- Office of Consumer Affairs and Business Regulation
Undertaking a home improvement job involves a great deal of time and skill. Contractors spend long hours reviewing project details with their clients, selecting and ordering supplies and hiring subcontractors. We always warn homeowners about the risks of doing business with a bad contractor….but it’s equally important for contractors take steps to protect themselves from having any issues with homeowners.
Make sure you are registered with our Office as a Home Improvement Contractor.
State law requires that any person performing home improvement jobs on an existing, 1-4 unit, owner-occupied, primary residence be registered with this Office. Having your CSL (Construction Supervisor License) alone is not enough. Registered contractors must follow certain rules regarding contracts, payments, advertising, business practices, etc. These laws and regulations provide standards throughout the industry and you can be fined by this Office for violating the laws and operating as an unregistered contractor.
It starts with the contract.
Have a contract! The law requires that you have a written contract for jobs costing over $1,000, but it’s best practice to have one for every job, every time. Know what language the Home Improvement Contractor law requires be written in the contract. Make sure that all work is agreed to and that both you and the homeowner sign and date the contract. If any changes to the project are made, both parties should sign and date the addendum or change order as well. Make sure you and the homeowner have the signed, dated and most recent version of the contract so that you are both referencing the same document during the project. The contract should also include a payment schedule. The law prevents you from collecting more than 1/3 the total cost of the project upfront (unless special order materials are needed) but you and your customer can discuss a payment schedule and set your own terms for the balance due, and whether any monies should be held back by the customer, pending final inspection.
Keep good records.
Put all conversations in writing, even if that means shooting the homeowner an email recapping a telephone or in person conversation after it occurred. Keep receipts for all materials—if the homeowner questions the price or quantity of an item, you will be able to produce the receipt. Take photos before, during and after every job, and note the dates. They can come in handy if you need them as evidence should a dispute arise. You can also use these photos as before and after shots for your website!
Utilize the law to your benefit.
The law allows contractors to initiate filing for arbitration in the event of a dispute with a homeowner, but only if you included an arbitration clause in your contract and both you and the homeowner(s) signed and dated the clause! Be sure you both sign and date the clause and the overall contract! Arbitration is less formal and generally less expensive than having to go to court, but the arbitrator’s decision is still legally binding!