The attorneys at Myers Law understand how stressful and risky hiring a contractor can be. After handling hundreds of consumer disputes against home builders, general contractors, restoration companies, HVAC contractors, plumbers, electricians, roofers, insulation contractors, concrete contractors, and material suppliers, we have seen a lot. Sometimes it feels like we’ve “seen it all,” but Dan Myers is still surprised at the actions some contractors will take, and the lengths that they will go.
You have to be careful about who you hire, how you hire them, how you pay them, who inspects the work, and what you have the contractors do. If you don’t read everything critically, you can end up dealing with some very serious issues–your home could be foreclosed on because of a faulty mechanic’s lien because of project overcharges that you never approved, and you may not be able to have your day in court because you agreed to a very expensive arbitration clause. If you end up in a situation where you need to file a lawsuit against your contractor, you need to make sure you have the tools, and have given your attorney the opportunity, to help you.
On this page, you will find important information about the laws that could apply to home construction and home repair situations, and also some helpful information and pointers on researching, hiring, and working with a contractor. We also share with you red flags and warnings about certain hidden contract terms and problems many of our clients have run into. You don’t want to skip over this information.
Homeowners have very powerful and very important rights and remedies under Ohio’s many different consumer protection laws. These laws are meant to protect homeowners from unfair, deceptive, unconscionable, fraudulent, and high-pressure practices used by many contractors. The problem is most homeowners don’t know about these rights, and most contractors don’t follow the law or tell consumers about their rights like they are supposed to. These are some of the laws that you need to know about. Some of these laws allow a homeowner to cancel a contract and get a full refund, while others allow the homeowner to collect damages. They can be mutually exclusive, meaning that once you choose to go one way, you cannot change your direction or attempt to use the other laws. That is why you must talk to an attorney before making a decision or saying the wrong thing to your contractor.
The Ohio Consumer Sales Practices Act, or CSPA for short, is the main consumer protection law in the State of Ohio. Because of the way this law is written, new consumer protections and rights are added almost every year, if not every month. This law applies to all home remodeling, repair, or improvement transactions between a homeowner and a contractor as long as the contract price was less than $25,000, and may even apply when the price is over $25,000 in some situations. In order to know if this law applies to your $25,000+ project, you need to talk with an experienced consumer rights attorney. The law is still in flux in this pricing “gray area.”
The CSPA appears very straightforward, at least at first glance. It makes it illegal for a home improvement contractor or builder to act in an unfair, deceptive, or unconscionable way with its customers. In certain situations, it allows homeowners to rescind, or undo, a transaction before it goes too far. In most situations, it allows consumers to sue for triple their actual out-of-pocket economic loss and $200 per violation of the law even when no cost is suffered by the homeowner. Consumers may recover up to $5,000 in non-economic damages for stress or embarrassment or harassment, as well as their attorney fees.
The CSPA is special in that it gives another tool and shield to homeowners. The law allows homeowners to act as if they are private attorneys general, and it gives them many of the same powers as Ohio’s Attorney General. That means homeowners can, in the right cases, get a court to publicly declare that a company has committed unfair, deceptive, and unconscionable acts, and also issue an injunction against the company. The injunction could be as simple as requiring the company to prove that it has changed its practices to comply with the law, or to remove certain provisions from its contract. In some cases, including some cases handled by Myers Law, the courts can order that a company be shut down forever, that it cannot act as a residential contractor anymore, and that the company’s owners can never again own or control a company that works in the same industry. This is sometimes called the “corporate death sentence.”
The CSPA is difficult to navigate, not because it is difficult to read, but because it is difficult to truly know what your rights are. The law allows the Ohio Attorney General to write specific regulations that spell out what is unfair, deceptive, or unconscionable, and what a contractor must or must not do. These can be found in the Ohio Administrative Code, and can change every few years. But most of the rules that companies have to follow, and most of the rights consumers have, can only be found by searching for specific decisions in the Attorney General’s Online Public Inspection File (OPIF). OPIF is a database of Ohio court cases where courts have declared that specific acts of a company were illegal under the CSPA. Once a court declares a new act or practice to be illegal, it is added to the OPIF; and once it is added to the database, it becomes illegal for any and all companies to do the same thing in a similar situation.
