June has been a wet and stormy month for Atlanta. The National Weather Service has recorded 9.43 inches of rain through June 25, which is more than 6 inches above the average amount for this time of year. Frequent thunderstorms have brought lightning and severe winds, toppling trees on homes and power lines across Georgia.
If you were affected by these storms and are looking for someone to perform home repairs, now is a good time to review tips for protecting yourself from contractor fraud. While most workers and companies are reputable, there are some contractors who pop up after significant storms and engage in fraudulent activities. Here’s how to decrease your chances of getting scammed:
- Do your homework. One of the best ways to protect yourself against fraud is to get estimates from several contractors and check whether they are local, bonded and insured. Be wary of any contractors who solicit door to door. The Home Builders Association of Georgia says that you should also ask for a copy of a contractor’s license and then check the status of that license and the reputation of the license-holder with your local building permit official or state licensing board.You should know that the Georgia State Licensing Board for Residential and General Contractors says “specialty services” contractors like brick masons, roofers and painters do not need state licenses, but that certain subcontractors like electricians, HVAC specialists and plumbers do.
- Don’t be rushed into mistakes. You might be anxious to repair damage, but rushing into a decision—especially at the contractor’s urging—could be costly. The BBB says that you should insist that the contractor sign a mutually-agreeable contract detailing the job to be performed, along with any warranties and guarantees, prior to beginning any work.The Governor’s Office of Consumer Protection (GOCP) also says that you should require the contractor to secure all the necessary building permits; if you seek the permits yourself, you could then be the one who is fined if the contractor fails to work according to local and state building codes.
- Control the contract. You don’t want to risk a contractor adding new terms to your signed deal, so the GOCP suggests filling in or drawing a line across any remaining blanks in the contract, and keeping a copy of the final contract that you and the contractor both signed.The GOCP also recommends including language in your contract that ties certain payments to the satisfactory completion of certain stages of your project, with at least 10 percent of the total payment held until after the contractor has provided you with a signed affidavit indicating completion of the project.Of course, sometimes repairs can cost more money than your contractor expects. In those instance, the GOCP suggests making sure you understand why any cost overruns occurred and then amending your contract to include any agreed-upon additional costs. Remember, too, that you always have the right to get other estimates before authorizing additional expenditures.
- Control the consequences. You have power in the relationship as long as you hold the money. The BBB advises you to never pay fully or agree that the work is done until you’re completely satisfied, and warns against paying more than 25 percent of the estimated cost up front.It’s also a good idea to use credit cards for payments, says the U.S. Federal Trade Commission, because credit card companies often have consumer protections against fraud. If the contractor cannot accept a credit card, consider paying by check and asking for a receipt, so that you have a record of the payment.Finally, make sure to protect yourself from potential liens. In Georgia, a contractor’s suppliers and subcontractors may file a “materialman’s lien” against your home if your contractor has not paid them. While the GOCP says this type of lien against homeowners is rare, the office advises that you take preventive measures to avoid it. These measures include filing paperwork to find out who all subcontractors and suppliers are; having contractors sign documentation each time you make a payment; and requiring your contractor to sign a final document that says all subcontractors and suppliers have been paid in full once the project is complete.
Another important point to keep in mind when working with a contractor: Never allow yourself to be talked into seeking insurance reimbursement for false or exaggerated damage, because that is insurance fraud. Do you have additional questions or concerns about your coverage or your rights in contractor negotiations? Contact the Georgia Office of the Secretary of State for legal questions and your local insurance agent for questions about your insurance coverage and protection.
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