The truth about contractors, builders, sub-contractors and home construction
By William Decker, CMI
(Note: Please be aware that these circumstances exist in the Chicagoland area and in the state of Illinois and are not directly applicable to all areas of the United States. Check your local and state laws for more information.)
So, you are having a house built for you, are buying a newly built house or you are having your roof replaced, house repairs done or your kitchen or bathroom remodeled. How do you make sure that the work is done properly, professionally and safely?
There are a couple of the common misconceptions about home building, home repair and remodeling:
- General contractors are licensed by the state and undergo rigorous training and testing before they are allowed to build houses.
- Likewise, all the various building trades (electricians, masons, carpenters, heating and air conditioning (HVAC)) are required to have years of training and undergo testing and obtain state licenses before they can work on building or repairing a house.
- The local building codes are technical standards that define the “best practice” standards that must be followed when a house is built.
- Building code inspectors are licensed and trained professionals that examine every portion of a house and guarantee that the house was built safely and to the highest quality and best practice standards.
- All tradesman (roofers, plumbers, electricians, masons, etc) do pretty much the same quality of work and know how to do their work properly, to best industry standards and in accordance with local and national building codes.
- A new house that has been OK’d by the code inspectors is free of all defects and built correctly.
Sad to say, all of the above statements are generally believed by the public, and are all untrue.
It’s the liability, stupid.
The first and most important concept to understand in construction is liability. When you have a house built, remodeled or repaired, there is always the risk that something will go wrong. The roof will leak (even a new roof) or the electrical system be inadequate or the furnace will not heat the house properly and so on. When (not if) these things occur, the homeowner wants to have them fixed and, especially in a newly built house, doesn’t think that they should have to pay for the fix. Another way of putting this is that they want to hold someone else liable for their problem and have it fixed at no cost to themselves.
So, if there are problems with a newly built house, who is responsible and who is liable?
If the house was built according to the Architect’s plans (i.e., the plans included all the construction details (not usual) and the builder and all the workers followed the directions fully) the Architect is liable. The Architect made the mistake and he should pay for the repairs. This happens more than you would think, but the repairs are rarely paid for.
If the General Contractor changed anything (substituted less expensive insulation or left out some of the details that the plans called for) then the General Contractor is liable. He tried to save money and make a bigger profit, but how do you get him to pay for it?
OK, so neither the Architect or the builder is going to make good on their work. You can just call the local building department and they will force the contractor to fix the problem, right?
Let me be very clear about this (and it only applies in the State of Illinois). The local municipal building code inspectors and their employers (i.e., the local government) are NEVER liable! An Illinois Appellate court ruling, in 2005 (related to the wooden porch collapse disaster) has found that no municipal code inspector or department, in the entire state of Illinois, can be found liable for personal injury of property damage. In other words, the government is not responsible and will hold the General Contractor to be liable.
So, the General contractor is liable. Great. But how do you get him to pay to fix the problem?
Simple, you have to take him to court and pay for your own lawyer, and it takes years and you will, probably, never collect because the contractor will go out of business first. This will be a civil lawsuit, that you will have to pay for, not a government sponsored and paid for, criminal trial. The building code departments force the owners to fix the problems, informing the owners that they will have to go after the builder on their own. The builder, by this time, has probably dissolved his company and moved on, sometimes to a different country.
About General Contractors and Tradesmen licensing and qualifications.
In the City of Chicago, the only requirements to become licensed as a general contractor are a) showing proof of general liability insurance and b) paying the license fee. There is no testing or experience requirements. Some of the sub-contracting trades do have some examination requirements (electrician, for example) but only two trades require a state license (roofers and plumbers).
But, as we all well know, a law is only as good as how well it is enforced. I cannot recall an unlicensed tradesman being fined or jailed in my lifetime. It may have happened, but it is very rare. During the recent building boom (2002 – 2008) it seemed like everyone and their cousin was a General Contractor and most of the workers were just people who were chosen from the parking lot of the local home improvement store, that morning.
This is not to say that there are not good, professional and experienced general and sub-contractors, there are many. It is, however, to say that there are many more people building houses that have not a clue as to what they should be doing. Many times, this is the result of the public not doing their own due diligence and just hiring the contractor who submitted the lowest quote.
About Building Codes.
In Illinois, every municipality with a population of 10,000 or greater is allowed to set their own local building codes. Most often, the smaller villages merely adopt portions of the nationally established industry codes (International Residential Code, National Electrical Code, etc) after they have been in existence for some years (adopting the 2002 NEC in 2008) with some adaptations for specific local variations. The larger cities, like Chicago, generally develop and adopt their own building codes. Most often, the actual details of the code are developed by the various building trade unions and do not always consider only technical considerations. For example, the use of Romex wiring and ‘mini-breakers’ are perfectly correct, according to the national standards and the Underwriter’s Laboratory tests, but they are not allowed to be used in the City of Chicago. Their prohibition is more result of the electrical union’s control over the local building code requirements than of any defect in these particular components. I will leave it to the reader to figure out why this is so. Needless to say, there are many considerations taken into account when the local codes are developed, and not all of them are technical. Politics is, most often, the art of keeping all constituencies happy.
