CONSUMER ALERT

BILL SCHUETTE

ATTORNEY GENERAL

The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern. Consumer Alerts are not legal advice, legal authority, or a binding legal opinion from the Department of Attorney General.

BUILDING AND REMODELING - ADVICE FOR HOMEOWNERS

Among the common issues raised about home remodeling work and window replacement in complaints to the Attorney General's Consumer Protection Division are: 

• High-pressure sales
• Confusion over contract terms 
• Poor workmanship
• Failure to honor warranties
• Incomplete job performance
• Overcharging
• Threats of foreclosure by the contractor 

While many consumers are naturally suspicious of offers made by door-to-door sellers, it remains important to your financial health and peace of mind to exercise caution when choosing any building contractor or company for home improvement services.

AVOID COSTLY MISTAKES - DO YOUR HOMEWORK BEFORE YOU OPEN YOUR WALLET!

• Resist high-pressure sales tactics. If someone offers a choice of "now or never," choose never.  An offer to perform construction or remodeling work that is profitable to the builder will not vanish in a matter of minutes or hours.

• Always ask if the contractor is licensed and insured - and demand to see proof.  Taking this step may help you distinguish between legitimate contractors and unlicensed scam artists offering to "save you money" by performing work that requires a license without proper credentials.  

Keep in mind that when a contractor says he or she is insured, it may not mean that the insurance will cover poor workmanship, failure to properly complete the construction, or even damage that might be caused to your property or that of your neighbor. Generally, the kind of insurance carried by contractors relates to injuries that may occur to the contractor or his or her employees while working on the job. If your contractor says that he or she is insured, ask "insured - for what"?

• Check to see if the contractor has been disciplined or if the license has been suspended or revoked.  Builders and contractors are licensed by the Licensing Division of the Bureau of Commercial Services, Michigan Department of Labor & Economic Growth.   

The Bureau's home page for Residential Builders, Maintenance and Alteration Contractors provides general information on issues relating to builders' licenses, including additional tips for consumers.

Consumers may visit the Bureau of Commercial Services' website to verify current license status and check for prior disciplinary action.  If possible, use the builder's license number as well as the names of the builder and the business name.

Decisions issued in response to formal complaints are also accessible online. 

You may also call the Residential Builder's Board at 517-373-8376 or write to:
 

Bureau of Commercial Services
P.O. Box 30018
Lansing, MI 48909

• Seek two or three written estimates for the work and carefully compare the services and materials with the price. Unscrupulous contractors may take advantage of a consumer's need for emergency repairs or lack of building expertise and quote repair costs that are grossly inflated in comparison to what other reputable contractors would charge.

• Check on consumer complaints. In addition to checking with the Bureau of Commercial Services for current licensing status and any past disciplinary actions against licensed builders, contact the Better Business Bureau that serves your area and the Attorney General's Consumer Protection Division for a complaint history.

• Get references.  Once you have selected a builder you are interested in hiring, ask the builder for a list of other homeowners who have hired the builder for similar projects and contact them before you sign a contract for costly construction work.

• Get a written contract. Do not permit work to start without a signed written contract that includes all verbal promises that were made by the contractor. Be sure that the written contract includes a start and completion date, a requirement that the builder obtain all required permits, a breakdown of the costs, payments dates and events that trigger your obligation to make payments, and information about the contractor - including the license number issued by the Department of Labor & Economic Growth, street address, and phone number.

• Read all the small print on any form contract that is supplied by the contractor. Never sign any contract until you have reviewed ALL the terms and understand them completely. Make sure that there are no empty spaces or check boxes that an unscrupulous contractor might later modify without your knowledge or approval.  (For example, some contracts may contain check boxes granting the contractor a lien on your home to assure payment.)

• Be aware of arbitration clauses in your contract.  A contract may contain a provision requiring you to submit disputes to "alternative dispute resolution" procedures.  Proper "alternative dispute resolution" provisions (typically mandatory arbitration clauses) that comply with the law are common in consumer contracts, but consumers should always be aware of how arbitration clauses may affect their rights and remedies.

With regard to builders, consumers should be aware that both 1) their right to bring a legal action against the builder; and 2) the Department of Labor & Economic Growth's authority to initiate a proceeding against a builder are limited if the contract requires the consumer to submit to alternative dispute resolution. 

• In some cases, Michigan law provides you a three-day right to cancel a contract.  Depending on the circumstances, you may have a right to cancel a construction contract after you have signed it. Situations in which you may be able to rescind the contract include: 1) sales solicited at your home (three days to cancel), and 2) contracts in which you agree to make payments over time to a home improvement contractor (one day to cancel).  

• Get required building permits. Check with local building and zoning officials to determine what permits are needed and that the builder has obtained them. 

Be wary if a contractor asks you to obtain the building permit claiming that he or she does not have the time to do it or that it will cost you extra if the contractor has to pull the permit. Such a request is often a sign that the contractor is not licensed or is unwelcome at the local building department.

• Arrange for payments to be made as parts of the job are completed.  Final payment should not be due until the job is done and you have personally inspected the work performed and obtained any necessary approvals from local inspectors.

If the construction work is for damage that is covered by homeowner's insurance, be sure to have your insurance company make the check out in your name only.  In this way you can control the payments made to the contractor.

IN THE EVENT OF A DISPUTE:

File a written complaint with the Michigan Department of Labor and Economic Growth, Bureau of Commercial Services Enforcement Division (for complaints against licensed contractors only).  Complaint filing instructions and complaint form available at online at:  http://www.michigan.gov/dleg/0,1607,7-154-35299_35395_35396---,00.html.

If the contractor is not licensed and is required to be, contact your local authorities, because failure to obtain a license may constitute a violation of criminal law.  If the contractor you hired is not required to be licensed, file a written complaint with Attorney General's Consumer Protection Division, and/or the Better Business Bureau.  Consumers may contact the Attorney General's Consumer Protection Division at:

Consumer Protection Division
P.O. Box 30213
Lansing, MI 48909

517-373-1140
Fax: 517-241-3771

Toll free: 877-765-8388

www.michigan.gov/ag (online complaint form)