When the CSPA applies, there are some specific things that contractors need to do to comply with the CSPA. There are thousands of examples and protections for homeowners, but some notable examples include:
- A contractor must give you a written receipt when you make any payment to them. For the first payment you make, i.e. your deposit, they must give you a receipt that specifically says whether the deposit is refundable or non-refundable. If they don’t give you the receipt, they aren’t allowed to take or keep the payment.
- A contractor must be registered with the local building department, licensed by the state if a state license is required (plumbers, HVAC contractors, and electricians), and they must obtain all permits required by law for the work.
- A contractor must either give you a written estimate for the work ahead of time (which must be binding on them for five days), or give you a written notice that you have the right to receive a written or oral estimate if you choose. If the contractor gives you the notice, it should allows you to initial next to which kind of estimate you want.
- If the costs of the construction work are going to be 10% higher than the original estimated cost due to additional and unforeseen repairs needed, the contractor must first get written or oral approval from a homeowner before incurring those costs.
- Once the contractor receives the initial deposit, work must be completed, or at least start, within eight weeks. If it doesn’t, the contractor must inform the homeowner of the delay and offer to give the deposit back during the wait.
- The contractor’s work must be good and workmanlike (not shoddy), and they must correct any deficient work.
- The contractor must be honest about everything, including the following:
- The contractor cannot file a mechanic’s lien that contains any false statements, or a lien that fails to comply with the Ohio mechanic’s lien law.
- The contractor must give the homeowner a written agreement, and also an estimated completion date in writing.
- The contractor must disclose the labor costs for the homeowner separate from the material costs charged to the homeowner.
- The contractor cannot knowingly breach its contract or refuse to honor its previous warranties.
- Many other rights.
Once a lawsuit is filed, contractors can use a “cure offer” to try and settle the case. In reality, the “cure offer” is a poison-pill to hurt the consumer’s ability to recover full damages under the law. If it is accepted, your lawsuit is settled. If it is rejected, then it can limit your recovery later if you don’t prove economic loss greater than what was offered. Therefore, it is critical to speak with an attorney before any lawsuit is filed. Many clients tried to file their claims in small claims court before contacting an attorney. That is a risky move, because the damages probably exceed the limit of small claims court, and because a contractor with an attorney will use a cure offer to harm the homeowner who may not know better. Before trying to negotiate with your contractor, speak to an attorney so you know what to say or what not to say to the contractor.
The CSPA is a very powerful law, but homeowners only have two years from the date the violation occurred (not the date they found out about it or discovered the problem) to sue for damages (unless the contractor sues first). If the customer wants to rescind or undo the transaction, that must happen within a reasonable time after the violation was discovered and before any substantial change has occurred. Because of these time constraints, if you believe your contractor violated your rights, you must talk to an attorney immediately, before it’s too late.
Since 2012, many larger construction projects–like brand new homes, additions, and detached garages–were removed from the CSPA, and fall under the HCSSA. The HCSSA applies only to these larger projects which involve construction of a new structure, where the contract price exceeds $25,000, and where the contractor has insurance with at least $250,000 in limits (which most do).
The remedies under this law are less than those that were available under the CSPA to these homeowners before 2012. Homeowners can recover their actual economic damages, plus up to $5,000 for the stress or embarrassment or harassment, but cannot collect triple damages, and cannot collect any statutory damages. It is also possible to recover attorney fees, as well as declaration that an act violates the HCSSA and court ordered injunctions, which were also available under the CSPA.
