A contractor can take care of that project in no time. But be sure to take care of yourself first. Most of us don’t deal in world of bids and liens — and what does it mean to be bonded and insured, anyway? We put together some good tips for Montana consumers before they hire a contractor. Take a look.

Important terms consumers need to understand before they hire a contractor:

  • Contractor liens – Under Montana law, you are responsible for the cost of supplies used to build or remodel your home, even if you have already paid the money to a contractor.  If the contractor buys supplies and uses them on your home but fails to pay for them, you will have to pay for them or the supplier will file a lien on your home.
  • Cost plus – Many contractors will offer to do a job at their cost plus a certain percentage as their profit.  Some contractors may abuse this type of contract by doing the work slowly to drive up the labor cost.

To protect yourself and make sure you find the best, most qualified contractor for your needs, follow these 10 tips:

  • Research your project. Before selecting a contractor, research the project so you know what the job involves. Your research should include:

    • what has to be done
    • the best way to do the work
    • the types and costs of materials that should be used

    You also may want to contact your local building inspector to find out what building permits are required for your job.

  • Get the names of several contractors. It is a good idea to get bids from several contractors. Friends and neighbors who have undertaken similar projects may give you the names of contractors they recommend. Trade associations, and hardware, building supply and home improvement stores also may be good sources of reputable contractors.

  • Check references. Try to get at least three references from actual customers, not just from people who know the contractor personally. Ask for the name of the contractor’s most recent customer.

  • Get written bids on your job. Get at least two or three written bids for your project. Never accept a verbal estimate. Prepare a detailed list of work that needs to be done and the materials required. Meet with each contractor about the bid. In order to protect yourself, ask the contractor these questions:

    • Is the business locally owned?
    • Does the contractor have a driver’s license. Get the name, address and driver license number for future reference.
    • How long has the business been established in the community? What is the permanent business address?
    • Will the contractor provide references? Get a list of names and phone numbers, and call them to check that previous customers were satisfied with the contractor’s work.

  • Compare bids. Carefully compare the written bids. Be sure each includes everything you want. The bid should serve as a starting point in your negotiations with the contractor. It is not necessarily the bottom line. Less reputable contractors may cut corners for low bids.

  • Make sure your potential contractor is registered. You can check online through the Department of Labor and Industry’s website. However, registration is not a guarantee of good work nor does it mean the contractor is bonded. If a registered contractor fails to complete the job or has poor workmanship, the state licensing board does not investigate it or provide compensation.

  • Check that the contractor has insurance. Make sure your contractor has liability and workers’ compensation insurance. Otherwise, you may be liable for injuries to workers or others on your property, including damages to personal property. Contact your insurance agent for more information.

  • Check that the contractor is bonded. If possible, use a contractor who is bonded. Ask to see the actual bond document and call the bonding company to confirm what it covers. A bond, which is an agreement with a third party, may be the only means to get compensation if your contractor fails to do the job or goes bankrupt after you have paid.

  • Get a written contract. The identification of the contractor, including name, business location and telephone numbers should be written into the contract. The contract should specify:

    • when the work will begin, how long it will take and what it will involve
    • the type, grade, quality and cost of the material to be used
    • whether subcontractors will be used and, if so, who
    • any guarantees and warranties
    • whether the contractor will obtain the necessary licenses and permits

  • Inspect the project and communicate with the contractor. Whenever possible, make sure all changes, problems or complaints (from you or the contractor) are recorded in a letter between you and the contractor. This helps to avoid confusion and safeguards both parties.

  • Beware of Con Artists. Home repair and improvement scams flourish in warm weather, or following severe weather or a natural disaster. Recognize the tip-offs to “fly-by-night” home repair or improvement swindlers, including:

    • arrival in an unmarked truck or van
    • door-to-door salespeople claiming “We’ve just finished a job nearby and have material left over so we can do your job for half the price.”
    • high-pressure sales tactics
    • refusal to give you a written estimate, contract or references
    • very low bids
    • ability to “start tomorrow” on your project

Quick Tips

  • Consider local, reputable contractors.
  • Don’t believe what you read in a contractor’s ad. Check yourself to make sure a contractor has the licenses, insurance and bonding claimed in the advertisement.
  • Ensure the contractor is registered. You can check online. However, registration is not an endorsement by the Attorney General, Secretary of State, Department of Labor and Industry, or any other governmental agency.
  • Try to avoid payment of advance fees.
  • Report suspected fraud to the Office of Consumer Protection.

OCP