Do homework before work begins on your home

The Minnesota Department of Labor and Industry (DLI) reminds homeowners to do some homework before hiring a building contractor after a storm ... or anytime.

"Most contractors are reputable. However, some unscrupulous operators may attempt to take advantage of storm victims," said Charlie Durenberger, DLI Residential Building Contractors. "Before hiring a contractor, call the Department of Labor and Industry to verify the contractor is licensed and to learn if there is a history of disciplinary action. And do not to sign anything presented by a contractor unless you read the document very carefully and have made a firm decision to hire that contractor. Generally speaking, if you sign a piece of paper, it is a contract, regardless of what the salesperson tells you, and you are then obligated to its terms."

In some cases, a salesperson for the contractor will explain the company will work with the homeowner's insurance carrier to get a good settlement and that the homeowner will not have to pay any more than the amount of their deductible. The salesperson will then ask the homeowner to sign an "authorization" form to allow the salesperson to contact the insurer. Many of the forms state that by signing, the homeowner agrees to have the contractor perform the work allowed by the insurance company in exchange for the insurance claim proceeds.

The homeowner may be left with the mistaken impression that they are still free to pursue bids from other contractors, even after signing the document. However, some of these contract forms contain small print (usually on the back of the document) that says if the homeowner cancels the contract after three business days, the homeowner will owe the contractor a percentage (usually from 15 to 50 percent) of the total claim settlement. This becomes a problem when the homeowner finds another contractor that they prefer to the original contractor.

DLI licenses residential builders, remodelers, roofers and manufactured home installers. To work in Minnesota, these professionals must be licensed. If you hire an unlicensed contractor, you will not have access to the Contractor's Recovery Fund, which is available to compensate consumers who have suffered losses due to a contractor's fraudulent, deceptive or dishonest practices.

Before you hire a contractor, DLI suggests homeowners ask:

• for the contractor's license number, then contact the Residential Building Contractors unit at DLI to verify the builder is currently licensed and to determine if the contractor has a disciplinary history;
• the contractor how long and where they have been in business;
• for references and check with former customers to see if they were satisfied with the work;
• for a Minnesota business address other than a post office box; and
• for a local phone number where the contractor can be reached during normal business hours.

Avoid contractors that:

• arrive in an unmarked truck or van;
• ask you to sign an "estimate" or "authorization" before you have decided to actually hire them;
• appear to be willing to do the job at an unusually low price;
• only provide a post office box for their business address;
• require full or substantial payment before work begins;
• refuse to provide you with a written estimate or contract;
• refuse to provide you with a state of Minnesota license number;
• refuse to provide you with references;
• show up at your door unsolicited; or
• use high-pressure sales tactics.

Before you sign a contract, make sure it includes:

• a detailed summary of the work to be done;
• a description of materials to be used;
• the total contract price or how the price will be calculated; and
• specific timelines and provisions that address what will happen if the contractor fails to meet the contractual deadlines.

What is the Contractor's Recovery Fund?

The purpose of the Contractor's Recovery Fund is to compensate consumers who have suffered losses due to a licensed contractor's fraudulent, deceptive or dishonest practices, conversion of funds or failure to perform. All licensed contractors are required to pay a fee to the fund.

The total amount that can be paid out against any one licensed contractor is $75,000. If multiple claims are filed against the same contractor they are prorated. In these situations, you may not be able to recover your entire loss. To better protect yourself, you may wish to request that your contractor obtain a performance bond for your specific project in case the contractor does not perform. A performance bond would provide a specific level of protection for your specific project.