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SELECTING A CONTRACTOR

It’s an important decision. when deciding to have someone do work on your home.  In a metropolitan area, there many different types of contractors.  Here are a few pieces of advice and some good information about the types of contractors and how to protect yourself.


The Price Points of Construction Labor

There are numerous options when hiring someone to do construction work at your home.  These options include everything from the neighbor’s kid to a multi-million dollar corporation.  It’s important to know the differences when making your decision.  While the best way to divide them is by quality of work, the simplest way to divide the different types is by how much they charge.  Some people in each category may try to charge more than is normal for their type of business, but will rarely be able to charge less without losing money or cutting corners on quality.


There are 4 general price ranges:

$10-20/hr.  Day-laborers.  

The neighbors kid, the guys in front of 7-11, and other helpers that you pick up, drop off, and buy lunch for them.  Usually don’t have their own tools, or have very few.  Can be a good deal, if you find the right ones.  The wrong ones may cost you a lot of money.  You still have to pay them, no matter the quality of work.

$45-75/hr.  Unlicensed Contractors.  

Half the people on Craigslist and many of the smaller construction companies.  They have their own tools and may even look like a professional construction company.  Most don’t offer a warranty, but if they do, I wouldn’t count on them returning to fix anything.  Many claim to be licensed and insured, because they know you will never check.  If they admit they are not licensed, then there may be some low risk work they could do for you, like interior painting or landscaping.  If they claim to be licensed and aren’t, then you probably don’t want to hire them.  If they are going to start with a lie, then they aren’t the type of person you want in your home.  

$85-125/hr.  Some Licensed Contractors.  

Many construction contractors are smaller companies, with lower overhead than the bigger companies.  Many offer great work, for a fair price, with a warranty.  Since they are smaller companies, it may be days or weeks before they can fit you in, so plan ahead.  Beware of construction companies that use subcontractors.

$99-145+/hr.  Larger Licensed Contractors and Some Specialty Contractors.  

Usually charge the highest rates.  They have many employees/subcontractors, so they can usually have someone out to your house within a day.  More likely to offer 24-hr emergency services, too.  Beware of construction companies that use subcontractors.


Construction Licensing in Virginia

Every state has their own laws governing construction work, and usually more specifically governing work on a residence.  These laws are made to protect homeowners and the community from bad quality work and scams.  To check a contractors licensing, visit - http://www.dpor.virginia.gov/regulantlookup  


In Virginia, a Contractor’s License is required for anyone bidding on jobs in excess of $1,000 and completing more than $10,000 of work in a year.

There are three classes of licenses:

Class C: if the project is over $1,000 but less than or equal to $10,000.

Class B: if the project is over $10,001 but less than or equal to $120,000.

Class A: if the project is over $120,000.

Each license has one or more specialty Endorsements on it that tells what type of work the license covers.  These include HIC – Home Improvement Contractor, BLD – Building, ESC – Electronic/Communication Service, ELE – Electrician, etc.  A full list can be found on the VA DPOR website.


In addition, each county requires a Business License for a business located in it and any business doing more than $20,000-25,000 (depending on the county) per year in business in the county.  Fairfax County also requires a Fairfax County Home Improvement License if a contractor has a Virginia Class C Contractors license with Home Improvement, ('HIC') or Building, ('BLD') as their specialty.


Construction Licensing in Washington DC

In Washington DC, a Home Improvement Contractor’s License is required for anyone bidding on jobs on a residence, in excess of $300.  A Home Improvement Salesperson’s License is required for anyone selling these services.  They must show you their DC government-issued Home Improvement Salesperson Photo ID upon request..  To check a Contractors licensing in Washington DC, visit - http://cpms.dcra.dc.gov/BBLV/default.aspx


Any trade contractor (Electrical, Plumbing, HVAC) must be licensed to conduct any work related to these trades.  To check a trade contractor’s license, visit -

Electrical             https://www.asisvcs.com/services/licensing/DCOPLA/search_page.asp?CPCAT=3609STATEREG

Plumbing             https://www.asisvcs.com/services/licensing/DCOPLA/search_page.asp?CPCAT=4909STATEREG

HVAC                 https://www.asisvcs.com/services/licensing/DCOPLA/search_page.asp?CPCAT=RA09STATEREG

    * If these sites don’t seem to work in Internet Explorer with Windows 8, then go to Compatibility View Settings in the Internet Explorer menu and Add this website.


Problems With an Unlicensed Contractor

The choice between hiring a licensed or unlicensed contractor can be a tough one.  Every one wants to save money and that lower bid from the unlicensed contractor can seem pretty tempting.  But is it really a good deal?  Considering the risks you will assume and the lack of guarantees, even paying half the cost of a licensed contractor isn’t a good deal.  If anything goes wrong or they don’t finish something, then you don’t have much recourse.  

Call the police?  Unless they took your money over a month ago and haven’t done any work or contacted you, then you will be told it is a civil matter – they can’t do anything.  They might even charge you with a misdemeanor for hiring an unlicensed contractor, which is illegal in some areas.

Contact the government?  If the contractor was licensed, then you could receive up to $40,000, from a state fund, to reimburse your loses.  Also, the contractor could face fines, disciplinary action, and/or loss of their license.  If the contractor wasn’t licensed, then there is nothing they can do for you.

Sue them?  Try spending a lot of time and money to get a judgment which you can’t collect on, because what little they do own is protected by the Homestead Exemption.

Contact your Homeowner’s Insurance Company?  Some would think that their Homeowner’s Insurance Company would help.  Better read that policy – it’s much worse than you think!  Not only are they not going to help with recouping your loses or paying for any repairs, they may cancel you and refuse to cover you until you can verify the repairs are completely properly, by a licensed contractor. **

Threaten them?   Probably what you want to do after finding there is nothing else you can do, but resist the urge – it won’t help either.


