Your home is probably your most expensive investment. Before you spend
thousands of dollars on building or remodeling, you need to do your
homework and understand your role as a consumer.
Your first step is
to plan:
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Think your project through from start to finish. Consider special
needs you may have and how you will use the space in the future.
Consult an architect or designer if necessary, and decide on a
realistic budget.
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Think about the materials you want to use - visit lumber yards and
suppliers, look at magazines featuring distinctive home designs, see
what friends and family have done, or do research on the Internet.
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Clearly define the job you want done in a specification sheet and
rough floor plan which you can give to potential contractors. When all
the contractors who bid on your job work from the same design plan,
you are most likely to get complete and accurate bids that can be
compared.
Shop for Quality
- Not the Lowest Price
Once you develop a list of builders or remodelers, find out about their
reputations and the quality of their work. Recording all information,
as well as your own impressions about specific contractors and homes,
in a notebook helps to make comparisons easier. The best way to learn
about contractors is to visit homes they have built or remodeled and
talk to the owners. Don't be shy. Knock on doors and ask people how
they like their homes, and whether they would buy another home from
the builder or have another remodeling job done by the contractor. The
more people you talk to, the better the cross section of opinion you'll
receive.
Check out each contractor's
credentials. Find out how long the firm has been in business and what
kind of reputation it has established in the community. Try to ascertain
information about the contractor's credit rating. Check with the Better
Business Bureau and local consumer protection agencies to learn if there
have been any complaints. Also find out if the contractor is a member
of the local home builders association, and check with that association
to verify the builder's professional standing.
Consumers planning
to build or remodel a home can also protect their investment by seeking
out those professionals in the home building industry who are licensed
contractors. To obtain a Massachusetts Construction Supervisors License,
builders must demonstrate - through exam performance and prior construction
experience - that they possess the necessary qualifications to perform
or oversee construction, renovation, alteration, repair, removal or
demolition involving the structural elements of buildings. Remodelers
must register with the state as a remodeling contractor.
Important Information
on Remodelers Contracts
While
it is advisable to put all contracts in writing regardless of the cost
of the work being done, it is the law that any home improvement contract
over $1,000 must be in writing. If a contractor violates this provision,
his or her registration may be suspended or revoked and he or she can
be fined or face prosecution.
Valid remodeling
contracts over $1,000 must contain several provisions and provide some
consumer cautions and special notifications. For instance, all contracts
must provide complete identification of all parties involved with the
proposed job including the registration numbers of all contractors and
sub-contractors. It must also include:
- a complete description
of the job;
- a detailed list
of specifications and materials;
- the starting
and completion dates;
- the total price
of the work and the payment schedule;
- a copy of the
contractor's insurances; and
- signatures.
Look over your contracts carefully before signing. Any contract which is
presented to you without meeting these requirements is invalid and could
affect your protection under the law. If you are unsure of anything in
the contract, contact an attorney to review the document. If everything
is in order, sign the contract and make sure you receive a fully
executed copy before the work begins.
- For more information
on contract specifications and to receive a copy of the pamphlet entitled
'A Sample Home Improvement Contract', call the EOCA Consumer Hotline.
Obtaining Building
Permits
If you
obtain necessary building permits on your own because you plan to self-contract
your home improvements or because you think you are doing the contractor
a favor, you should know that doing so will reduce your options under
the law if a dispute arises. It could also extend your personal liability
for any work-related accidents. If you contract with someone to do work,
make the contractor obtain all necessary permits.
What Consumers
Should Know About Their Contractor's Insurance Coverage
Uninsured
contractors can expose unwary home owners to financial hardship. All
responsible contractors should carry appropriate insurance to protect
their clients, their employees and themselves. But what insurance should
your contractor carry to protect you, the home owner?
Liability Insurance
If your contractor is a sole proprietor and has no employees and uses
'independent' subcontractors to do any portion of the work, your contractor
cannot purchase Workers Compensation Insurance. To protect yourself,
you should insist your contractor and/or his or her independent subcontractors
carry Liability Insurance. This insurance coverage protects you if your
property is damaged, or if the contractor or subcontractors is/are accidentally
injured during the course of the work. Proof of your contractor's liability
insurance helps you substantiate that this contractor operates as an
independent business person and is not your employee. Therefore, you
are not responsible for injuries, pain, suffering or lost wages provided
the injuries were not caused by you.
Get a copy of your
contractor's and any subcontractor's Liability Insurance. Make sure
the policy's effective dates are current and that the policy dollar
coverage is sufficient to cover any potential claims for injuries or
damages. Be sure the insurance certificate covers the period the workers
will be on the job.
It is reasonable
to expect that professional contractors who carry all the appropriate
insurances will have greater business overhead expenses and that their
bids will be a bit higher than those from workers who take business
shortcuts. However, it's a small price to pay to hire the right person
for the job and forego the risk of exposing yourself, your financial
future and your home to someone who is improperly insured or uninsured.
Workman's Compensation
Workman's Compensation pays medical bills and lost wages to any or all
employees of a company who are injured while working on your house.
Only corporations, or employees of companies are covered by Workers
Compensation Insurance. If your contractor's business is incorporated
then everyone in that corporation must be insured by Workers Compensation
Insurance. If a contractor should, but does not have Workers Compensation
Insurance for his or her employees, the law exposes you, the home owner,
to litigation by the injured party. Home owners increase their risk
of exposure if:
a) the home owner
takes out the building permit for the work to be done,
b) the home owner
pays the contractor by the hour,
c) the home owner
supplies or loans the tools and materials to get the job
done, or
d) the home owner
gives directions on how to perform the job.
