DennisBeaverApril 03, 2010 (Original publish date) • By Dennis Beaver

Part 2:

“Licensed and bonded.” That’s what state law requires of contractors, as we discussed last week.

But in the world of things that are not as they seem, contractor bonds and many of the companies which sell them deserve an Academy Award in the category “it’s not what you think it is.”

It’s reasonable to think, “If my contractor does a lousy job, explain the problem to his bonding company, and they will pay to have the job completed.”

“But it never works that way. The flaming hoops to jump through just to establish a claim, makes you qualified to work for the Barnum and Bailey’s Circus,” I was told by an attorney who works at a law firm representing bonding companies. (For obvious reasons, I have not revealed his name.)

If these companies don’t have something to hide, then why did the president of one of the country’s largest refuse to discuss why so many consumers feel that it’s impossible to ever collect on claims?

His name isn’t important, nor is the name of his company, for most have an odd relationship with the Contractors State License Board, and our deeply caring state Legislature.

Why do I say that? By law, the bond amount is only $12,500, not per job, but for all of the contractor’s jobs, making it virtually worthless if he’s messed up for several customers.

If you go to small claims court you can only sue the bonding company for $6,500, when the limit for other suits, is $7,500. Anyone want to guess who got a campaign donation for that gift to bonding companies? In fact, for years, their limit was an amazing $4,000!

The need to protect yourself

“If doctors or lawyers dealt with their patients and clients in the incompetent and dishonest way so many contractors treat their customers, society would be back to voodoo dolls, medicine men and dispute resolution through a shotgun,” stated Bakersfield Attorney Fawn Dessy, who specializes in construction law.

“You have to protect yourself, from not only crooked contractors, but [from] those who promise more than they can deliver in the time agreed on, or whose sense of quality came out of ‘Alice in Wonderland,'” she cautions.

Information on the contractor is critical

Southern California construction law attorney Kirk MacDonald said that information is critical. “Regardless of the size of the job — from the smallest to the largest — do your homework and learn as much as you can about the contractor.”

The following is a “must do” list which both attorneys provided:

—Get references — at least three — from customers who had similar jobs to yours. Call and, if possible, inspect the work. If he cannot produce such a list, or the customers do not want to talk with you, this is not a good sign.

—Does he have not just a license, but a license for this type of job? You can phone the Contractors State License Board to find out about complaints, and to determine if this person and his sub-contractors are adequately licensed.

—Do a Google or data-base search for lawsuits and complaints. Some county Web sites allow access to their Plaintiff/Defendant Index, showing who has been sued. If not available online, you can research this easily at the courthouse, and the time spent could be well worth it. Additionally, the Better Business Bureau might have complaints that were unresolved and that should appear on their Web site or by phoning them.

—Ask for proof of both workers compensation and a general liability commercial insurance policy. This would cover damage caused to your property or to third parties nearby.

—For the contractor and subcontractors who will be working on the job, you must have personal information on them, including: driver’s license, home and business address, all telephone numbers, Social Security number (if you can get it.) This could prove critical, later, for a variety of reasons, but especially if things go wrong. If they refuse, take the hint.

Large job? Consult an attorney

“It’s not always practical to have a lawyer review a contract for a small job. A $5,000 bathroom remodel does not justify paying $1,000 for that review. However, if it’s over $25,000 then it becomes something you really should consider,” attorney MacDonald said.

“But if problems arise with the $5,000 job, and you didn’t see a lawyer beforehand, you will kick yourself. The cost of hiring a lawyer after things have gone wrong will be dramatically higher than what you would have spent for that consultation and related legal services beforehand,” he concluded.

Next week: Warning signs that trouble is brewing and what to do.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.