The HCSSA carries over a few of the protections of the CSPA, but leaves out most of the important protections. More troubling, it does almost nothing to protect homeowners when they agree to a cost plus contract with their builders. A cost plus contract means that the builder will charge the homeowner all costs of the construction (actual labor and material costs), plus an additional amount or percentage. In these cost plus arrangements, the costs of a project can increase exponentially and without warning–there is no cap or limit to the cost. A normal contract is sometimes called a guaranteed maximum price because the cost to the customer is capped or limited.
The HCSSA requires contractors to perform work in accordance with the Home Builder Association’s Minimum Quantifiable Standards. These standards are written by the Ohio Home Builder Association, and include requirements for the grading of yards, limits on flooring height changes, and establishes other tolerance limits for projects. It also incorporates the Residential Code of Ohio, so if work isn’t up to code, it automatically isn’t good or workmanlike–it’s shoddy if it violates code.
The law also places a limit on the amount a contractor can take as a down payment or deposit before work starts. Unless there are custom or specialty orders for materials, the contractor cannot ask for more than 10% upfront before work starts. There are very few cases that have been decided under this law because it is relatively new.
Many people have heard that they have a three-day right to cancel certain agreements, but most people don’t understand what that really means. Often, consumers are wrong about when they do or do not have that right. In addition to some federal laws, the Ohio HSSA gives consumers a three-day right to cancel certain contracts.
No matter how big the construction project is, the HSSA will often apply to home repair, home improvement, and home remodeling projects. It applies to many contracts for goods or services, including construction services, so long as the seller came to the home of a customer to make part of their sales pitch, and the agreement is entered into somewhere other than the seller’s business place. It usually applies to home repair agreements because most contractors visit homeowners in their home, and most homeowners sign their contracts while at home.
It is imperative to talk to a lawyer before trying to exercise cancellation rights under this law. According to some courts in Ohio, once a cancellation letter is sent to a contractor, the homeowner has chosen to cancel the contract and can no longer get additional damages from their contractor. It does not always make sense to cancel; sometimes it makes more sense to sue under one of the other consumer protection laws.
For example, if a homeowner paid $5,000 to a contractor on a shoddy $15,000 roof replacement, and has to pay another contractor $20,000 to do it the right way, it may make more sense to sue for damages, unless a lien or other issues have come up. Talking to an attorney to get specific advice as to what route to take could be the difference between you owing money and you being entitled to tens of thousands of dollars.
If you are past the first three days after you signed the contract, don’t worry–you might still have time to cancel. Contractors have to include in a written contract a notice, near your signature, that says “You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation for an explanation of this right.” If that is missing, your right to cancel never expires, at least not until the contractor corrects the missing information.
The contractor also has to attach to your contract two additional pages titled “Notice of Cancellation” that explain your cancellation rights in the language used by the HSSA. If they are missing this information, or they don’t fill in the blanks for the cancellation date, then your right to cancel also does not expire until they correct that missing information.
Three days can turn into three years or more if the contractor does not use the right forms or give the right warnings in their forms. If you cancel your contract, the contractor has to refund all money you paid within ten business days, and remove all liens that were filed. You also have to return any materials delivered to your home as long as they were not previously installed by the contractor. Anything installed stays installed even after the agreement is cancelled.
If you have ever read through the Ohio Constitution (WARNING: do not drive or operate heavy machinery afterward), you will notice it includes a lot of uncommon “rights.” A lot of these you will not find in the U.S. Constitution. One such right in Ohio is the construction contractor’s right to file a mechanic’s lien against someone’s property.
If you have a dispute with your contractor over the work performed or the amount of payment owed, it is likely that a contractor will file a lien against your property to “secure” the amount claimed by the contractor. These liens function like a mortgage. They can also be dangerous for a homeowner–-if you have a mortgage, the filing of a lien likely puts you in default; if you are trying to get financing, you may be denied as a risky investment; if you lease the property, you may be evicted for violating your lease. Worse, a contractor can file a foreclosure action against you to force your home to be sold at a sheriff’s auction to satisfy the lien. Even if no action is taken by the contractor, this lien stays on your property for up to six years after it was filed, and can prevent or complicate sales of the property, as well.
