Be Careful When Hiring Contractors For Disaster Repairs

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Release date: 
May 13, 2009
Release Number: 
1830-043

MOORHEAD, Minn. -- Residents of Beltrami, Clay, Marshall, Norman, Polk, Traverse and Wilkin counties who suffered damage from the severe storms and flooding that began March 16 should watch out for scam artists when hiring contractors to clean and repair property or remove debris.

That is the warning issued by officials with Minnesota Department of Public Safety Division of Homeland Security and Emergency Management (HSEM), the Federal Emergency Management Agency (FEMA) and the U.S. Small Business Administration (SBA).

"Unfortunately in disaster situations, scam artists often attempt to take advantage of other people's misfortune," said State Coordinating Officer Kris Eide.

People should be especially alert, she said, for phone or door-to-door solicitors who hand out flyers and promise to speed up the insurance or building-permit process, and those who ask for large cash deposits or advance payments in full.

“All too often disasters attract scam artists,” said Federal Coordinating Officer Michael H. Smith.  “Some claim to be state or FEMA certified, when, in fact, neither the state nor FEMA certifies or endorses any contractor.”

If you suspect contractor fraud, contact the Minnesota Attorney General's Consumer Protection Unit 1-800-657-3787 or online at www.ag.state.mn.us, or contact your local Better Business Bureau.

Tips for hiring contractors include:

  • Get a written estimate. Compare services and prices before making a final decision. Also, read the fine print. Some contractors charge a fee for a written estimate, which is often applied to the cost of subsequent repairs they make.
  • Check references. Contractors should be willing to provide names of previous customers. Call several former customers who had similar work done to make sure they were satisfied with the job.
  • Ask for 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.
  • Use reliable, licensed contractors. Call your local Better Business Bureau (and other local sources) to inquire about a business before signing a contract.
  • Insist on a written contract. A complete contract should state clearly all 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 keep a copy for your records.
  • Get guarantees in writing. Any guarantees made by the contractor should be written into the contract. The guarantee should state clearly what is guaranteed, who is responsible for the guarantee and how long the guarantee is valid.
  • Obtain a local building permit, if required. Permits may be required for site work including demolition and reconstruction. Contact your local government for permit information.
  • 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.
  • 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 to be paid upon initial delivery of materials. Federal law gives consumers a three-day "cooling off" period for u...
Last Updated: 
July 16, 2012 - 18:46
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