Disaster Victims: Proceed Cautiously When Hiring Contractors to Rebuild or Repair

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Release date: 
June 23, 1999
Release Number: 
1280-05

RAPID CITY, S.D. -- State and federal disaster recovery officials are advising residents who have disaster-related damage to be extremely careful when hiring contractors to cleanup and repair their homes.

"Scam" artists sometimes pose as state or federal inspectors. If your property was damaged and someone appears at your door claiming to be a disaster official, ask for identification. All Federal Emergency Management Agency (FEMA) and U.S. Small Business Administration (SBA) inspectors carry federal identification cards.

Disaster officials offer the following "Consumer Beware" suggestions:

  • Use Reliable, Licensed Contractors: Check with the Better Business Bureau or the local business trades council to make sure the firm has no outstanding consumer complaints filed against it.

  • Get a Written Estimate: Be sure to obtain a written estimate for the job. Compare the services and prices of several reputable contractors before making a final decision. Hire local contractors, if possible.

  • Check References: Call former customers who had similar work done to make sure they were satisfied with the job performed.

  • Proof of Insurance: Make sure the contractor carries general liability insurance and workers' compensation. If the contractor is not insured, the home or business owner may be liable for accidents that occur on the property or to the house/building.

  • Ask for a Written Contract: A complete contract should clearly state all the tasks to be performed, all associated costs, and the payment schedule. Never sign a blank contract or one with blank spaces. Make sure the contract clearly states who will apply for the necessary permits or licenses. Have a lawyer review the contract if substantial costs are involved, and ALWAYS keep a copy of the signed contract

  • Written Guarantees: If the contractor provides any guarantees, they should be written into the contract clearly stating what is guaranteed, who is responsible for the guarantee, and how long the guarantee is valid.

  • Pay by Check: Avoid cash payments. The safest route is to write a check to the contracting company. A reasonable down payment is 30 percent of the total cost of the project. (If you should sign a contract with an unsolicited door-to-door salesman for more than $25 and then change your mind, federal law allows you a three-day "cooling-off" period during which you can cancel the contract in writing.)

  • Canceling a Contract: Canceling a contract should be done within three business days of signing. Be sure to follow the agreements stated in the cancellation clauses. Send the notification by certified mail, return receipt requested.

  • Have Work Inspected: Make sure a qualified observer inspects the work in-progress before it is hidden from view (for example, plumbing and wiring,) to avoid similar problems in the future.

Consumers who have problems with a contractor or have been victims of fraud are urged to contact the U.S. Attorney General's office at (605) 330-4400 in Sioux Falls to file a complaint.

Last Updated: 
July 16, 2012 - 18:46
State/Tribal Government or Region: 
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