You may not even know that a lien has been filed on your property. You should know, because the contractor is required to serve a copy of the lien on you shortly after it is filed. But some contractors, and their attorneys, fail to follow the law.
These liens are a powerful weapon for a contractor to persuade homeowners to make payments, even when those payments are in dispute–so long as the lien was filed as Ohio law requires. But what Ohio law giveth, Ohio law also taketh away. The law also provides homeowners with many different tools to remove the lien or punish the contractor.
As always, before taking action, you should first consult with an attorney about your specific options and rights–some of these may be better than others in your situation, and some may not be available to you.
There are at Least Seven (and Really more) Steps to Follow When Looking for a Home Builder or Contractor to Work on Your Home
Clients and the public frequently ask “what should I have done differently,” or “what should I do to make sure I’m protected from a bad contractor.” The truth is there is no perfect, sure-fire way to ensure your contractor will be perfect. There is no guarantee. There is almost never a perfect project, either. However, there are some steps you can take so that you can find comfort in the fact that you did everything you could do.
STEP ONE: MAKE A LIST OF POSSIBLE CONTRACTORS
Before you even meet with a builder or contractor, you should make a list of possible companies you could hire. Instead of looking online or in the phone book first, many people suggest starting by asking the people you trust. Your family, friends, and neighbors probably have recommendations for contractors they have used and liked. If they don’t, you can check with other companies you know and trust that work with contractors. But don’t stop there: you can check with local building supply stores to see if they know good contractors that pay their bills. Add these contractors to a list.
STEP TWO: RESEARCH YOUR CONTRACTOR LIST
Once you have made an initial list, start looking these companies up. Do they have websites? Do they file a lot of mechanic’s liens (check the county records at the Recorder or Fiscal Officer websites)? Do they get sued a lot or sue their customers a lot (check the county court records for the courts around you)? How are their BBB, Angie’s List, Yelp, Google, Facebook, or other reviews? Do they have complaints? Do the complaints sound legitimate? Did you see anything that immediately makes you reconsider even thinking of them? Do they have a lot of complaints against them in the Attorney General’s office?
Most importantly: are they a licensed or registered contractor? A lot of this information can be found online. You should also check with your local building department, or if the contractor is a plumber, electrician, HVAC, mechanical, or other specialty trade, check for their licensed with the Ohio Construction Industry Licensing Board (or your state licensing board, if you live outside of Ohio). Demand to know their state license number.
Contact your local building department to see if they can verify the information (remember: they will only be able to do so if they are registered with the City at that time). Any plumber or electrician should be working under a state license, and should be able to tell you their number. General contractors, carpenters, and roofers do not currently have state-wide licensing in Ohio, but all contractors should be registered with your local building department. Remember: contractors and builders can register with the building department after you talk with them, as well.
Use this information to make a shorter list.
STEP THREE: TALK TO THE CONTRACTOR
Once you’ve done your research, consider calling the contractor to ask them questions. Ask them about the issues important to you, but consider including:
- Do they do the type of project you want to have done?
- Have they done projects as big (or small) as yours?
- Are they willing to provide references from the business they buy from (material suppliers)?
- Will they show you examples of previous work and let you talk to previous customers?
- Do they have time to get your project done when you expect it to be done?
- Do they use subcontractors or employees? How long have they worked with them?
- Do they offer a written warranty? (There are often automatic warranties in Ohio under the law, but sometimes written warranties are provided, too.)
- Are they insured, do they have workers compensation coverage, and can they get a license and bond in your city?
There are many other questions to ask, but this is a good start. From this, you have a better idea whether the company is available to do the work, if they are financially secure and responsible, if they are reliable, and if you like the personality of the contractor. Financial stability is critical. We have seen far too many clients left high and dry (or low and wet with water-filled basements) because their contractor didn’t have enough money to do the work, or used our clients’ money to pay for other projects, like a Ponzi scheme. You should again re-evaluate your list.
