Check Before Hiring a Contractor

Do your homework before work is done on your home. Don’t hire just anyone! Use this checklist to select a contractor you can trust with your most valuable asset.

Is the contractor licensed to work in New Mexico? The New Mexico Construction Industries Division (CID) contracts with PSI to maintain the database of current contractor’s licenses. Every contractor must list his license number on all advertising and contracts. Check the PSI website www.public.psiexams.com/ to see if a contractor’s license is current.

CID handles complaints against contractors over building code violations. Call their Santa Fe Office at 505-476-4700 and ask if they have any complaints on file for the contractor you are considering. CID also has additional consumer information on their website at www.rld.state.nm.us

The Better Business Bureau (www.bbbnm.com/) acts as a mediation bureau. They can tell you if there have been any complaints against a contractor where they have become involved in the mediation of a dispute.

Does the contractor have proof of workers’ compensation and general liability insurance? If not, you may be liable for any construction-related accidents on your premises. Ask for the contractor’s insurance agent’s name and number and call the agent to get copies of “Certificates of Insurance” for these coverages.

Will the contractor provide you with names of recent customers? Call them to see if they would hire the same contractor again. Also ask how their relationship is with the contractor, and if they are related in any way.

Can you inspect the contractor’s work, both completed and in progress? If so, look for quality of workmanship and materials.

Will the contractor provide you with a complete and clearly written contract? A deposit is often required, but DO NOT pay the entire amount in advance.

Are you able to communicate easily with the contractor? Misunderstandings may cause problems. You will be in close contact with the contractor and may share your house with the crew until the project is completed.

Be wary of contractors who go door-to-door offering discounts for finding other customers, and watch out for those who offer to use materials left over from other jobs.

One way to know if a contractor values professionalism is to see if he is a member of a trade association. Members of New Mexico Home Builders Association join through one of nine “Local” associations around the state. Our website has a map to assist you in finding the Local Home Builders Association nearest you. Click on the town closest to you for contact information.

What if the Contractor Asks for a Deposit?

YOU SHOULD EXPECT a request for a cash/check deposit on residential remodel projects. It is customary for a contractor to ask for funds up to 30% for a remodel to order materials. For instance, kitchen cabinet suppliers generally request 50% down to place an order. The same goes for any custom windows that may be ordered.

Custom homes and room additions may require a first draw at the time of pouring the slab/foundation (also generally 30%) from the bank.

An important part is the deposit request must be in a written contract. Consumers should ask for a “draw schedule” for milestones of when funds should be provided to the contractor. Even if the contract doesn’t mention it, the contractor is obligated to pay Gross Receipts Tax to the State on each of these progress draws. Consumers should expect to have GRT added to the progress payment. GRT is calculated in the county where the construction project is being built/remodeled.

Again, USE CAUTION AND HIRE A REPUTABLE CONTRACTOR!

Quality and Warranty

Many builders have developed formal inspection procedures. Building inspectors, warranty insurance companies, FHA, VA, or your lender may also inspect the home. However, no matter how strong the commitment of the builder and all the inspectors, the desire for a high quality home will be strongest for you, the eventual owner.

No matter what the price of your home, you may reach a point where your standards exceed everyone else’s. Or you may not have the technical knowledge to judge the quality of every stage of the work and wonder if it is done well. Trust and information are vital to your peace of mind at such times. For perspective on this important subject, keep these points in mind:

Building codes make no distinctions based on price. Code books do not include one set of regulations for homes up to $200,000 and another for those over $200,000. Codes require that all homes meet the same level of safety.

Codes make no attempt to set standards for aesthetics. Many steps in construction allow the builder and the buyers to exercise their discretion. Performance in such areas is based on experience, pride of workmanship and the ever-present budget.

Price differences often show most notably in size and features. The more expensive the home, usually the larger and more complex the design. The list of features in a $597,000 home is longer than that of a home costing $125,000. For instance, the master bath of the former has a jetted tub with a fancy faucet. Tile walls, including hand-painted accent tiles, surround the tub. Beside the tub is a spacious walk-in shower, enclosed by clear glass panels in gold-tone frames. The cabinets have raised-panel doors with brass knobs and provide lots of storage space. The master bath in the second home includes a fiberglass tub with a chrome faucet. Tile surrounds this tub also. The buyers select from eight colors, none of which include hand-painted accents. A shower rod comes standard, but space limitations prohibit a walk-in shower. A single cabinet beneath the vanity offers some storage space. Its unadorned doors have no hardware. Although different in appearance and price, the plumbing to both tubs must work without leaking. Neither tub should have chips or gouges. The tile in both baths must meet the same standards. In time, grout and caulking in both baths will need maintenance by the homeowners. The cabinet doors should all operate smoothly and be level. They will all show variations in the way the wood took the stain.

THE STATE OF NEW MEXICO DOES NOT REQUIRE A CONTRACTOR TO OFFER A WARRANTY.

At closing your contractor will provide you with the manufacturers’ warranty documents for the new appliances. Mechanical systems such as water heater, furnace and air conditioning/swamp cooler also carry a manufacturer’s warranty of varying lengths. Ask to see any other warranty the builder may choose to provide for your new home AT THE TIME YOU SIGN THE PURCHASE CONTRACT.

Most purchase contracts will contain:

An arbitration clause that essentially states if any (or all) dispute(s) may arise, you will not have the option to go to court to settle your differences. Instead, disputes will be decided by an arbitrator. This is generally recognized to be faster, cheaper, and simpler than going to court. Consult an attorney and decide if you are comfortable with this concept BEFORE SIGNING THE PURCHASE CONTRACT. You should not be surprised to be requested to sign a form stating you have read the arbitration clause and understand its impact on your legal rights.
If your contractor builds more than 10 homes a year, you can expect to see a clause that requires arbitration to be done separately for each home; in other words — no class action suits. If you are having your home remodeled it is less likely this clause will be included.
If your contractor offers a warranty, you should expect to see information on this included in the Purchase Contract. If it is not mentioned, you should not assume your contractor is offering a warranty.
If the Purchase Contract does include a warranty, ask for a copy of the warranty up front, and review it before you sign the Purchase Contract. Warranties generally cover some items for one or two years, and structural issues for up to 10 years. The length of time each category of items are “warranted” for is generally stated in the Purchase Contract. Warranties never cover issues such as paint color or floor coverings. These are considered “cosmetic” and not structural.