In any case, it is important to remember that building codes are a bare minimum standard, i.e., they represent the bare minimum that a tradesman has to do in order to be allowed to legally build a house. The codes say nothing about the quality of the workmanship nor the long term durability of the house.
How does one protect themselves?
There are some things that every home owner or buyer should do, merely as part of their own duty of due diligence. While not foolproof protection against scam contractors and tradesmen, they will help to weed out most of the sub-standard ones.
1) Always request copies of the contractor’s license (state, county or local), general liability insurance policy certification and workman’s compensation insurance policy cover sheet. One can check, at least for some trades (roofers and plumbers, in Illinois),on-line with the state licensing authority. Many “fly by night” contractors will steal the license number of a qualified company and use it to do the work, illegally. Be especially aware of the summertime “hail damage” roofer scams. One should also double check that the general liability and workman’s comp insurance are still in force. Unscrupulous tradesmen, often, get their insurance policy just to obtain their license, canceling it when it is no longer needed. If the consumer has this information, it is an easy proposition to just make a claim against the insurance policy if there are future problems with the work.
2) Make sure that you only hire General Contractors who are members in good standing with a nationally recognized professional organization. The National Association of the Remodeling Industry (NARI) and the National Association of Home Builders (NAHB) are two such organizations. These associations, unlike many local and state governments, actually have experience, testing and continuing education requirements for their members.
3) Make sure to verify the name, address and business location of the tradesman. If they are not listed in the phone book or with the Better Business Bureau they are probably not legitimate. Also be aware of the “traveler” workers who will steal the license number from a legitimate company.
While we are on the subject of the BBB, here is an important fact. There are many good companies that are not members of the BBB. Being a member of the BBB costs money and not all businesses want to have that expense. Many times, the local BBB associates will field a complaint against a business, then contact that business in an effort to resolve the dispute, but they will not do so unless the business joins (and pays!). So, it is important for you to check the listing of the contractor with the BBB, but it is not so important for a company to actually be BBB members.
There are also other listing services (Angie’s List or Service Magic, for example) that report on different contractors. When checking these listing services, it is important to remember that the number of listings and whether these reviews are favorable or unfavorable is NOT indicative of actual, statistically valid, ratings. Having done thousand’s of inspections, almost all of which with satisfied customers, our company has only 2 reviews on Angie’s list. It is also important to remember that people are more likely to post a negative review (in an effort to “get back” at a bad contractor) then they are to post a positive review. Just plain human nature.
4) Carefully read all contracts, quotes, specifications and paperwork. If you don’t fully understand them, do not sign them. If necessary, have your lawyer look over the contracts and make any changes that they better protect your interests. When comparing the quote prices from different contractors, don’t just look at the cost. Compare the quotes based upon the price, but also based upon the scope of work, materials and construction details that the work will entail.
With regards to contractor quotes, it is important to remember why contractors are called contractors. It is because they work according to a contract. This contract defines the work they must do and the materials that they will use. In order to get paid, they are only required to do the work that the contract specifically states. When looking at the proposed work, and especially when comparing the quotes of different contractors, make sure that you are comparing the apples to apples. The work, timeframe, materials and methods used must be clearly and completely spelled out. Don’t be pressured into signing a contract unless you completely understand what the work will entail and it is clearly written down. I would NEVER sign a contractor quote right away (when the salesman is in my house, pressuring me for the sale). Also remember that the person who presents the quote is NOT, usually, the person who will actually be doing or overseeing the work. They are, usually, just salesmen and only concerned with their commission.
5) Make sure to specify who will do the work. Make sure that you have the license number and insurance certification of the General Contractor. Make sure that the workers are all experience and qualified and are direct employees of the contractor. Also, sad to say, make sure that all the workers are legal citizens or documented immigrants. Many foreign born workers are very experienced, but many are simply day workers, hired out of parking lots and day worker pools.
6) When in doubt, consider hiring a state licensed home inspector to check on the work, and do so while the work is being done, not afterwards. A professional home inspector is an unbiased source of information. The inspector gets paid for his time and expertise and has no conflict of interest in assessing the work. In short, he gets paid the same regardless of whether the work is good or bad.
In summary, remember that it is the home owner’s responsibility to be informed and to check out contractors and tradesmen before the work is done. The local government code inspectors are very overworked, underpaid and are not expected to enforce the quality of the work. The burden is on the customer to check things out for themselves.