Fraudulent Contractors

Something I’ve grown really tired of having to hear about is contractors taking advantage of customers, primarily residential customers. You’ve probably heard it before. “I gave them a deposit for the materials, and they never showed up”. Over my years in this business, I’ve heard this several times. It’s incredibly sad and embarrassing for my industry. I’m sometimes skeptical at first, as I hear the sad stories being told to me. I am so caught off guard by how it’s even possible, or how the customer allowed it to happen. Unfortunately though, it still happens. And I’m embarrassed of the ‘contractor stigma’ that I work so hard to change and improve.

The countermeasure to prevent this unfortunate occurrence is relatively simple. You know the adage: “good fences make for great neighbors”? How about this one: “good contracts make for successful projects”. And the terms in the contract should be based on the simple belief that no money should be transferred until something of value has been performed or delivered. The discussion, understanding and agreement of this should eliminate majority of these cases.

This does mean that the contractor has the burden to perform or deliver prior to being paid. But that’s not a problem. In fact, this is a great thing! It provides a consistent balance for the project.

First, it allows the contractor to stand out as being dependable, stable and legitimate. It also signifies to the customer that the contractor is invested in the project and that they plan to complete it, to the customer’s satisfaction. Additionally, it provides an exit strategy for everyone in the event either party wishes to stop. The customer will still have some quantifiable value that they either will pay for or already have paid for. The contractor is also paid, or will be paid for something that has been done or furnished.

From my experience, the legal system favors the contractor. For example, it is fairly easy and affordable for a contractor that has not been paid for goods or services provided to a property owner to place a lien against that property. This typically will guarantee the contractor will eventually be paid. On the other hand, when a contractor fails to deliver goods or services in which they have already been paid for, I have yet to see a fair and equitable outcome for the homeowner. It seems to be very difficult, if even possible sometimes to locate the responsible parties and reclaim those funds.

Majority of the horror stories I’ve been involved with included me performing charity work to help the homeowner get their home back together. And those cases originated with the customer making a down payment or deposit, and the project never being finished or in sometimes ever even started.

Please consider this when selecting contractors, especially for residential construction projects. It does happen, but doesn’t need to. You can protect yourself from majority of those challenges by always having the financial leverage over the contractor until you are completely satisfied.