STEP FOUR: MEET THE FINALISTS
After the you arrive at your short list, pick a few contractors to meet with, and ask them for an estimate. You may find some of the contractors arrive late, or not at all. Some may never get you a written estimate. Ask them more questions, like where they currently doing work, and make it a point to drive by or visit that project to see how it’s moving along and looking. Make sure you are comfortable with the contractor and feel like they listen and take your concerns seriously. Depending on the size of your project, you will be working with them a lot, and communicating a lot of information to them. First impressions mean a lot. If your “gut” tells you to avoid someone, listen to it.
STEP FIVE: IGNORE THE LOW BID OR LOW ESTIMATE
This is so important that it gets its own step, and not just a mention in Step 4. Everyone wants a deal, but often in construction the lowest estimate is low for a concerning reason. We often see clients who hired a low-bid contractor and later find out the contractor left out a lot of the work that needed to be done, couldn’t do the work (and therefore could not estimate it accurately), or wants more and more money to complete the job. While the most expensive estimate may not be the best, in our experience, it is more often true that you get what you pay for.
We have sued the high-bid contractors before for violations of Ohio law, bad work, or misrepresentation, but it is more common that we sue the low-bid contractors and builders. Please do yourself a favor and ignore the low-bid. Otherwise you might be setting yourself up for more problems later.
If you are using a Cuyahoga County, or other government financial assistance program, to finance the work or pay for some of the work, they may force you to use their contractor–which will probably be the lowest bidder. Think twice, and demand to have a say with the County or governmental program when they pick your contractor.
STEP SIX: DETERMINE THE FINAL SCOPE OF YOUR PROJECT
Now that you have a general idea of proposed cost, and you have narrowed your contractors down to just a couple that you trust, you need to determine what exactly you want them to do. Some contractors have relationships with architects or designers and can get the drawings, prints, plans, specifications, and scope written up for you. Others will want you to handle this on your own. Regardless of the route you take, make sure you get the drawings and specifications in writing as to everything you want done, all the way down to the specific model or price range for appliances or specialty items. If you want a room painted a specific color, put it in writing. If you want your floor boards screwed and glued instead of nailed, put it in writing. If you don’t want builder-grade windows…you get the picture.
This step may cost you some money. Some contractors will provide design details for free as part of their estimate, while others will expect compensation for pre-construction services. If you are expected to pay for it, get that agreement in writing. Once you have the specific scope of the project, you can actually compare apples to apples with bids and final estimates for your last two or three contractors.
STEP SEVEN: PUT YOUR AGREEMENT IN WRITING
Never hire a contractor on a handshake or oral agreement. It’s dangerous, it leaves a lot of room for miscommunication and misunderstanding, and it’s generally a bad idea. Many contractors are required by law to put your contract and agreement in writing. You’ll want to make sure the contract includes or “incorporates” the drawings and specifications that detail the full scope of the work. If your contractor made any oral promises to you, including warranties, make sure they end up in writing in the contract. Things that you want to make 100% sure are in your contract are:
- the contract price;
- incorporation of the scope of the work and materials;
- payment terms and payment schedule (avoid cost-plus or unlimited/unknown cost contracts);
- requirements that the contractor give you lien releases from them and subcontractors at the exact same time you give them payments;
- estimated or initial completion date;
- all oral promises or representations that were made to you before you sign the contract (and after);
- a description of your cancellation rights;
- a requirement that any changes to the scope or price need to be agreed to in writing signed by you;
- a statement that your contractor is responsible for all permits, licensing, and registration required by law;
- proof of insurance;
- a list of all subcontractors if any are going to be used.
Is this a complete list? No. But it’s a great starting point, and if all of these terms are included, you can feel more comfortable that your are dealing with a responsible contractor–or at least one that you can actually hold responsible later. Make sure you are given a copy of the contract the exact time that you sign it, along with all changes made to it. If they can’t give you a copy there, take a picture with your cell phone of every page, including any changes you made to it.
