In the aftermath of disasters, follows unscrupulous individuals looking to take advantage of vulnerable victims and their money.
Natural disasters seem to be happening with more frequency and destruction than ever before and recovery is becoming more difficult for homeowners, due to increased costs to repair and lack of proper insurance.
Government officials are quick to put out warnings of the scams that typically arise, which put consumers at risk for being robbed of their money. There are several scams such as insurance flood scams, charity, clean up, repair and rebuilding. This article will focus on repair, rebuilding and contractors.
Unlicensed and out-of -state so-called contractors, will likely be soliciting homeowners with promises to help get their lives and homes back to normal. And of course, this is exactly what homeowners are desperate to hear and have. Believing that these individuals truly want to help them, victims tend to let their guards down and take the bait. Heartless, I know, but it happens
There have been many stories of homeowners deceived by these crooks, who lost money they received from insurance, FEMA, and some, their life savings. And getting any relief from consumer protection agencies isn’t going to be in the form of reimbursement; you’ve pretty much been had at this point.
Hiring contractors in general, is risky business if you don’t know what to look for and don’t understand the contracting process. Natural disaster victims especially need to take their time to do the necessary research and background checks on potential contractors for their project.
The following 5 steps will help guide homeowners through the task of contracting for their rebuilding projects.
1. First off, beware of unsolicited offers to repair your home. Expect individuals to be knocking on your door or leaving business cards on your property.
-Consumers need to thoroughly vet the individual and company by checking for online complaints, which can be done by googling their names. Also check the BBB and sites like RipOffReport, and ComplaintsBoard to name a few. Be sure to check licensing and complaint history with the Contractors State License Board in your state.
2. Ask the contractor for proof of insurance such as a Surety Bond which most states require of contractors in order to be licensed. Workmans Comp, if they have employees, and general liability insurance or builders risk insurance are not mandated, but ethical contractors carry as a precaution. Verify coverage by getting copies of certificates and contact the carriers to ensure they are current.
3. Understand how much a contractor can legally ask for to begin a project.
– Never pay a large sum of money up front, especially the entire amount, and never pay in cash. Research and negotiate a reasonable payment schedule. Remember, unlicensed and out of state contractors will be canvassing neighborhoods offering deals and asking for large sums of money upfront.
4. Never sign a contract agreement that you don’t understand or that has little details to it, describing the work to be performed. including materials and labor. Learn about the use of protective clauses you should include in your agreements such as Change Orders for any extra work to be done and obtaining Lien Releases upon payments made to the contractor and subs. Get some legal advice if you have questions about the contract.
5. Get 3-4 written bids and if there are vast differences in costs, go back and find out why.
– It’s not unusual for some contractors to leave off certain items from the plans when presenting the bids, especially with disaster victims, knowing they will be focused on costs. Referred to as “low-ball bidding”, it’s a tactic unethical contractors used to get the job. Then as the job progresses, the homeowner discovers certain work they expected to be done wasn’t included in the bid. This is where “extra work” starts to creep in and the cost to complete the project increases. It’s also important to use formal, written Change Orders to control the surprise of any unexpected bills and to better manage the project.
Finding contractors will be a challenge for many, but it’s important not to rush into hiring anyone without doing a thorough job of researching and learning how to protect yourself from unethical business practices.
The five steps presented here are a solid way to begin, but you’ve got to implement them and not just pick and choose which ones you’ll do; they are all key to reducing your exposure to a rebuilding disaster.
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