Sign a detailed contract. Make sure your contract spells out exactly what will be done, including deadlines, progress payments, the exact materials that will be used down to the model number and who will provide which materials. “If you don’t have it documented, it’s your word against theirs,” Hicks says. If the builder’s contract is not detailed enough, write up your own or provide addendums. Any change in the project, whether you change your mind about products or ask for additional projects, should generate a written change order that includes the new work, materials and cost.
Get the proper permits. Nearly all home renovation projects require permits. Many fly-by-night companies, as well as some licensed contractors, will suggest the job be done without permits to save money. Not only does that violate local ordinances and subject you to fines if you’re caught, it means the work will not be inspected by the city or county to make sure it’s up to code. Be wary of contractors who ask you to get the permits – that’s the contractor’s job. Unpermitted work can also cause problems when it’s time to sell.
Don’t pay more than 10 percent of the job total before the job starts. You don’t want a contractor to use your money to finish someone else’s job. Christian says he will occasionally ask for up to 30 percent if expensive materials are needed immediately. The contract should include a payment schedule and triggers for progress payments.
Don’t sign a contract for your entire renovation budget. No matter how careful you and the contractor are in preparing for the job, there will be surprises that will add to the cost. “They can’t see through walls,” Hicks says of contractors. Expect to spend at least 10 percent to 15 percent more than your contract.
Negotiate ground rules. Discuss what hours the contractor can work at your home, what kind of notice you’ll get, what bathroom the workers will use and what will be cleaned up at the end of every workday.
Talk to the contractor frequently. For a big job, you may need to talk every day. If you see a potential issue, speak up immediately. Something that is done wrong will be harder to fix later after your contractor has packed up and moved on to his next job.
Verify insurance coverage. Know what is covered by your homeowners insurance and what is covered by your contractor’s business insurance. Get a copy of the company’s insurance policy.
Get lien releases and receipts for products. If your contractor doesn’t pay his subcontractors or suppliers, they can put a mechanic’s lien against your house. You want copies of receipts for all the materials, plus lien releases from all the subcontractors and the general contractor before you pay. You can ask for some of those when it’s time for progress payments.
Don’t make the final payment until the job is 100 percent complete. Contractors are notorious for finishing most of the job and then moving on before they get to the final details. Don’t make the final payment until you are completely satisfied with the work and have all the lien releases and receipts.