There are also things you want to absolutely avoid in your contract. If you see them, ask that they be removed before you sign it, or cross out the sections before you sign it:
- attorney fees if the contractor has to sue you to collect money;
- unreasonable interest rates;
- arbitration clauses;
- liquidated damages (unless they are in your favor only);
- any waivers of warranties or rights or remedies;
- any choice of court venue (i.e., location where lawsuit must be filed) which is far away from you;
- anything that allows changes to be made or costs to be added without your prior written approval.
If anything changes after you sign the contract, make sure all changes that you agree to are in writing, and signed by you, before any change is actually made to the work or price. Demand that all change orders be in writing. Demand estimates for any increased or changed work be in writing before you agree to the extra cost. If promises are made to you for free or no-cost extra work, get that promise (and the fact it is free) in writing.
There are many other steps to follow before letting work start or before making final payment to your contractor, but these steps will put you in as good a position as any for moving forward.
A contract is just a deal. You enter contracts every time you buy something, whether you buy a home, a car, construction services, or a lemon. If you work for a business, you may end up making contracts without even realizing it through talking over the phone with people who buy or sell things from or to your business. Because we all frequently deal with contracts, it’s important to understand some common and commonly misunderstood technical legal words that are associated with contract law. If you read the fine print in a lot of consumer contracts, chances are you’ll see at least one and maybe all of these big three words.
Arbitration clauses are very common today. If you agree to “binding arbitration” or “final arbitration” in your contract, then you are generally agreeing to resolve legal problems that come up without going to Court, seeing a judge, or having a jury trial. The arbitration process involves you and the other party to your contract sitting in front of an arbitrator, a person who decides your case, who may or may not be a lawyer or trained in the law. The arbitrator could be another business owner. The process is quick and costly for consumers, with very few rights or protections you would normally find in court.
Arbitration has some pros and cons. The good aspects generally help businesses, the bad aspects generally hurt consumers. On the plus side, arbitration is faster and almost always cheaper than going to court, at least for the business. But it is usually more expensive for a consumer. A construction arbitration under the rules of the American Arbitration Association could cost a consumer as much as $6,000 to file, even though filing a lawsuit costs only $250 or $300. Arbitration limits some remedies the law might otherwise give you. You cannot appeal to a court or another arbitration panel simply because you do not like the decision, meaning the result is quick, but many times not painless. Arbitration also eliminates discovery that happens in court cases, where each sides exchanges relevant documents in their possession, that could help make or break your case.
As a consumer, you should always read the contract. If you see an arbitration clause, stop and ask questions, see if they will negotiate it away, or cross it out entirely before you sign it. Don’t sign it and then ask about it—that may be too late.
DISCLAIMERS OF WARRANTIES
Many contracts for the purchase of property, such as cars, homes, and boats, include a term disclaiming all warranties. Sometimes you will see this in ALL CAPS in the agreement. Otherwise you will see the words “as-is” or something similar. A disclaimer of warranty tries to eliminates protections you otherwise would have, like that the work would be performed in a good and workmanlike manner, or that the products and materials will be fit for their intended use. These warranties are usually not allowed to be waived under Ohio law, but it won’t stop a contractor from trying. This can really cause you problems in a contract.
Do not sign a document that says you are waiving your warranties, or no oral warranties or promises were made to you, unless you note on it the oral warranties that were made to you, and the seller agrees to include them. Otherwise, you could run into a problem later.
When someone fails to comply with a contract, that contract might include “liquidated damages” which state how much the party breaching the contract has to pay the other party. A liquidated damages clause is supposed to reasonably predict the amount of damages that would occur. It might say that, if you try to get out of a home improvement contract, you forfeit your down payment or agree to pay money to the contractor. Sometimes, these liquidated damage clauses are penalties and are not enforceable and not valid under Ohio law. Other times, they are perfectly reasonable and enforceable.
