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Avoiding Costly Mistakes on Your Home Building Projects

 

When Mary decided to re-roof her home, she looked through the Yellow Pages to locate roofing contractors. After obtaining several bids, she decided to use ZZZ Roofing because their bid was considerably lower than the others submitted. Mary and ZZZ Roofing signed the $2,400 contract, calling for 50 percent down and 50 percent upon completion. Mary paid the initial $1,200 in cash, and ZZZ Roofing never returned. Mary became the victim of an unscrupulous contractor.

Unfortunately, problems of this type occur too frequently.  As fraud becomes more prevalent within the contracting industry, consumers would do well to safeguard their home building project investments.  Following are some basic steps you can take to avoid the common problems that occur while building or remodeling your home.

Prepare Plans and Instructions

No one can read your mind.  Prepare detailed building plans to help ensure the end product complies with the building code and meets your expectations.  In addition, consider building materials of various qualities and prices to find those most suitable for your geographical area and which meet your personal needs.

The Bidding Process

Obtain several bids for your project.  This will help you see both the price range of your project as well as which contractors may be under-bidding or over-bidding your project.

However, keep in mind that bids will vary and may not reflect the qualifications of the contractor.  A high bid does not always represent a better product, and a very low bid could mean the contractor miscalculated or overlooked important items involved in the project.

Choosing a Contractor

Utah state law requires all contractors and subcontractors doing work in the state to be licensed by the Utah Department of Commerce.  Therefore, it is important that you hire only licensed professionals to work on your building project.  In addition, consider the following tips during your selection process:

Note: If you do not immediately find the licensee you are considering, try the following:

1) Enter the business name and not an individual's name. Contractor licensees are entered in Licensee Lookup & Verification System by the business name of the company and not the name of an individual qualifier or employee (unless the individual is practicing as a sole proprietor).

For example, John Jones may have completed the bid sheet for your construction or repair. However, if John Jones works for "ZZZ Roofing" or for "Jones Roofing," you will not find "John Jones" as a contractor licensee in the Licensee Lookup & Verification System. Therefore, you will need to enter "ZZZ Roofing" or "Jones Roofing" in the business name field to determine if the business has a current contractor license.

2) If you cannot find the licensee either by individual name or by business name, ask the contractor for a contractor license number. Every licensed contractor should be able to provide you with a contractor license number on demand. If the contractor cannot produce a contractor license number, be cautious! Every licensed contractor has one.

NOTE: A "contractor license number" is not the same as a "corporation registration number." Corporation registration numbers are similar in format to the description listed below; however, they will not end with the extension 5501.

Corporation registration numbers simply show that a DBA (Doing Business As) name, corporation, LLC, partnership, etc. has been registered in order for the entity to do business in the state. Once a business is registered through the Division of Corporation, the appropriate state contractor license(s) must also be obtained so the business can legally engage in the regulated practice of construction.

Please also note that a corporation registration certificate looks very similar to a contractor license. It is therefore vital to look closely at the identifying name on the certificate (contractor license or corporation registration) and ensure that the license number ends with the essential 5501 or 5551 extension - indicating a valid contractor license.

  • Be sure the contractor is licensed to do the specific type of work your project requires. For example, a roofing contractor may not be licensed to pour concrete.
  • Do not allow the contractor to begin the building project before he or she obtains the building permit from your local city or county. Also, investigate local building ordinances and regulations.
  • Ask all contractors, subcontractors and suppliers working on your project to sign lien releases prior to paying them for services that have been completed.
  • Be cautious of requests for a down payment in order to purchase materials or to "solidify" the contract. Most established contractors will purchase the materials first and will then present an invoice for reimbursement.

Protection Against Liens

State law protects homeowners from having a lien maintained on their home and from civil judgment by persons other than the original contractor, provided the following conditions are met:

  • The homeowner used the services of a licensed contractor.
  • The homeowner has a written contract with the original contractor(s).
  • The homeowner pays the original contractor(s) in full according to the terms of the written contract and any amendments to that contract.

    Note: If a mechanics' lien is placed on a residence, it is the homeowner's responsibility to notify the lien claimant(s) in writing that the above listed requirements have been met and to provide them with the relevant documentation.

Written Contracts

A written contract is vital regardless of the size of your building project. Should a dispute arise, the written contract can verify the terms and conditions of the project and what type of payment was to be made.

A written contract also protects you from having a lien maintained on your home provided other conditions are met (see Protection Against Liens).

Your contractor is obligated to notify you of these rights, in writing, as a part of your contract.  Read this section of your contract carefully.

The contract should state the cost of the project, fees, payment deadline, and the time frame for project completion.  Before signing any contract, you may want to have an attorney review it.

Where To Go For Help

The time to identify and correct problems is during the course of construction. Stay involved with the building process, and if you do encounter a problem with your contractor, seek assistance immediately.  Delays add to your investment risk.

Remember, it is your investment.  No Utah government agency is empowered to restore or repay your losses other than restitution provided by a civil court case.  However, the following agencies may be able to provide some assistance:

Inspection Agencies: Located in your city or county, inspection agencies have trained and licensed inspectors to identify code violations and to ensure the project is built to plan specifications. Request their assistance if you detect any problem or deviation from your building plan specifications.

The Division of Occupational and Professional Licensing: The Division licenses Utah's contractors by requiring them to have experience, pass an examination, and establish a degree of financial responsibility.

By law, the Division is authorized to investigate a number of illegal and unprofessional acts. If found guilty, fines may be imposed and the contractor's license may be suspended or revoked.

Contact the Division's Bureau of Investigations at 530-6504 if you suspect any of the following violations or click here to access our on-line complaint form:

  • The unlicensed performance of jobs exceeding $1,000 in value including materials (no matter who purchases them) and labor
  • Failure to pay for materials and labor within 120 days of payment
  • Failure to complete a project without the consent of the owner
  • Willful or material departure from the building plans and specifications
  • Failure to comply with a lawful order of a building inspector which jeopardizes the public health, safety, and welfare
  • Any willful, fraudulent, or deceitful act by a contractor which causes material injury to another or jeopardizes the public health, safety, and welfare
  • Failure to pay taxes or unemployment insurance or to provide workers' compensation insurance for employees.  

The Better Business Bureau keeps records of complaints on contractors. The Bureau will attempt to mediate a resolution to your problem; however, they cannot require a contractor to perform any act or service, impose fines or penalties, or take legal action.

Small Claims Court: You may be able to recover damages or claims of up to $5,000. Contact your county clerk for information on how to file.

Produced as a Public Service by:

                                    Utah Department of Commerce
                                    Division of Occupational and Professional Licensing
                                    P.O. Box 146741
                                    Salt Lake City, Utah 84114-6741
                                    (801) 530-6628
                                    (866) ASK-DOPL (275-3675)

 

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doplweb@utah.gov • P.O. Box 146741 • Salt Lake City, Utah 84114-6741 • Phone: (801) 530-6628 • Toll-Free in Utah: (866) 275-3675 • Fax: (801) 530-6511