Contractor Hiring Tips

Contractors on home construction project

The State of California Contractor's State License Board has helpful guides to the "dos and don'ts" and legal considerations of hiring a contractor.

It is far better to find out as much as you can about a contractor before you give them a large chunk of your money and let them tear open your home.

Here are a few rules you should follow when hiring any contractor to perform work. These rules are designed to protect you and your contractor from any misunderstandings.

Check the license with the CSLB

The first step before considering any contractor is to check the status of their contractor's license.

Get the license number and enter it at the CSLB website's License Check page.

Be sure the contractor has a valid license, insurance, and no unresolved issues. 

Checking references and getting bids

Depend upon references when selecting. Ask friends, neighbors, relatives, and co-workers for references. Ask for references from the hardware or building supply store. Talk to a Realtor.

Interview a minimum of three contractors and get bids from each.

Once you know their contractor license is valid from checking with the State of California's Contractors State License Board, check their references.

The three most important references a contractor can provide are a current client and the two most recent clients for whom they have performed work. Even good contractors can find themselves in financial trouble. You don't want them to use money from your job to pay the bills from their last job.

Here are some questions to use when interviewing the contractor's references:

  1. Was the job started on time?
  2. Was the job finished on time?
  3. Were there any surprises during the job?
  4. Was the job completed for the pre-agreed upon price?
  5. Did you find it easy to get in contact with the contractor while work was in progress?
  6. If you had to do it all over again, would you hire the same contractor?
  7. How did you handle changes to the original contract?
  8. Do not be afraid of asking a prospective contractor for several vendor references, too. Make sure you actually call the vendors and ask about the contractor's credit history with them. Good contractors have good credit and are proud of it!

Contract requirements help protect you

Insurance

Your contractor should have two types of insurance in order to protect you while the work is being performed on your property: 

  1. General Liability Insurance: This covers any accidental damage or injury that could occur on your property during the job. Your homeowners insurance will not suffice.
  2. Workers compensation insurance: This covers possible work-related injuries at the job site, which in this case is your home. California requires all employers, except sole operators, to have this type of insurance. When working with a "sole operator," there are very specific rules which apply for your protection. You may contact the CSLB to get information about such rules.

Written contract

Insist on a written contract that specifies brands, manufacturer's model numbers and all specifications which apply.

The contract should indicate the planned date of completion and include an agreement for the contractor and any sub-contractors to clean up after the project is finished.

Any special conditions you want should be included...after all, you're the boss!

Contract Changes

Once you have signed a contract, make sure all contract changes are in writing and signed by you and the contractor. Never rely upon verbal change order agreements.

Deposits and final payments

Contractor Payments

  • Be certain the contract includes a schedule of payments for the complete job.
  • Arrange contractor payments so the down payment, if any, does NOT exceed $1,000 or 10% of the contract, whichever is less (Cal. Bus. & Prof. Code, Section 7159).
  • Only pay for work that has been performed. Never pay in advance for materials or work. (Good contractors have good credit and can get their supplies.)
  • Remember, the payment schedule in your contract must be spelled out in dollars and cents - not percentages of the job!

Subcontractors & Suppliers

  • Do not make a final payment until you have seen written receipts for bills paid by the contractor, or written waivers providing he/she has paid for materials and labor on the completed job.
  • Even if you have paid your general contractor in accordance with the contract, if he/she fails to pay an subcontractor or supplier, you may remain responsible to those who perform work or supplied materials for your project. You bear the risk of having a Mechanic's Lien filed against your home, if you have received preliminary notice from any subcontractor or supplier.