Watch Out For Construction Fraud

State Attorney Curtis Golden's office faxed the following tips to alert homeowners about construction fraud. The report was compiled by the State Attorney's Construction Fraud Task Force and is printed in part. For a full copy of the report contact the State Attorney's office or the Home Builders Association.

The biggest key to preventing contractor fraud lies with you, the homeowner. Know your contractor! Make sure the contractor is properly licensed and has ties to the community. Beware of repair businesses and individuals who solicit door-to-door, arrive in unmarked vehicles, have a post office box or temporary address, or claim they are from another county or state and are in the area solely to help hurricane victims.

Get it in writing! Be sure you have signed contracts and receipts; and do not verbally authorize subsequent changes. Following a natural disaster, it may be best to make only emergency repairs until you can regroup, rethink, and negotiate free from panic and emotion. Remember, the best protection is an informed homeowner!

1. Prior to entering into a contract, verify with proper authorities that the contractor is properly licensed.

2. Make sure your contract is detailed, ie., do not enter into a contract which merely states X number of dollars to rebuild and repair your home.

3. Consider a contract provision tying periodic progress payments to inspections by the local building authority.

4. Consider a provision requiring a set percentage (85%) of all monies paid (including deposit monies) be applied to your home.

5. Prior to signing a contract have the contract reviewed by an appropriate professional, ie., attorney, licensed architect, and/or engineer.

6. Make sure proper permits are obtained before work begins.

7. When large amounts of money are involved consider establishing an escrow account with an attorney or a bank. Do not endorse and/or hand over a large insurance settlement check.

8. Prior to making progress payments require an inspection report indicating the work has passed inspection (consider making this a contract term).

9. If the contractor demands extra monies to continue work because he has run out of money, make any payments you choose to give him by means of a two-party check.

10. When possible make checks out in company names and not personal names.

11. Be cautious of contractors who ask you to pull/obtain permits (owner/builder). Know that you are giving up some rights or taking on some obligations normally performed by the contractor. This is generally an improper action if the contractor is properly licensed.

Written by Collier Merrill, President, Home Builders Association of Northwest Florida.

May not be used without written permission from The Home Builders Association of Northwest Florida.