Victims of natural disasters face the unbelievably numbing and devastating task of rebuilding their lives and homes in the wake of severe flooding and property destruction. Cleanup and repair efforts will no doubt keep repairman, roofers, contractors and the like busy for months, if not years, to come. And the reality is that many may not be able to rebuild because of the lack of flood insurance coverage, making the costs to do so prohibitive.
For those who do rebuild, their greatest challenge will be in finding ethical contractors to perform the cleanup and repair without the potential for getting ripped off. It’s hard for most of us to even think about anyone taking advantage of vulnerable homeowners who have lost everything, but it happens. I’ve read many stories from homeowners in the aftermath of these disasters and the perpetrators behind these schemes can be very convincing.
Natural disasters tend to attract unsavory characters, such as unscrupulous contractors, often referred to as “storm chasers” looking to cash in at the expense of homeowners. People are naturally anxious to get their homes and lives back on track, and are vulnerable to smooth-talking con artists promising to begin work quickly, and whose only interest is to gain their trust and take their money.
The fact is, when it comes to hiring contractors in general, consumers need to exercise caution and thoroughly vet the contractor with background and license checks that will reveal complaints, lawsuits and criminal activity.
Yet this is probably the last thing victims are thinking about when they’re smack in the middle of unimaginable loss and grief. And that’s what unethical, so-called contractors are betting on. Knowing the probability of this happening after the Wildfires in Southern California in 2007, an industry group put on an event to educate consumers on all aspects of scams that they might encounter.
I, myself, participated in the “Don’t Get Scammed” panel put on to help victims avoid rebuilding scams and unscrupulous contractors. The cautionary tales related by the various government agencies of previous disasters centered around contractors taking large sums of money upfront, shoddy or uncompleted work or abandoning the project altogether. There were also a fair number of homeowners who forked over the entire amount of the contract fees over to the contractors, who never performed the work.
Natural disaster victims need to be especially vigilant to the fact that unscrupulous individuals will be out in force and they need to do a thorough job of researching potential contractors as well as their states’ contractors laws. Every state is different and licensing requirements may not be mandated at the state level, with some requiring only registration at the municipal level. Homeowners need to understand how to protect themselves from unethical business practices and avoid rebuilding disasters.
In North Carolina, officials are making easy for homeowners to check out contractors before they hire them with their free mobile app called “NCLBGC Search”, allowing anyone to search their database of contractors by name, address, license number or county.
Despite the challenges they face, there are some practical steps disaster victims can take to help protect themselves from contractor fraud and avoid scams.
1. Beware of unsolicited offers to repair your home. You may find business cards posted on your property or others knocking on your door.
– Thoroughly vetting a contractor is the foundation for a successful outcome. Check for licensing requirements in your state, insurance coverage, including surety bonds, Workmans’ Comp and general liability insurance. Always verify coverage by getting copies of insurances certificates and going one step further, contact these companies to be sure coverage is current.
2. Verify any history of complaints.
– Check for complaints online, googling the name of the individual and company name. Also check out sites like ComplaintsBoard, Rippoffreport, My3cents, and the BBB, to uncover any complaints. Be sure to check licensing and complaint history with the Contractors State License Board in your state.
3. Understand how much a contractor can legally ask for to begin a project.
– NEVER pay a large sum up front, especially the entire amount. And never pay in cash. Research and negotiate a reasonable payment schedule.
Unlicensed and out of state contractors, offering repair, cleanup and rebuilding will likely be canvassing neighborhoods offering “deals” and asking for large deposits upfront.
4. Make sure you have a detailed, written contract that includes everything you expect the contractor to perform, materials and labor included, and protective clauses such as Change orders and Mechanics’ Lien Releases on payments made to everyone on the project. And if you don’t understand the contract, don’t sign it! Get some legal help to ensure you’re not putting yourself at risk.
5. Get at least 3 written bids and if there are vast differences in costs, go back and find out why.
– Some contractors may have left out certain elements that will reduce the end price, knowing that the homeowner will be focused on costs. This is generally referred to as “low balling”, where once the project is underway, the homeowner realizes specific items have been left off the bid. The contractor will point to the contract – and rightly so – saying it’s not in the contract, but is willing to add that in. This is when costs start to escalate along with tension between the parties.
Finding local contractors may very well be difficult, but using out of state or unlicensed contractors could prove disastrous. Check with both state and local licensing as well as Consumer protection agencies. Your insurance company may also have a list of approved contractors but there is a caveat. Contractors offered up by insurance companies are not necessarily vetted with background checks and many homeowners have reported problems using their recommendations.
All in all, homeowners need to be their own best advocates and do the necessary research to prevent being victims of unscrupulous contractors and business practices.