Courts will usually find liquidated damages clauses fair and enforce them. However, if the amount seems to be outrageous under the circumstances, such as a $1,000 liquidated damage for not paying your $450 payment on time, an attorney can argue that the court should not enforce the clause because it was too one-sided and really acts like a penalty, which courts will not enforce. You should be in the lookout for these clauses in all types of contracts, like car financing agreements, construction contracts, rental agreements, and even employment contracts.
Before you enter into any contract, depending on the money and risk involved, it’s usually a smart idea to have an attorney look things over. If you’re already a party to a contract and the other side claims it is protected by an arbitration, disclaimer, or liquidated damages clause, you should contact an attorney before it is too late.
When you engage in a remodeling or repair project, there are a lot of details to worry about, and a shortage of people able to help you discover what you need to know. Whether you are overwhelmed, shy, trusting, inexperienced, or simply the type of person that goes-with-the-flow, you need to approach hiring a contractor, allowing work to start, and paying your contractor, proactively.
There are at least seven things you need to force your contractor to show you before you allow them to do any work, and well before you pay any down-payment or deposit. If your contractor can’t show you these seven things, you need to show them the door (until they can come back with the proof).
FULLY SIGNED CONTRACT
If you’ve read our prior articles on steps to take before hiring a contractor, you know your contractor should be using a written contract for your home repair or remodel project. You and your contractor should sign that contract. But simply signing a contract and giving it to your contractor isn’t enough.
We’ve seen many situations where clients sign a contract, and are never given a copy, or are given a copy at the end of the project with alterations apparently made. In order to prevent misunderstandings about what is going to happen, what materials are going to be used, or when you are supposed to make payments in what amounts, make sure your contractor gives you a copy of your contract before any work begins or payment is made.
Don’t settle for a blank version–-you want a copy of the signed version, signed by you and your contractor. In Ohio, when a home improvement or residential repair project costs less than $25,000.00, your contractor is required by law to provide you with a copy of the signed contract at the time it is signed.
THE PERMIT (WHEN REQUIRED)
Not every project requires a building permit from your city or county building department. Most larger projects, and projects involving roofing, electrical, plumbing, or structural work, usually require permits. If your contractor tells you that no permit is needed, it’s a good idea to call your building department to tell them the scope of the work and ask them if one is required or not.
Never agree to pull the permit in your own name. Your contractor is doing the work, so your contractor should be legally responsible. If you obtain the permit, you may be criminally and civilly liable to correct any deficient work instead of your contractor, and your failure to timely do so could put you in jail.
If your project requires a permit, or your contractor tells you they will get all necessary permits, ask for copies of the permits before you make any substantial payments (more than the permit cost) and before work begins. Permits should be posted at the job site anyways, but if you don’t see it posted, you need to ask about it. Many consumers have paid contractors many thousands or tens of thousands of dollars just to find out that no permit was ever pulled, carpenters were doing complicated plumbing and electrical work (poorly), no work was ever inspected, and now they have to pay someone else more money to fix the mess.
Request the permit from your contractor and make sure it is posted on site. Make sure the contractor that obtained the permit is the same one that you hired (for building permits). That said, electrical, HVAC, and plumbing permits will usually be obtained by (and other the name of) the subcontractor for that work, because they require a special license.
RECEIPT FOR THE PAYMENT (ESPECIALLY A CASH PAYMENT)
If your contractor is asking you to make any payment, you must be given a receipt. This is especially important for cash payments (which are not the preferred method of safely paying a contractor). If you are going to hand over a check or cash, you need proof from your contractor that he or she received it.
We have sued contractors who claimed that they never received cash payments made by our clients. If there is no proof of the payment, it turns into the homeowner’s word against the contractor’s. This is a bad position to be in at trial. Demand that the contractor give you a dated, written receipt showing the amount you are paying, the previously payments, and the balance left to be paid on the project. Don’t give them the payment until they have a receipt ready for you.
