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The Essential Guide to Vetting Contractors: Protecting Your Investments

Updated: Apr 3

In today's market, the allure of hiring small businesses for contracting needs is undeniable. However, before you sign on the dotted line, it's crucial to ensure that you're entrusting your project to reliable hands. At Ames Law Group, we've seen firsthand the consequences of inadequate vetting, and we're here to guide you through the process of safeguarding your investments.


Here are some essential steps to take when vetting contractors:


1. Verify Registration and History: Ensure that the contractor is a registered company or has a verifiable history of doing business under their own name. While references are helpful, they may not always be reliable. Conduct thorough searches in the local area and neighboring counties to check for any past legal issues or lawsuits.


2. Check for Tax Liens: Look up if there are any tax liens on the contractor's personal property, especially if they operate under their personal name or a business name. This step can help you assess their financial stability and potential liabilities.


3. Review Insurance Coverage: Request a copy of the contractor's insurance contract to understand what is covered and what is not. At Ames Law Group, we've encountered cases where contractors had insurance that excluded specific types of work, leaving clients vulnerable to financial losses.


4. Legal Protection: Contracts done under a business name usually serve to protect the individual from being sued directly. Additionally, in states like New York, New Jersey, and Pennsylvania, personal homes of the contractor may be protected from creditors if certain conditions are met. This may leave the property owner with little to no recourse when it comes to recovering financially.


5. Professional Contracts: Insist on a professionally drafted contract outlining the scope of work, billing terms, and hourly rates. Avoid informal agreements via text messages or verbal communication, as they lack legal clarity and protection.


6. Insurance Verification: Contact the contractor's insurance company to confirm the validity and coverage of their policy. A lapse in insurance coverage could indicate potential risks and unreliability.


7. Payment Terms: Consider paying the contractor incrementally based on project milestones to mitigate financial risks. Avoid upfront payments until you've seen tangible progress to limit potential losses.


8. Verify Permits: Before embarking on any project, it's essential to double-check that all necessary permits have been secured from the town or borough. This simple step can prevent headaches down the line and ensure that your project is legally sound from the start.


9. Maintain Oversight: Insisting on inspections after significant milestones, such as electrical or plumbing work, can help catch any substandard or negligent work early on. By staying vigilant and having each aspect of the project approved along the way, you can avoid the costly consequences of having to rectify issues after the fact.


10. Verify Biographical Information: While it may seem basic, safeguarding yourself against contractor scams is crucial. As strange as it sounds, take a copy or a clear scan or photo of their driver's license or government-issued identification during the hiring process. Ames Law Group has encountered cases where contractors vanished without a trace, with their identities unverifiable. This simple step ensures you have recourse if you become a victim of fraud, allowing you to pursue legal action if necessary. Protect yourself from potential scams by being diligent from the start.


At Ames Law Group, we understand the complexities and risks involved in hiring contractors. If you've experienced issues with a contractor in New York, New Jersey, or Pennsylvania, don't hesitate to reach out for a free half-hour consultation. We're committed to protecting your interests and ensuring fair resolution to your contractual disputes. Trust your investments to experienced legal guidance – contact us today.


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