ThemBid.com

Contracting Gotchas

We are launching the first version of the ThemBid Contractor edition (it is currently in private beta) in California. Here we will list a few issues that any person working with a contractor should consider, particularly in California. We also recommend that you consult your lawyer before attempting to hire a contractor and your state contractor licensing board.

1. The 20-Day Preliminary Notice

If the 20-Day Preliminary Notice is not filed by the contractor within 20 days of the start date of work, the contractor is not legally entitled to be paid. Other details regarding this notice, can be found here.

2. Down Payment Rights

You have the right to make a down payment of no more than 10 percent of the project price or $1,000, whichever is less.

3. Re-Modeling

California law requires re-models to adhere to specific energy saving standards. See this for details.

4. Liability Insurance

Make sure that your contractors have liability insurance, or else you will have to pay for any damages that contractor makes to your property.

5. Workers Compensation Insurance

California law requires that contractors have workers compensation insurance for all employees. If a worker is injured working on your property, you will pay for injuries and rehabilitation through your homeowners insurance policy.

6. Cancel In Three Days

You have a three day grace period to cancel the contract, use that time to review carefully. The cancellation must be in writing and mailed before midnight of the third day. Registered mail is recommended to verify the date you mailed the cancellation letter.

7. No Owner/Builder Permit

The correct permits must be obtained from the local building department; however, do not get an owner/builder permit. That would imply you are personally providing your own labor and materials. The contractor should obtain the proper permits.

8. Protect Against a Mechanic’s Lien

If you don’t protect against liens, you may end up paying twice. Download a free informational guide here.

See the California State Licensing Board’s website for more details.