Realty.com » Resources and Services

Login • Register

Resources and Services

Consumer Guides

Why Financial Background Checks Are Important

Good credit is one sign of a company’s financial health and stability. You can talk with subcontractors and suppliers regularly used by the contractor. Ask if the contractor paid them on time. Ask if they’ve had any problems dealing with the contractor or if they feel the contractor’s credit is good. If a subcontractor or supplier reports any problems with the contractor, you may want to think twice before hiring the contractor.

If a contractor fails to pay the subcontractors and suppliers, they could go to court to force you to pay for any unpaid bills from your project, possibly even forcing you to sell your home. One way to protect yourself from this action is to ask the contractor and every subcontractor and supplier for a lien release or a lien waiver. For more information on liens, ask a local consumer agency for an explanation of lien laws in your area.

Insurance

If a contractor does not have the appropriate insurance, you may be held liable for any injuries or damages that occur during the project. General liability insurance, worker’s compensation and property damage coverage are particularly important. If workers are injured on the job, the contractor’s insurance will cover their injuries, and you won’t be held liable. Insuring your project can provide safeguards not only to prevent liability but also to protect you against errors and omissions and breaches of warranties. For example, without insurance, if the service professional orders supplies and fails to pay for them, you will have to pay the bill to the suppliers even if you’ve already paid the service professional for the supplies.

Homeowner’s insurance may provide further protection. Read your homeowner’s policy carefully or ask your insurance agent. If faulty workmanship leads to problems, your homeowner’s policy may not cover damages.

After signing a contract, contractors should notify their insurance agents and have an insurance certificate mailed to you. The certificate will show active insurance for that contractor.

Bonding

A bond provides additional protection to a homeowner. To obtain a license, some states require that contractors post a bond. A bond is basically a piece of paper a contractor buys from a bond company that is worth a specific amount of money. If a contractor fails to complete a job, a homeowner can turn to the bond company and attempt to collect the bond fee due to nonperformance.

In addition, a homeowner who sues a licensed contractor for faulty work can sue the bond company. This is particularly helpful in cases where the contractor is insolvent or has gone out of business.

Although a bond may only provide minor financial protection (many states have minimum amounts for bonds, such as $5,000), it is still another avenue homeowners have for financial protection if things go wrong.

If a contractor is not bonded and abandons a job, the homeowner may not be able to recover any expenses.

More Popular Entries

Additions & Remodels

Stylish Basement Remodels
Checklist: Recommended Questions to Ask a Contractor
Home Improvement Trends

Agents (Real Estate), Appraisers & Home Inspectors

Townhouses
The Final Walk Through
Bringing it all Home—the Closing

Appliances

Garbage Disposals
Tip: Dishwasher
Tip: Instant Hot Water Dispenser Problems

Builders (New Homes), Architects & Designers

Small Feng Shui Tips
Checklist: Questions to Ask Your Architect
Tip: Water Seepage

Carpentry & Cabinets

Tip: Built-In Desks
Different Sized Cabinets
Cost and Quality of Kitchen Cabinets

Cleaning Services

Cleaning Asphalt Shingle Roof
Checklist: Get Your Home Ready for Spring
Musty Smell in Attic

Concrete, Brick & Stone

Tuck-pointing
Concrete Sawing
Retaining Walls

Consumer Guides

Townhouses
The Final Walk Through
Bringing it all Home—the Closing

Design Ideas

Herb Gardens
Illuminate Your Kitchen
Building a New Home

Electrical, Telephone & Data

Illuminate Your Kitchen
Checklist: Electrical Wiring Project
Upgrade for the Future

Expert Advice

Refinishing a Peeling Porch
Cleaning Asphalt Shingle Roof
Frozen Pipes

Flooring

Choosing the Best Carpet for Your Home
Steam Cleaning Grout
Cleaning Hardwood Floor Inlay

Handyman Services

Checklist: Biyearly Maintenance
Checklist: Fall Maintenance
Do-It-Yourself Compared to Hiring a Pro

Heating & Cooling

Tip: Ceiling Fan Solutions
Air Quality
Checklist: Cold Weather Survival Tips

Home Construction

Do Homework Before Building a New Home
Tip: Panelized Homes
Building a New Home

Landscape, Decks & Fences

Checklist: Spring Maintenance
Refinishing a Peeling Porch
Herb Gardens

Moving & Storage

Remodeling Increases Value
Preparing Your House for Sale
Checklist: Increase the Potential Sale Price of Your Home

Other Services

Radon Testing and Abatement
Disability Elevators
Tip: Mildew on Wood

Painting & Staining

Fun Painting Techniques
Interior/Exterior Painting
Peeling Paint

Plumbing

Frozen Pipes
Water Damage
Loss of Pressure

Quick Tips

Checklist: Spring Maintenance
Checklist: Biyearly Maintenance
Checklist: Fall Maintenance

Roofing, Siding & Gutters

Helpful Roofing Terms
Roof Treatments
Comparing Aluminum to Vinyl Siding

SP Feature Article

The Internet Will Change the Buying of Services

Walls & Ceilings

Paint Over Paneling
Nicotine Stains on Walls and Ceilings
Repair Small Hole

Windows & Doors

Tip: Door Problems Solved
Awnings
Checklist: Home Safety

copyright 2008 Realty.com