What to do if you're the victim of a bad contractor

By Jodi Mohrmann - Managing Editor of special projects
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Whether you neglected to do your research on a contractor before hiring, or even if you vetted every candidate — bad things can happen.

Unskilled workers slap together a poor job, you pay for amenities that never get installed, the work is subpar or maybe the contractor disappears altogether.

"When we are hiring contractors to do projects around our house a lot of times we may skip on our research," said Angie Hicks, founder of Angie's List. "Don't hire the contractor that is not licensed, don't hire the contractor that doesn't carry proper insurance because while those might seem like little shortcuts now, they could turn into big headaches down the road."

Depending on where you live and what resources are available, a homeowner's options for recourse vary.

  • Your options if the contractor was licensed: If the company is licensed, file a complaint with your local licensing agency. In addition, homeowners can file complaints with their state or local contractor's board (even if the contractor is not licensed) and through the Angie's List complaint resolution, all of which might be able to help resolve the claim on the homeowner's behalf.
  • Your options if the contractor was bonded: Homeowners can also seek reimbursement from a contractor's bond. Although requirements can vary by state and even by city, when a company tells you it's bonded, there's an agreement between the customer, the contractor and the agent that issues the bond (typically an insurance company). The bond is a guarantee that the contractor will perform the services outlined in the contract, and if he or she fails to do so, the customer can report the problem to the issuing agent and receive compensation. Bonds can protect homeowners from shoddy work, project abandonment, damage to the property and any unpaid supply or labor charges.
  • Your options if taking legal action: Homeowners can seek legal action, whether it's through small claims court or by hiring a private attorney. While you don't need an attorney for small claims court, each state has a limit on how much can be recovered through this process.

Angie's List Tips: Hiring a Contractor

  • Create a paper trail: Create a timeline and assemble a file of all the paperwork surrounding the project, including contracts, receipts and canceled checks. Document with photos.
  • Never pay the full amount up front: Down payments are a standard practice in the remodeling industry, but you should be careful about how much to put down. Never, of course, pay the full costs up front. A reasonable down payment is acceptable. Don't pay anything, though, until you have a contract that spells out the payment structure. Tie future payments to progress on the job and hold back at least 10 percent until the job is complete to your satisfaction.
  • Get three bids: You'll get an idea of the general price range and identify the outliers. Then, using price as one consideration, you can select your contractor based on other factors such as communication, creativity and flexibility. The goal when taking the time to get three estimates is a high-quality project completed at a fair price. That's a return well worth your time.
  • Read the contact: The details of the contract, including payment terms, should be spelled out in the contract signed by both you and the contractor.

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