** Even worse, many Homeowner’s Insurance Policies won’t cover it if anyone gets hurts during or because of work by an unlicensed contractor.  If anyone, even the unlicensed contractor, seriously injures themselves the courts usually rule that the homeowner is responsible for injuries on their property.  Since the Homeowner’s Insurance Company doesn’t have to pay, it comes out of your pocket.  


Beware of Construction Companies that Use Subcontractors

There are two types of construction companies who use subcontractors.  Some General Contractors specialize in coordinating projects and keeping their group of quality, Licensed subcontractors busy doing the actual work.  They usually discount the amount you pay them by 15-25% and the subcontractor gets the rest.  Since the subcontractor doesn’t spend as much time and money acquiring projects, it works out for both parties.  Usually they have used the same group of subcontractors for years.  The General Contractor has a project manager, who is an employee of the company, who actually stops by and inspects the work of the subcontractors.  They often have some of their own employees to do some of the grunt work, like keeping the site clean and safe.


The other type of General Contractor is in the business of selling.  They get you to sign a contract and then advertise the project on Craigslist or some other way to get someone to actually do the work.  They keep 50-70% of the money you pay them and pass along the rest to the person doing the work.  Usually they don’t have any employees, except the ones doing the selling.  Often the subcontractors aren’t licensed or insured, and the General Contractor’s licensing and insurance doesn’t cover them.  Usually it’s the first project that subcontractor has done for the General Contractor and they only took it because they were slow.  They can’t believe how little they are making, are going to have to cut corners to not go broke doing the project, and if something else comes up that pays better, then your project gets put on hold for awhile.


The first type of General Contractor offers a good and valuable service.  Depending on your budget, the type and amount of work, this type of contractor can be a great choice.  Most of the time you will get work which is completed quickly and professionally, without any problems.  If there is a problem, then it will be fixed properly.  The second type of contractor gives the good ones a bad name.  They feed upon the ignorance of homeowners, and subcontractors who are desperate for work.  The homeowners pay way too much for the services of the General Contractor and the subcontractor makes too little for the work.  There is also a much higher chance of having problems with the quality of the work, long delays, and lots of additional costs.


So how does a homeowner protect themselves?  Before signing anything, ask if the people doing the work will be employees or subcontractors.  If you are told they are employees, then request the contract include a provision that everyone working on your project will be an employee of the company, no subcontractors.  This will protect you in case there is a problem and you find out later subcontractors were used.  If you are told they will be using subcontractors, then request name, licensing, and insurance information for each subcontractor.  Verify the information for each subcontractor.  These are both simple requests that any honest contractor would be willing to do.


Verify Your Contractor

When dealing with a Construction Contractor, always make sure you verify any information they give you.  There are so many people in this area who claim to be licensed and insured, but aren’t.  They know no one ever checks and it saves them thousands of dollars.  

There are 4 things you should do to verify each contractor:

1.  Ask for the full legal name of their business.  Unless they are using a Trade Name different from their legal name, this should be EXACTLY the same as is in their advertising, business cards, the name you write on the checks, etc.  

2.  Ask for their Contractors License #.  If they are using a trade name, then the Contractor’s License must be in the trade name.  Look it up on the appropriate website listed above.  And no, they can’t legally use their buddy’s license.

3.  Ask for their General Liability Insurance information.  At least the insurance company name, phone number, policy number, and coverage amounts.  It’s best to have them give you a copy of the Declarations page from their policy packet, or even better, a Certificate of Liability from their insurance company..  Then call the insurance company to verify they are currently covered.  There are some people who pay for the first month, then stop paying and get cancelled, even though they have paperwork that shows they are covered the whole year.

4.  Ask for their Workman’s Compensation Insurance information (insurance company name and policy number).  If a business has more than two employees, then the business must have a policy.  Then look it up to ensure the policy is current -

Virginia              http://www.vwc.state.va.us/portal/vwc-website   

                          (under Online Services, go to Insurance Coverage Search)

DC                     https://www.ewccv.com/cvs/


The Contract

The final thing you can do to protect yourself is make sure a legal contract stating exactly what work will be performed is signed by both you and the contractor.  There are numerous things the Virginia state law requires in a contract for construction work including:

1. Start Date and the estimated completion date

2. Total cost, plus the amounts and schedule for down payment and progress payments

3. Listing of specified materials and work to be performed

4. Contractor's name, address, license number, class of license, and classifications or specialty services

5. Cancellation rights of the parties.

6. A "plain-language" exculpatory clause concerning events beyond the control of the contractor and a statement explaining that delays caused by such events do not constitute abandonment and are not included in calculating time frames for payment or performance.

7. A statement of assurance that the contractor will comply with all local requirements for building permits, inspections, and zoning.

8. Statement providing that any modification to the contract, which changes the cost, materials, work to be performed, or estimated completion date, must be in writing and signed by all parties.

9. For contracts resulting from a door-to-door solicitation, a signed acknowledgment by the consumer that he has been provided with and read the Department of Professional and Occupational Regulation statement of protection available to him through the Board for Contractors.


DC has similar requirements for contracts.  In addition, read the fine print.  Make sure the payments for a flat-rate contract are based on the completion of specific stages of work that can be clearly determined and not by date.  Make sure to note the cancellation policy, and costs for rescheduling and delays.  These should be reasonable to cover the costs of the Contractor.  Some contracts will charge outrageous amounts or may even require full payment whether they do the work or not.