What kind do you need?

There are approximately 40 different types of contractors, each requiring a separate specialty contractor's license. For example, if you want only roofing or plumbing work, you may want to hire a contractor licensed in the particular specialty. A general building contractor may also contract for the specialty work but may need to actually have a specialty contractor do the work. If the job requires more than two types of work on a building, the work should be done by a "licensed" general building contractor. For example, if your kitchen remodeling will involve plumbing, electrical and carpentry work, a licensed general building contractor should be hired. A "B" general building contractor may perform most single "C" specialty trades on a building or may have specialty sub-contractors do all or part of the work.

One of the best ways to select a contractor is to seek out personal recommendations from friends or relatives who recently had work of the type you want completed by a licensed contractor.

If the work you are considering is valued at $300 or more, a valid California Contractor's License is required for the license category in which the contractor is going to be working. If you contract with someone who does not have a license, the Contractors Board may not be able to assist you with a complaint. A remedy in a complaint against an unlicensed contractor may only be available in civil court. This is one more good reason to work only with licensed contractors!

Check the contractor's license

Is the contractor properly licensed? In California, any job that costs $300 or more for material and labor must be performed by a contractor who holds a current, valid license from the Contractors State License Board in the specialty for which he or she is contracting.

Ask to see the contractor's pocket license and some additional form of identification. The name on the pocket license should be the same as the name of the contractor or the business name under which the contractor is working.

It is illegal for one contractor to use another contractor's license, just as it is illegal for someone to use another's driver's license.

When you establish that the contractor's or company's name matches what appears on the pocket license issued by the Contractors State License Board, call the Board's toll-free number, 1-800-321-CSLB (327-9707 in the Sacramento area), and ask if the license is valid.

Finally, if the contractor is operating with a valid license, you may also want to find out whether the person you are considering working with is a member of a professional or trade association that has a code of ethics or standards for their trade. Find out if members of the association have pledged to arbitrate disputes. You may want to contact the local chapter of the association to see whether it will act as an intermediary in case of disputes or arrange for an impartial arbitrator. If you want an arbitration clause in your contract, make sure the contractor you are considering will agree to arbitrate any disputes that arise out of the contract. (See additional discussion of arbitration.)

Check the contractor's references

Ask the contractor for local references, and call them to see if they were satisfied with the contractor's work. Skilled contractors will be proud to take credit for their work. If possible, go out and look at finished projects. Some consumers even try to find jobs in progress to see how the contractor works and to speak with the homeowner about work habits, inconveniences, and the sensitivity of the contractor to the living needs of the homeowner. Remember that the person you hire to work in your home will be a part of your home until the job is completed.

When speaking to the contractor's customers, ask such questions as:

• Did the contractor keep to the schedule and the contract terms?
• Were you pleased with the work and the way it was done?
• Did the contractor listen to you when you had a problem, and seem concerned about resolving it?
• Did the contractor willingly make any necessary corrections?

In addition to talking with customer references, obtain references from material suppliers, subcontractors, and financial institutions, if possible, to determine whether the contractor is financially responsible.

Ask the contractor for the address of his or her business location and business telephone number, and verify them. A contractor who operates a business out of the back of a pickup truck with a cellular telephone may be difficult to find to complete a job or fix something that has gone wrong after the last bill is paid.

Make sure your contractor measures up

You may also wish to check the contractor out with your local building department, trade association or union, local consumer protection agency, consumer fraud unit in your city or district attorney's office, and the Better Business Bureau. Call these organizations to see if they have information about the contractor you are considering. Ask how long the company has been in business and find out if there are any complaints about the firm or other relevant file information.

Do not be fooled by a smooth talking salesperson. Take the time and effort to insure that the person or business doing your home improvement is going to perform in a professional manner.

Make sure the contractor has workers' compensation and liability insurance coverage

Ask the contractor if the company is insured against claims covering workers' compensation, property damage, and personal liability in case of accidents. Ask to see a copy of the certificate of insurance, or ask for the name of the contractor's insurance carrier and agency to verify that the contractor has this insurance. In California, if a contractor has employees, workers' compensation insurance coverage is required by law.

This is important for you as a homeowner. If a worker is injured working on your property and the contractor does not have insurance, you are the one who will have to pick up the bill for an injured worker's injuries and rehabilitation, if necessary. Don't let your homeowner's insurance policy become your contractor's liability coverage!

Check the status of the contractor's bond

Some bonds are designed to protect you against substandard work that does not comply with local building codes. Bonds do not assure the financial or professional integrity or competency of a contractor. For example, they do not cover situations such as a contractor who leaves town after doing only half the job.

Bonding is generally required for large jobs financed by institutional lenders such as savings and loans, insurance companies or commercial banks. In addition, many owners and lenders as well as other contractors require bonding. Bonds can be obtained from bonding companies for a percentage of the contract price. This should be recognized as a cost of doing business when a bid is submitted.

In general, the bonding company will not have to pay more than the face amount of the bond.

Consumers should realize that bonding requirements might keep a new contracting business from bidding on desired jobs. Bonding companies will not take a risk without verifying the technical and resource capabilities of the contractor. For a contracting business to qualify for bonding, it must practice sound business techniques.