Beware of Fraudulent Contractors When Repairing Your Flood-Damaged Home

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Release date: 
September 4, 2001
Release Number: 
1387-08

Greeneville, TN -- State and federal disaster recovery officials advise Tennessee residents who have disaster-related damage to be extremely careful when hiring contractors to clean up and repair their homes and businesses.

"Scam artists are often ready to seize an opportunity to capitalize on the misfortune of others," Gracia Szczech, the FEMA official in charge of long-term disaster recovery. "In the wake of disasters, dishonest contractors often flock to an area to rip off those seeking to rebuild."

The following consumer protection suggestions are offered for the consideration of those rebuilding after the flooding:

  • Use reliable, licensed contractors. Check with the Tennessee Contractors Board at 1-800-544-7693, or the Tennessee Division of Consumer Affairs at 1-800-342-8385 (web site: www.state.tn.us/consumer) 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 and read the fine print. 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.

  • Proof of Insurance. Make sure the contractor carries general liability insurance and workers' compensation. If the contractor is not insured, the homeowner 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. 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 on-the-spot 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. Federal law requires a three-day "cooling off" period for unsolicited door-to-door sales of more than $25.

  • 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 registered mail.

  • Have Work Inspected. If excavation work is being performed (e.g., sewers or basement walls) make sure a qualified observer inspects the work before it is hidden from view to avoid similar problems in the future.

  • Make final payments when the work is completed. Do not sign completion papers or make the final payment until the work is completed to your satisfaction. A reputable contractor will not threaten you or pressure you to sign if the job is not finished properly.

Consumers who have problems with a contractor or who have been victims of fraud are urged to contact the Tennessee Division of Consumer Affairs at 1-800-342-8385.

"Take your time, talk to building and floodplain officials, and deal cautiously with contractors to help make your recovery process a positive one," added John D. White Jr., state coordinating officer for disaster recovery.

Last Updated: 
July 16, 2012 - 18:46
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