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Educational Consumer Tips

Home Improvements/Contractors

Author: Better Business Bureau

The BBB suggests that you solicit two or three bids for the work or project, but do not automatically accept the lowest offer. Make sure all bids are based on the same set of specifications and materials to be used. Ask for references and inspect finished projects. Make sure the contractor or company is in compliance with all local licensing, bonding and insurance requirements and that any necessary building permits are obtained.

Never sign a blank or partially blank contract. Before paying, get a statement that all bills for material and labor have been paid for by the contractor. Typically a down payment of no more than one third of the total contract price is made with additional payments made after completion of each phase of work. Final payment should not be made until the job is completed and you have inspected the work. You should also ask for a Mechanics Lein Waver showing that you are not responsible for contractors or materials that have not been paid for.
Mechanic's Lien Waiver
The Mechanic's Lien Waiver document should be used when a party (the "Lienholder") has furnished labor and/or materials and has received or is about to receive payment for the services. In exchange for the payment, the Lienholder agrees to waive (release) any lien or other claim that the Lienholder may have against the improved property. Even if the Lienholder has already received full payment for all work and materials, the owner may still wish to acquire a Waiver to confirm that those payments have been made and that therefore the Lienholder makes no claim against the property.

Most states require that a release of a statutory lien must be done in writing to be effective. Therefore, the use of this document serves as tangible evidence that the Lienholder waived/released its right to a lien.

If the work or project is to be financed, be sure to have complete details of the financing agreement, especially if a second mortgage of your home is used as security for the remodeling work.

Residents / Homeowners should beware of pulling  permits for contractors.  When pulling permits, the person pulling the permit becomes the responsible party; therefore, if a company asks the homeowner to pull any permits this could be a problem if the homeowner has any issues with the contractor. Hence, the homeowner would be responsible for the repairs and not the company.