Although most home repair and improvement contractors are honest, licensed business people, the Council of Better Business Bureaus in Arlington, Va., says that home improvement ripoffs rose nationwide by 10 percent last year, and as much as $1 out of every $15 goes into the pockets of home-repair con artists.
Suppose you hire a general contractor to build a family room on your house. The contractor charges the ordered materials to his bill but fills in your name as recipient of the order. When the work is complete, you pay the contractor in full.
Later, the court clerk notifies you of a mechanic's lien on your house. A lien can be filed by any contractor, subcontractor, or supplier providing work or materials for the job.
You prove you paid the contractor but discover the contractor didn't pay the supplier. As a result, the supplier demands payment from you. If you refuse, the supplier can bring suit against you. You want to sue the contractor but find that the company has gone out of business, left town, or declared bankruptcy.
Some states don't accept payment to a contractor as a defense against a lien unless the householder withholds the final payment till after the filing period of a lien (30, 60, or 90 days).
How do you avoid this ''sting''?
Get a waiver of lien (a paper renouncing the right to file a lien) from the contractor, subcontractors, and suppliers. Ask the contractor to sign a paper saying you have a complete list of what was purchased. Or you could make all the payments to suppliers and subcontractors yourself. Also, keep the final payment until after the filing period for a lien, and state your intention to do so in the contract.
The Council on Consumer Information, the Center for Consumer Affairs, and the Council of Truth in Advertising all give consumers planning home improvements some sound advice: Invest your time researching and checking before you invest your money!
Here are some tips: