I recently had a very negative experience with a contracting company renovating my home. In Calgary’s booming market it is difficult to find the right contractor and avoid the nightmares I have faced. Sadly, I am aware that my situation is not unique. What can others do to prevent similar downfalls when hiring a contractor?

Signed,
Frustrated home-torn-apart-owner

Dear Frustrated,
It is true that you are not the only and will not be the last homeowner to be let down by a general contracting company. The key for those looking to hire a contractor is to do their homework.

There are three common mistakes people make according to Michael Nyikes, director of technical affairs for the Calgary Region Home Builders Association (CRHBA). First, people typically don’t check references and background, such as business licences (for the City Licensing Department of Calgary, call 268-5521); Workers Compensation Board (WCB) coverage (call 517-6000); and insurance.

Secondly, people base decisions on the cheapest price rather than workmanship. Lastly, people don’t get things in writing, which only serves as protection for them later. A common misconception with builders also doing renovations is that they are protected under the Alberta New Home Warranty Program, when, in fact, the program only covers new-home construction.

Daniel MacDonald, a trade practices consultant for the Better Business Bureau (BBB), says some people only get one quote, which he advises against.

“I recommend getting at least three to five estimates and then three to five references within each contractor before making a decision,” he says.

When checking references, MacDonald says to ask past customers about more than just the quality of a prospective contractor’s work.

“Check if they left a clean worksite, finished on the budget agreed upon, and finished on time,” he suggests.

MacDonald urges homeowners to inquire about licensing, especially if the contractor is asking for a deposit up front. He says these companies must first apply for a Pre-Paid Contractor’s License through the provincial government, and homeowners can check with Service Alberta toll free at 1-877-427-4088 to make sure they are, in fact, licensed.

MacDonald also says it’s a good idea to negotiate a ten per cent holdback, which homeowners have a right to do.

“You hang on to the ten per cent for 45 days, check with the registry on your property title record to make sure there are no liens placed on your home, and if there are none, you can pay out the 10 per cent,” he says. “If there is a lien, then you should seek legal action.”

Checking whether a company has liability insurance is another necessity. If you leave workers alone, damage to your property or your neighbours’ may not be covered without liability insurance.

“Ask the contractor for the name of their insurance company and the policy number,” MacDonald says. “Then verify with the insurance company that the policy is still in effect." Any member of the BBB must agree with the ethical standards they uphold in the market, according to MacDonald.

If a written complaint is given, the company is obligated to deal with the issue in writing within two weeks. The report will show any complaint submitted in writing along with how the company resolved the complaint.

“It is more valuable to see how they dealt with a complaint and how they addressed the issue than it is the actual complaint,” MacDonald says. “You can’t please everyone, and some people have unrealistic standards.”

He recommends homeowners be aware of the company’s history.

“We certainly have received a lot of calls in the last months, but a lot of people are just asking on what they should do,” he says.

Fact checking with the BBB is simple, he says, adding a report on a particular business is free and can be accessed online, via the bureau’s phone system or by speaking directly with a representative.

Similar to the BBB, Nyikes says the CRHBA is an organization that has reputable contractors who adhere to the association’s code of ethics.

The benefits for members of the CRHBA are that they receive regular updates on building codes and safety requirements, and have opportunities to attend courses offered by the CRHBA. “Choosing a company through an organization gives homeowners piece of mind,” he says.

While many homeowners wish to become very involved in the renovation, they must understand the contractor is the expert.

“Write an agreement that dictates when the renovator and homeowner can review each stage,” says Nyikes. “This provides a benchmark and also gives a good timeline of progression.”

Nyikes highly recommends homeowners purchasing WCB insurance coverage. The insurance protects homeowners if anything were to happen on the worksite—their home.

“Homeowners are insured as though they are a worker, themselves,” he says. “Any qualified contractor should already have coverage through WCB.”

Nyikes warns there are some renovators operating in the “underground economy”; that is, they do business for cash.

“Generally these companies are not providing a written contract, are most likely not paying taxes, and will leave homeowners in a precarious situation,” he says.

One way for homeowners to steer away from bad companies is to use a contractor referral system such as Home-Work.

Steve Rogers, owner of Home-Work, started the company in 1999 after he experienced a bad renovation himself. The company now has approximately 125 to 150 contractors in its database.

“There’s always been a segment of the business that is unreliable,” he says, adding he hasn’t noticed any higher percentages in bad contractors recently.

Home-Work has a continual screening process for contractors, which checks licensing, insurances, and standing with the BBB and coverage with WCB, for a small access fee.  The company also checks references, but Rogers suggests looking at the last six or seven jobs the contractor did rather than talking to references.

So whether you have time to do the homework yourself or have a third-party service such as Home-Work do it for you, when it comes to hiring a contractor, it’s better to be safe than sorry.   NL