Real-Life Contracting Disasters and How to Avoid Them

A home renovation can transform a tired house into a dream home. But unless you choose your contractor carefully, your dream can turn into a nightmare. Here are some disasters drawn from real life, as well as advice on how to make sure they don’t happen to you.

The grab-and-run
Patrick and Michelle wanted to build an addition on their home. The builder gave them a price of $105,000 and asked for $30,000 up front for lumber, drywall, plumbing and electrical supplies. The couple wrote the contractor a check -- and never saw him again.

As home improvement nightmares go, this is about as bad as it gets. Unfortunately, Patrick and Michelle made two big mistakes that left them vulnerable to this scam artist. Their first was failing to check whether the contractor was legitimate. Every state has different laws governing which contractors need a license. Check to see what your state requires and then contact the relevant authority to make sure your contractor is properly licensed.

Your next step should be contacting the Better Business Bureau to see if there have been any complaints against your contractor. You should also ask for references and follow these up with a phone call, or even a visit to see the work first hand. Ask the reference how the contractor dealt with problems, whether there were long delays, and whether the person would hire the company again.

Patrick and Michelle’s second mistake was paying far too much up front. You should not have to advance a builder for materials, since professional contractors should have credit with their suppliers. A small deposit is reasonable as it assures the contractor that you’re not wasting his time while you continue shopping around. But you shouldn’t pay more than about 10 percent, or up to a couple of thousand dollars.

The job juggler
Isabelle and Marc bought an older home and decided to upgrade the plumbing and electrical before they moved in. The contractor estimated the job would take 90 days, but it took almost a year, forcing the couple to put their furniture in storage and live with Isabelle’s parents for months.

Sometimes a contractor takes on more work than he can handle. That’s why it’s important to sign a contract that outlines when the work is to begin and the estimated time it will take to complete. If Isabelle and Marc had included their move-in date in the contract, they might have been able to sue to recover some of the expenses they incurred from the contractor’s incompetence.

One way to avoid delays is to put a payment schedule in the contract. Never agree to pay installments on a weekly or monthly basis -- only pay for work after it is completed. Contractors usually juggle several jobs, so if you pay them up front they may have less incentive to give your project priority.

Not all delays are foreseeable. An electrician or plumber working on an old home may not discover a major problem until after the wall has been opened or the fixtures removed. Remember, renovations sometimes bring unexpected surprises that can’t be blamed on the contractor.

The bait-and-switch
Bryan was invited to a barbecue by a neighbor who had just had a beautiful new deck installed. He hired the same company to build him a similar deck, but the contractor sent a couple of younger, less experienced workers who did only a mediocre job.

This can occur when a contractor gets busy and subcontracts some of his jobs. In other cases, a contractor may simply have several workers on the payroll, not all of whom are equally skilled. If you’re hiring a company based on a specific job that impressed you, make sure you let the contractor know. In this case, Bryan could have mentioned his neighbor’s deck and requested that the same crew build his own.

If you believe that a contractor’s employees did a substandard job on your project, call and voice your complaint. You can even hold back partial payment until the issue is resolved. Reputable contractors know how important it can be to get new business through word of mouth and should be motivated to ensure you’re pleased with their work.

Note: Names have been changed to protect privacy.