If any of the above
conditions apply, the home owner may, in the event of a lawsuit, be
found to be acting as their own general contractor and could be responsible
for anything that happens to the subcontractors, or their employees
during the course of their work.
If your contractor
tells you that he or she has Workers Compensation, get a copy of the
certificate of the insurance policy with yourself named as the certificate
holder before the job begins. Keep this document with your written contract
and other important paperwork pertaining to your project.
Service and Warranties
Make a special effort to learn what type of customer service and
warranty protection contractors offer. Do not wait until after you have
purchased a house to find out how to correct problems. Most builders
offer some form of written warranty. Find out the length of the warranty,
if it is backed by an insurance company and what procedures to follow
if a problem arises. Many contractors back their own warranties on workmanship
and materials, typically for one year. A warranty backed by insurance
costs more, but it offers long-range protection.
When choosing a
contractor, be thorough and ask a lot of questions. Get as many specifics
as possible. Never hesitate to ask a question for fear of sounding stupid
or uninformed. What seems like a stupid question may yield an informative
answer or avoid any future misunderstandings.
Resolving Disputes
If you have a contract dispute with your contractor or you think that
the job he or she did was shoddy or was done in an unprofessional manner,
there are options for you to explore if the problem cannot be resolved
privately. If the contractor is a member of this association, the consumer
can contact our organization to attempt an informal resolution to the
problem. A good first step would be to contact the Attorney General's
local consumer group in your area for help with informal mediation.
Beyond that, you are encouraged to fully investigate the following alternatives.
The cost and effectiveness depend largely on your particular situation.
Home owners should
be forewarned that once a dispute enters this stage it can consume a
lot of time, effort and energy for both parties before it is resolved
and/or compensation is awarded.
Arbitration
If a consumer has a dispute against a registered contractor or subcontractor,
the consumer may try to resolve the dispute through a state-approved
arbitration program. The consumer selects an approved form and pays
a fee, based on a sliding scale linked to the size of the claim. The
fee may include a nonrefundable processing charge that would be kept
in the event the case is withdrawn before making it to a hearing. Once
the arbitration firm has been chosen and the application fee has been
paid, the case is heard with both parties present and a decision is
rendered. An arbitrator's decision is final but may be appealed by either
party in a court within 21 days of the decision.
- For more information
and to receive a listing of all approved arbitration firms and a description
of the sliding fee scale, call the Executive Office of Consumer Affairs
Hotline at:
phone: (617) 727-7780
e-mail: consumer@state.ma.us
or fill out the on-line
form for the quickest response.
Court Action
A consumer always has the option of bypassing the arbitration process
by taking the dispute directly to court. Except for arbitration by mutual
agreement of the parties, a contractor is limited to using the court
to resolve any dispute against a home owner. Either party may bring
the dispute to small claims court if the monetary claim is less than
$1,500.
A judgment received
from either a court action or an arbitration session fully preserves
all rights of the parties to pursue other remedies including additional
legal action and, in the event of a consumer involved in a remodeling
dispute, compensation from the Guaranty Fund.(see below)
- For more information
about taking a case to small claims court, call the EOCA Consumer
Hotline and ask for the 'Consumer's Guide to Small Claims Court'.
For help with preparing a court case which will result in claims in
excess of $1,500 and for other legal advice, you are urged to contact
an attorney for advice.
The Guaranty
Fund - A Note For the Remodeling Consumer
If a judgment has been awarded to the consumer and the contractor refuses
to pay the award or defaults due to bankruptcy or flight, remedies are
still available through the Guaranty Fund if the consumer has used a
registered improvement contractor.
The fund was created
as a source of last resort to reimburse consumers who have been awarded
judgments that have not been paid. Money in the fund comes from a one-time
assessment levied on registered contractors based on the number of employees
which are on the contractor's payroll.
When a claim is
paid out to a consumer because a judgment award was not paid, the responsible
registered contractor is obligated to reimburse the fund with interest
within 30 days. If a contractor fails to do so, he or she may face administrative
fines, revocation of his or her registration, and in the most extreme
cases, criminal prosecution. To apply to the fund, a consumer must file
the claim within six months of the initial judgment made by an arbitrator
or court, and demonstrate that all reasonable efforts to collect the
judgment award have been exhausted. In most cases, this will mean that
the last step prior to applying to the fund will have to be a court
proceeding, regardless of the option used to secure the initial judgment.
Claims of up to
$10,000 in actual losses may be recovered through the Guaranty Fund.
However, if a single contractor is responsible for more than $75,000
in claims to the fund within a 12-month period, no further claims may
be awarded until either the contractor reimburses the fund or a new
12-month period begins. If actual losses exceed what is paid out through
the fund, the consumer may seek other remedies to recover those additional
costs.
To find out the
standing of a specific contractor, call the Home Builders Association
of Western Massachusetts at (413) 733-3126 or contact the Director of
Home Contractor Registration at (617) 727-8598. For more information
about the Guaranty Fund, reimbursement or an application, call the EOCA
Consumer Hotline.
240 Cadwell Drive
Springfield, Massachusetts 01104
Phone: 413-733-3126
Toll Free: 800-523-8320
Fax: 413-781-8416
