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5 Legal Tips for Hiring a Home Contractor

By Ephrat Livni, Esq. on September 25, 2015 | Last updated on March 21, 2019

Your home is your castle. When your castle starts to crumble, it's time to call in a contractor. Before you begin fixating on bathroom fixtures, prepare yourself.

Hiring a contractor means entering a binding agreement that impacts a major investment: your home. So take a look at these five legal tips for getting the job done right.

1. Licensing

Start your research with your state's licensing requirements. Many states regulate contractors, requiring them to be registered professionals who adhere to certain standards. Working with licensed contractors is no guarantee of good work but it does indicate that the individual operates within the law and follows certain processes. Most importantly, when contractors are licensed, you will have recourse if something goes wrong.

State consumer protection agencies also often provide important insights for hiring a contractor and protecting yourself. For example, California's consumer protection website lists particular considerations for building in that state, as well as advice on permitting, reading contracts, and keeping records. Meanwhile, Massachusetts offers a downloadable PDF guide to contract hiring.

2. Bonds

There are different types of bonds and different bonding requirements. Basically, a bond is a type of guarantee the contractor buys from a surety company that ensures contract completion and also ensures work to specified codes. Make sure that you first know what bonds contractors are required to carry in your state and what each type of bond ensures.

3. Insurance

It may be the last thing on your mind now, but if your contractor does not pay workers' compensation insurance on behalf of employees or fails to pay for materials, third parties can seek a lien on your home in some states. Make sure that your contractor is properly insured, that coverage is up-to-date and complete, and that you ask to see evidence of this before signing a contract.

4. Permits

Most projects require permits. Even something as simple as a new deck will need to be run by local authorities. You will not have to pull permits yourself. Your contractor should be familiar with local permitting process. If not, and your assistance is sought, this is a warning sign that your contractor may not be licensed or is insufficiently experienced.

5. Contracts

Before you enter into a legally binding agreement with a contractor, make sure that you cover contingencies. Make payment graduated, in phases and based upon completion of aspects of the job.

Be extremely wary of a contractor who does not want to enter into a written agreement. Contracts simply serve as a record of the agreed-upon obligations of the parties. If your contractor is looking to avoid having a precise record of those obligations, it may be an indication that they won't be met.

Hedge Your Bets, Protect Your Project

As you can see, home improvement implicates numerous legal issues and local agencies. If you are unsure how to handle this process or how to read a contract, you are not alone. Talk to a lawyer who can help guide you.

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