I recently responded to an e-mail regarding a woman who had hired a contractor who did not complete the job and ran with her money. This is the third time I have heard this story this week so I think it's time to share some valuable information with anyone who will listen about what you need to know when hiring a contractor in California.
Regarding Recourse for a contractor that did not finish the job or performed faulty work:
If he/she is a licensed contractor you can file a complaint with the Contractors State License Board - call them at 1-800-321-CSLB and the contractor will have to go through the mandatory arbitration system set up by the CSLB in order to avoid having a complaint filed on his license.
Also, he may have a bond because all contractors are required to have a $12,500 bond. I know Economy Bonds is a pretty large bonding company and you can call them at 1-800-278-0689 and see if they can search for the person's name or give you other ideas of how to look up a contractor's bond. If you find he has a bond you can file a complaint against the bond and if the contractor doesn't reply and argue against your complaint, you will get paid the amount which you feel is owed to you (up to $12,500). People say it won't happen - my cousin works for a bond company and trust me it happens all the time!
Even if he isn't licensed I would start by calling the CSLB (by the way if you press the number 3 three times you will get to an operator - otherwise they're prompting system will drive you nuts!) and see what other advise they can share with you.
Now here are some other general tips I would like to share that I only wish everyone would know prior to hiring a contractor:
1. It is ILLEGAL for a contractor to collect more than 10% or $1000 (whichever is less) prior to starting work. Which means that any time a contractor asks for more than $1000 before he has started he is breaking the law. We have had so many sub-contractors ask us for more than that and we just remind them of the law - many contractors don't even know the law because they learned it to pass a test and forgot all about it.
2. It is ILLEGAL for a contractor to collect more money than the cost of work that has already been furnished. In other words, if they have done 2 days of work and deconstructed a room for you and they want $5000, you don't have to pay them that amount because that is more than the amount of labor and materials that they have furnished. This can obviously lead to many arguments that no one wants to have. So the best way to get around potential conflicts on the "value" of the work completed and how much you are willing to pay is to have your contractor give you a payment schedule. Which says that he will get paid at different points throughout the job when certain things are completed that you can physically see. Example: once the counter tops are removed and the new counters have been installed your contractor gets $2,000. Once he has installed all the new appliances and they are in working order he gets another $500 or whatever. Then, before he starts, you can review the payment schedule to make sure that you agree that the amounts he is asking for at the completion of each phase is equal to the amount of labor and materials it would cost to do the work. So that way you can get the details ironed out prior to the start of the work.
3. It is ILLEGAL to work on time and material. Most people are shocked when I tell them this because every contractor they have ever worked with has worked on T&M. It's not that you can't work on T&M but you have to have a cap - a bid. In other words, if we bid on a job to remodel a kitchen and the cost will be $15,000, we can work on T&M as long as the cost of the kitchen is not more than $15,000. That way the client benefits from the possibility that the job will cost less than the bid and the peace of mind that they job wont be more than the $15,000 bid no matter what. Although this brings me to my next point...
4. Watch out for change orders!!! Many contractors will give you a bid that seams low and then once they've started they seem to run into all sorts of unexpected problems that they give you change orders for. This is a huge opportunity for contractors to give you change orders that are high because they've already started your job and you don't really think you have a choice. You do! I would tell your contractor that you will be getting bids from other contractors on the change order because you need to make sure that the cost of the extra work is reasonable. In fact, I'd tell your contractor this before he starts so that if he's that type of guy he can run the other direction before he has to deal with you because you're not going to let him get away with that!
5. Finally, always get your contractor's license number and look it up at the CSLB website - check that the name of your contractor is the same name that is on the license, check that the license is not expired and check to see if they have any complaints against their license.
Good luck with your projects and remember there are many really good contractors that are not jerks - you just have to do your homework to find them!
