- Good sources for locating contractors include referrals from friends or relatives, yellow pages advertising and newspaper, radio and television advertising.
- Be sure the ads contain the contractor's state license number. If the contractor is not licensed the law requires the contractor to state "not a licensed contractor" in the ad. The contractor's ad should also show the contractor to be insured and bonded.
- Compile a list of contractors that you would wish to contact.
- With your touchtone phone, dial the State Contractor's Board computer 1-800-321-2752 to pre-qualify the contractor. It is a swift and simple process to determine the validity of a contractor's license. You are guided through the process and can check up to three license numbers with one call. Now it is even easier to check a license. Go to the website CSLB, click on "Check License by the State License Number". This brings up a myriad of information concerning the contractor you are considering for an estimate. It tells you where the contractor lives, gives you the bonding information, when the license was issued, and whether or not the contractor has Workmans' Compensation Insurance on his/her employees. You can determine if the business is a Sole Proprietorship, a Partnership, or a Corporation. You can also click on "Business Personnel" to determine who the principals of the business are and what trades they are licensed to perform (you would not want a painter to wire your home). Any person not listed on the personnel list is an employee and should be covered by workmens' compensation. According to the state board, at least 60% of licensed contractors have opted out of workmens' compensation by sending an affidavit to the state board stating they have no employees. If they bring help to your home they are not covered by workmens' compensation.
- Certificates of Insurance: You should ask the contractor to supply certificates to protect you completely.
- Liability Insurance: This insurance is not required by law. It protects both the homeowner and the contractor for damage done to the premises by the contractor or contractor's employees. A contractor with "nothing to lose" will probably not have this coverage. Responsible contractors will.
- Workers' Compensation Insurance: Since 1993 the law requires contractor's to carry Workers' Compensation Insurance. A certificate of insurance is required to be on file with the Contractor's State License Board. If this coverage is interrupted the contractor's license can be suspended or revoked. Workers' Compensation Insurance covers medical bills incurred by an injury to a contractor's employee or employees while on the job. Your homeowner policy is not required to pay for these injuries.
Personal Health Insurance: Required by owners or partners in a business not incorporated. Workmans' Compensation Insurance covers only the employees of a company, not the owners. An uninsured owner of a contracting business, if injured on your property, could file against your homeowner's policy. Your policy may not cover these individuals. Contractors can operate legally without Workmans' Compensation.
Insurance if they file an affidavit with the State Contractor's Board stating that they will not be hiring employees. In this case, be positive that your prospective contractor works alone and ask the contractor to produce proof of health and accident insurance to cover any injury to the contractor.
- Bonding Information: Ask your prospective contractor to supply you with the name and phone # of the contractor's bonding company and the bond number. If the contractor hesitates to supply this information or does not answer your questions satisfactorily you have the option of terminating the phone call without disclosing your name, address or telephone number. Invite the contractor who appears legitimate to make an appointment to see the work. It is important to pre-qualify your contractor. You need to be assured that the individual coming to your home is legitimate. It is best to err on the side of caution in this day and age.
- NOTICE - "Under the Mechanics Lien Law (Civil Code, Sec. 3110 et seq.) any contractor, subcontractor, laborer, supplier, or any other person who helps to improve your property but is not paid for his work or supplies, has the right to enforce a claim against your property." This means that, after a court hearing, your property could be sold by a court officer and the proceeds of the sale used to satisfy the indebtedness.
Even if you pay the contractor in full, if the contractor does not pay the parties listed in the Mechanics Lien Law, those parties can file a lien on your property. The law does not state who pays these parties simply whether they were paid or not. Labor and material releases are very important to a homeowner. Demand them!
Labor and Material Releases:
These forms are submitted to you by the contractor. The labor release is signed by the contractor's employee. The material release is signed by the material suppliers. These relinquish the right to file a Mechanics Lien on your property and those who signed the release thereby relinquish their lien rights by stating that they have been paid by the contractor for their improvement of your property.