Summary. Sixteen sequences, with the money-losing moments flagged.

1. Screening — the two hours that prevent most of this

  • Verify the license on the state board's website — current · classification covers this scope · name matches the contract · disciplinary history clean. Print the page.
  • Verify insurance by calling the insurer or agent directly — general liability AND workers' compensation. Do not rely on a certificate handed to you.
  • Verify the bond with the surety
  • Three itemized bids on ONE written scope
  • Call references — including one from a project two or more years old
  • Look at a current job site — organized, protected, clean?
  • Search county court records for the business name and the owner's name
  • Check the secretary of state — good standing, and how recently formed

2. Red flags

  • Door-to-door solicitation, especially after a storm
  • Large cash deposit demanded
  • "Today only" pricing
  • One-page contract
  • No license, or wrong classification
  • Reluctance about insurance certificates
  • Asking YOU to pull the permit as owner-builder
  • Refusing lien waivers as a payment condition
  • A price far below the others
  • No physical address
  • Pressure to sign before reading

3. The bids

  • Write the scope before getting bids
  • Require itemization: labor · materials · subcontracted trades · permits · disposal · markup
  • Ask what is EXCLUDED — unforeseen conditions · structural repairs · code-required upgrades · permit fees · disposal · patching and painting · plumbing or HVAC relocation
  • Ask what each allowance actually buys — go look
  • Ask about schedule and concurrent jobs
  • Ask who will actually be on site
  • Treat a far-below bid as a question, not a bargain

4. Check the contract against your state's statute

  • Look up your state's home improvement contract statute and read your contract against it
  • Required in most states: written and signed · copy given at signing · contractor's license number · detailed scope and materials · total price · payment schedule and deposit limits · start and completion · written change order provision · notice of right to cancel in required form · warranty · insurance statement · mechanics lien notice · recovery fund and board contact
  • Note: a materially non-compliant contract is frequently unenforceable by the contractor or voidable by you, and in several states a violation is a per se deceptive act with multiplied damages and fee-shifting

5. Terms to insist on

  • Detailed scope — inclusions, exclusions, products by manufacturer and model
  • Allowances identified, with what each buys
  • Payments tied to milestones, not calendar dates
  • Modest deposit — many states cap it
  • Retainage of 10% held until the punch list is done — your only leverage at the end
  • Change orders in writing, signed, priced, BEFORE the work
  • Lien waivers as a condition of payment, from the contractor and everyone who sends a preliminary notice
  • Permits pulled by the contractor, in the contractor's name
  • Insurance certificates you verify
  • Warranty — what, how long, what is excluded
  • Termination with notice and an opportunity to cure
  • READ THE DISPUTE RESOLUTION CLAUSE BEFORE SIGNING

6. The arbitration clause

  • Read it. Ask what it costs. Arbitrator fees on a multi-day residential hearing run $12,000–$18,000.
  • Ask to strike it, or:
    • Carve out small claims
    • Fix local venue
    • Have the contractor advance the arbitrator's fees, subject to reallocation
  • Contractors who want the job frequently agree — nobody asks

7. Your right to cancel

  • Signed at your home or anywhere that is not the contractor's permanent place of business → three business days under the federal cooling-off rule
  • The seller must give written notice of the right plus two copies of a cancellation form
  • IF THEY DIDN'T GIVE THE NOTICE, THE CLOCK NEVER STARTED — the right may still be alive
  • Check your state statute for a longer or broader right
  • If financed by a loan secured by your home: three business days to rescind, extended to three years if disclosures were not properly given
  • To cancel: in writing, proof of date, before the deadline. Keep a copy.

8. During construction — the one habit

  • GET A LIEN WAIVER EVERY TIME YOU PAY
  • From: the general contractor and everyone who sent a preliminary notice and anyone you know is on site
  • Conditional waiver when paying by check (effective when it clears) · unconditional only when payment has cleared
  • Progress waivers at each payment · final waivers at the end
  • Use your state's statutory waiver form if there is one
  • Understand the risk: subcontractors you never hired can lien your house even if you paid the general contractor in full

9. Preliminary notices — do not throw these away

  • They arrive early, from companies you don't recognize, titled "Notice to Owner" / "Preliminary Notice" / "Notice of Furnishing"
  • They are a precondition to lien rights in many states
  • They are the complete list of who can lien your house — which is the list you need waivers from
  • Keep every one in a folder. Make a list. Check it against your waivers at every payment.

