There are countless legal issues that will arise in the aftermath of Hurricane Harvey. This article is aimed at providing some tips and resources specifically for homeowners with property damage requiring repair. The first few weeks are about cleanup and recovery. After that time the repairs begin and that is when a lot of homeowners can get into even more trouble.
The unfortunate truth is that a lot of contractors will descend upon areas devastated by natural disasters such as this. The large volume of repair work needed combined with a lot folks in desperate situations is a breeding ground for fraudulent and criminal activity. Invariably, fraudulent contractors come in, steal money, and get out before they are ever caught. The homeowner ends up losing twice – once with the property damage and a second time with the money they thought they paying to have their home repaired. Those most at risk from these types of predators include the elderly, those with limited English skills, and those with low income.
There is no way to guarantee you won’t fall prey to a bad contractor. But here are some things you can do to increase your odds.
Tips to Limit the Risk that a Bad Contractor Will Take Advantage of you
- Be patient! It’s tough to do that when your home has been destroyed or suffered significant damage and you just want a safe secure place to live. But that desperation is exactly what bad contractors are hoping to take advantage of. So be patient throughout the process – don’t make quick decisions. Don’t be afraid to sleep on it or take a few days to think about a decision. Finding the right contractor that will work with you on many of the issues below may take a lot of time but spend that time. Believe me – you will regret your impatience if it leads to someone taking advantage of you.
- Always get multiple estimates. Never sign an agreement with the first contractor you come across. There can be significant differences in costs and estimates from one contractor to the next. Take the time to learn about the range of prices and the differences in the estimates (or contractor’s method of business) that account for those differences in pricing.
- Avoid paying the contractor significant money up front. It is not unreasonable for a contractor to require some form of down payment for supplies and materials when he starts work on your project. But it also is not necessary. It is certainly not necessary for the homeowner to put down a large fixed percentage of the total cost up front. Or worse – pay in full up front. If you have a contractor demanding you make such a payment – move on. If you have a contractor pushing you for a down payment so he can “put you on his schedule” – move on.
- Always have a written contract for the work. Never pay money to a contractor without a written agreement signed by both you and the contractor. The agreement should specifically state the scope of work that the contractor is responsible for performing and the price for that work. The contract should specify when payment is due – upon completion or periodically. If periodically, then the contract should set specific bench marks for the contractor to earn each periodic payment. More detail is better.
- Inquire whether the contractor will use employees or subcontractors. Make sure the answer is stated in the contract. If the contractor uses subcontractors, you must get lien releases from the subcontractors showing that the subcontractor has been paid in full at the time you make any payments. If you do not then you risk the subcontractors filing a mechanic’s lien on your home for the work they performed if you pay the contractor and he does not pay the subs. Make sure your obligation to make any payment is contingent on receiving those releases. Make sure the subcontractors are licensed, insured, and bonded.
- Home Equity Loans. You may need a loan to repair your property and this is not uncommon. However, do not allow the contractor to push you into that decision or “recommend” a lender to you. It is an all too common scam for a contractor to induce a homeowner into securing a home equity loan, then take the loan proceeds and leave with out performing any work. This leaves the homeowner with a loan payment, a lien on their house, no more equity, and the repairs still need to be done.
- Verify the contractor. This means check his license. Check his liability insurance. Check his workman’s compensation insurance. Check his Better Business Bureau rating. Is the contractor bonded? Ask for referrals – and contact those people. Verify the contractor’s address – a lot of contractors will chase storms from out of state. You are less likely to run into trouble if you work with a local contractor that has a long history of successful services in your area. If he is using subcontractors, ask for their credentials.
- Get a firm start date and time estimate. Then put it into the contract. It is not uncommon for the start date to slip a few days or even a week or two. But address that possibility in the contractor and secure a right to walk away from the contract if the contractor does not begin work on or before a certain date so that you are not stuck waiting. See #3 above – do not make any payment prior to the date the contractor actually begins work. Also – get a firm estimate on the time to complete the work. See #3 above – do not pay your contractor in full before the work is done and you receive all lien releases (see #5). Do not pay the contractor on anything but the agreed upon schedule under any circumstances. If you properly addressed the payment schedule in your contract then this will provide you with some protection should the contractor leave mid-job.
- Here are some additional miscellaneous red flags. Contractors soliciting door to door. Out of state contractors. Contractors using P.O. Box addresses. Contractors with no history that you can locate. Contractors with phone numbers from a non-local area code. Contractors who cannot or will not address any of the issues above.
Additional Resources for Homeowners Recovering from Hurricane Harvey
Below are links to some additional resources:
- State Bar of Texas Disaster Recovery Manual
- State Bar of Texas Disaster Relief Page
- Federal Emergency Management Agency (FEMA) – Hurricane Harvey Page
- Office of the Governor Hurricane Page
- Office of the Attorney General Consumer Protection
- Texas Association of Builders (with more information on choosing a reputable contractor)
- City of Houston Disaster Recovery