In a word, NO! But an ounce of prevention will
Scenario:
You want your kitchen remodeled. You get three bids, $35,000, $30,000 and $20,000. You decide to go with the $20,000 bid with Ace, Inc. Ace has a nice website, an office with a friendly secretary, and a salesman who came to your house in a company truck. There is a written contract. They want $10,000 down, $5,000 when half the job is done, $5,000 on completion. The contract says the job will be done in 30 days. Ace says they have ‘insurance’ and show you an insurance certificate. They say there is a 5 year warranty on the work. You sign the contract, give them $10,000. A week goes by, and nothing. You call the company, and they tell you they have been caught up in an emergency. Another week goes by, more phone calls, more excuses. A month goes by then another, and still the excuses pile up. After a while, no one answers or returns your calls. You drive by the Ace office, and it is boarded up.
You’ve been taken, big time!
What do you do?
Call the police? They might take your complaint, but will criminal charges be filed? Against who? Ace, Inc? Probably not.
You decide to file a breach of contract case in Justice Court. You pay your $120 filing fee and a year later you get a hearing before the judge. Nobody from Ace shows up. You get a judgment against Ace for $10,000 plus your $120 costs and post judgment interest.
You’ve got a judgment, but no cash. Now what do you do?
You can hire a lawyer to see if Ace has any assets, but typically a lawyer will want money up front, and will charge by the hour for work done, with no guarantee they will be able to recover any money.
A situation like this happens hundreds of times a year in the Houston area. Most fraudsters get away Scott free.
The common thread of all contractor fraud cases is that the homeowner hands over money BEFORE work is done. Other indications of potential fraud are door to door solicitations, and bids that are substantially lower.
YOU DO HAVE A CHOICE!
Don’t give money until work is done. If the work is half done, it is safe to hand over half the money. If the contractor needs money to buy materials, go to the lumbar yard / hardware store, you buy it and pay for it. If the contractor won’t do the work without up front money, find another contractor. If you do decide to pay up front, pay only a fraction, and less than what is initially asked for. Use a credit card. If the contractor is not set up to take a credit card, that is a warning sign. Definitely move on.
If you are going to undertake a major home renovation that runs into the tens of thousands of dollars, spend a few hundred dollars up front for a review of the proposal(s) with an attorney who can alert you of any red flags and advice how to avoid a financial land mine.
Contact the Law Office of Elliott Klein, PLLC for more advice on this issue.