10. Permits, inspections, lead

  • Confirm the permit was pulled by the contractor, in the contractor's name
  • Keep the permit card, every inspection sign-off, and the final certificate
  • Attend inspections when you can
  • Pre-1978 house: the contractor must be lead-safe certified, must use lead-safe practices, and must give you the required pamphlet before work begins. Ask for the certification number.

11. The project file

  • Contract and every change order
  • Every preliminary notice
  • Every lien waiver
  • Every payment record — traceable methods only, never cash
  • Weekly dated photographs
  • A log: who was on site, what was done, what was said
  • Every text and email — delete nothing
  • Permits, inspection sign-offs, product submittals, manuals
  • PHOTOGRAPH EVERYTHING BEFORE IT IS COVERED — framing, rough plumbing, rough electrical, insulation, waterproofing

12. Finishing

  • Written punch list walkthrough before final payment — dated, both signed, with completion dates
  • Do not release retainage until the punch list is done and final inspection passed
  • Before final payment, obtain:
    • Final unconditional lien waivers from everyone
    • Certificate of completion or final inspection sign-off
    • Written warranty documentation
    • Manuals, product information, leftover materials
    • As-built information on anything hidden
  • NEVER sign a completion certificate before the work is complete — lenders release money against it

13. Defective work — check the statute FIRST

  • Look up your state's construction defect notice statute before doing anything. Failure to follow it can bar the claim.
  • Document specifically — not "the work is bad," but "the tile at the shower threshold is not sloped to drain; water pools approximately 1/4 inch"
  • Notify in writing with a real opportunity to inspect and cure, on the statutory timeline
  • Independent inspection — licensed inspector, engineer, or a contractor in the same trade — written, photographed, with a repair estimate
  • Two repair estimates
  • Withhold proportionally, in writing, stating why. Withholding everything can make you the breaching party.
  • Document their repair attempt; reject an inadequate one in writing with the report attached

14. Abandonment

  • Written demand with a specific deadline to resume, proof of delivery, stating that failure will be treated as abandonment
  • Document the state of the work exhaustively — photographs, video, measurements, materials on site
  • Two itemized bids to complete
  • Compute damages: cost to complete − unpaid contract balance + consequential damages
  • Licensing board complaint — abandonment is a violation nearly everywhere
  • FILE THE BOND CLAIM EARLY — bonds are modest, shared, and go to whoever files first
  • Recovery fund — check whether your state has one and its prerequisites
  • Attorney general consumer division
  • Consider a criminal referral — many states have a home improvement fraud statute

15. If a lien is recorded

  • Do not ignore it — it clouds title and surfaces at sale or refinance
  • Check timeliness and procedure — lien deadlines are strict and defects are common
  • Check whether a required preliminary notice was served — no notice, in many states, no lien
  • Demand the general contractor clear it — most contracts require it
  • Consider a release bond to clear title while the dispute continues
  • Check the claimant's deadline to sue — unenforced liens expire, and some states let you force the issue

16. Remedies, in order (free first)

  • Licensing board — investigates, can order restitution, can suspend or revoke
  • Bond claim — administrative, fast, real money
  • Recovery fund, where one exists
  • Attorney general consumer division
  • Tender to the contractor's liability insurer
  • Independent inspection + demand letter — a few hundred dollars, and where most disputes actually resolve
  • Mediation
  • Small claims for anything under the limit — check whether arbitration carves it out
  • State unfair and deceptive acts and practices claim — frequently double or treble damages plus attorney's fees, and a home improvement statute violation is often a per se deceptive act
  • Watch the deadlines: contract limitations, and separate statutes of limitation AND repose for construction defects. Repose runs from completion regardless of discovery, and it is absolute.

Related documents

Educational only, not legal advice. Home improvement contract requirements, licensing, lien deadlines, and defect notice statutes vary substantially by state.