Contractors 102: The Hiring Process

After researching and finding the right contractor for your project, it is easy to just rush through the hiring process and get started. However, properly creating and having both parties sign a contract is extremely important. A contract can not only protect you in the event that something goes wrong during a project, but it also can provide a clear set of expectations for the project.

Get it all in writing

It is extremely important to have both parties sign a written contract before the work begins. Contract requirements can vary by the state so even if your state does not require a contract you should ask for one. This contract should be clear, concise, and detailed. When considering a contract you should make sure it contains:

  • Contractor’s name, company (if applicable), address, phone number, and license number (if required)
  • Any subcontractors that will be used along with the address, phone number, and license number (if applicable)
  • An estimated start date and an estimated end date
  • A statement on the project estimate and the scope of work
  • A payment schedule for any parties involved (contractor, subcontractors, suppliers, etc.)
  • The obligation of the contractor to get all necessary permits
  • How change orders will be handled. A change order is a written authorization to make a change or addition to the original plan presented in the contract. A change order could potentially affect the price and timeline of the project.
  • A detailed list of any materials needed. This should include the color, quantity, price, brand, model and size. If any materials are going to be chosen later the contract should state who will be choosing those items and how much money is allotted for each item.
  • Information regarding warranties. This should include warranties on materials and on the workmanship. Information that should be included could be: who is honoring the warranty (manufacturer, contractor, or the distributor), the length of the warranty, and any limitations on the warranty.
  • What the contractor will or will not do. Is cleanup included in the price? Will the contractor be responsible for any spills, stains, or damage?
  • Any promises that were made during phone calls. If these are not put into writing and the contractor does not remember them then these oral contracts may not be enforceable.


Payment Options

It is recommended by the Federal Trade Commission that you should not pay a contractor in cash. If a contractor is asking for payment in cash they may not be as reputable as one who has other payment options. While it may not apply to everyone, contractors that ask for payment in cash instead of other forms could be using your payment for other things besides the project. For a larger project you may want to arrange a financing option.


Payment process

One way to help limit the risk in hiring a contractor is limiting the down payment. Some states limit the amount of money that a contractor can request, to find out what your local laws are you can contact your state or local consumer agency. Another way you can limit some of the risk is to add a clause into the contract making the payments contingent upon completing defined amounts of work. This will provide an incentive to the contractor to complete the work on time and with good quality.



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