APPROVED DRAWINGS AND PLANS
When permits are required, contractors may have to submit drawings or plans for the building department, engineer, city/county architect, or zoning board to approve. Often, this is the first step to getting a permit issued. These drawings, like the permit, should be at the job site at all times.
If you hired a contractor to build a new home addition, build a new home, remodel a bathroom, finish a basement, or fix up your kitchen, demand that the drawings or plans be produced to you before you allow anything to begin. We’ve seen contractors fake their permits, trying to fool the consumer into believing that a permit was obtained.
If your contractor is building a new addition or taking out some walls, etc., requesting the approved drawings or plans can help you double-check that the permit is authentic. These drawings and plans, when approved, are often stamped by the city or county official in charge of approving them.
PROOF OF INSURANCE
In order to make sure your contractor is official, and can afford to compensate you if they damage your home during the project, you need to make sure they have insurance. While insurance does not cover correcting bad work, it can cover damage done to your home by your contractor. On far too many cases we have handled, contractors had signed up for insurance, just to get the insurance certificate needed to register with the building department, and then fail to pay their premium, resulting in the insurance policy being cancelled.
You want to make sure your contractor (1) can show you proof of insurance, and (2) prove to you that premiums have been paid, especially if the policy is less than 30 days old. The Certificate of Insurance form will show the effective dates of the insurance. If the beginning date is less than 30 days or so ago, it would be wise to ask your contractor for proof or payment of the premium.
Cities are supposed to receive notice when a contractor’s insurance is cancelled, but not all insurance companies or agents provide that information, and not all cities actually take note of changes.
CONTRACTOR REGISTRATION OR LICENSING
It’s not enough that a contractor has a business registered with the Ohio Secretary of State. You need to make sure your builder or repair contractor is registered with the local building department, and if necessary, licensed with the state OCILB.
Just like insurance, it’s important to make sure your contractor is registered or licensed to do the work they claim to be able to do. You should ask your contractor to show you their registration for your city/county. Some cities do not have building departments, and sometimes county building departments oversee registration for all communities in the county. Rarely, a city, county, or other area will not require contractors to be licensed or registered. If your contractor doesn’t want to show you their registration, or says “I don’t need to be registered,” call your local building department to check. If your building department requires contractors to register (that’s the norm), then make sure they can show you their license or registration. If they are an electrical, plumbing, HVAC, or mechanical contractor, you can also ask for their Ohio Construction Industry Licensing Board (OCILB) license number, and you can verify that they are legitimate online.
If the license or registration doesn’t match your contractor, you need to address that before the project starts. If your contractor is having someone else pull permits for them, that is a red flag. Who is actually responsible? Who are you actually hiring? Are they illegally working under someone else’s license? Why? If they are registered with your city/county, and your city/county is an area that requires a bond, proof of the registration will also mean they likely have the legally required bond. But again, not every city or county requires a bond.
ESTIMATED / EXPECTED COMPLETION DATE
This is often overlooked by consumers. Once you get a signed contract, you have the permits, and you have a competent, licensed contractor working for you, you expect that the project will begin to move forward. But you may find yourself waiting for months and months with broken promises about the start of the project, how long it will take, and you may receive requests for more money before the project starts.
Your contractor should be giving you, in writing, an estimated date by which they plan to have the project completed. If this isn’t in your contract, you need it in another document, provided to you and signed by the contractor after your contract is signed. Better yet, insist that the date be handwritten or printed on the contract as “Estimated Completion Date.” Things change, projects evolve, and mother nature gets in the way, but you should know what the plan is, and where in line you fall, so that you don’t have to deal with being put on the back burner while your contractor works on larger, more profitable projects.
This isn’t any exhaustive list of things to ask for or steps to take, and it won’t guarantee that you are 100% protected or safe. It will, as a practical matter, protect you from a lot of different, and very common, problems that arise on home improvement projects.
You should contact our experienced consumer law attorney Dan Myers as soon as you know you are having problems with your contractor.