Scam Alert

Contractor Scams
Be aware of the warning signs of a scam! Unfortunately, the number of reported scams occur more often than ever before. What typically happens is a "contractor" will offer services for a much lower price that his competition (that is if the owner checks other prices), requires a large deposit to begin the work (1-third is a typical figure), stating that he gets the best pricing on materials if he pays cash in advance or cash before delivery. Worse yet, a second stage payment is required when the materials are delivered, lending credibility to his claims.

The contractor may even hire a sub-contractor to put the materials in place to even further enhance his image. And he may even require another stage payment at that time! Of course he bought the materials on "credit" that vendors are too-often eager to provide. And, the sub-contractors are usually not paid until they have completed their work. You guessed it…he skips town. This scenario leaves property owners not only out of their deposit funds, but responsible for payment for the labor performed and non-returnable materials as well. An unusual situation? Hardly. Desperate times spawn desperate measures. Scam artists thrive on people who fail to conduct due-diligence before entering into a contract. And when times are tough, the offers seem to look even better.

Prevent Fraud
The problem is, these unscrupulous con artists can put the honest contractor out of business and the results give all contractors a bad reputation. It’s an unnecessary scenario that need not happen if homeowners just take simple steps to protect themselves:
  • Make sure you seek bids from no less than 3 contractors who have worked in the community with established places of business.
  • Request a copy of the contractor’s Builder’s or Maintenance and Alteration Contractor’s license. The Michigan Occupational Code requires that these entities be licensed to provide labor or materials for all contracts in excess of $600. Keep in mind that the M&A Contractor is licensed only to perform the services on the printed license.
  • Check that license with the State of Michigan (Call 517-241-9288 or check their website, to verify that the license is active and there are no past or pending complaints.
  • Insist that the Builder or M&A Contractor apply for and obtain a building permit. Most work in this City requires a permit. The need for a permit can be verified on our website or by calling the Building Department, 248-644-1520. (Note: The City requires registration of all contractors each calendar year, which includes proof of licensure. We do not check for outstanding complaints registered with the State of Michigan.)
  • Ask for references and then call them. Discuss your project and ask questions relating to quality of work, timeliness of installation, and response to service needs.
  • Insist on a written contract and have it reviewed by your attorney.
  • Make payments only in proportion to the work provided and never pay for a job in full until all the work is completed and has been inspected and approved by the Building Department, if permits are required.
  • Make sure your check is made payable to the licensee named in the contract and not a third party. Always get a receipt.
  • Make sure you see evidence that their bills are being paid. A "sworn statement" and waivers of lien may not be enough. Verify that the waivers are genuine and specify the amounts paid.
  • Do not advance funds that are not consistent with the terms of your contract. Any changes or revisions to the scope of the project (often called "change orders") should be identified in writing and signed by both parties.
State Resources
The State of Michigan (Department of Labor and Economic Growth) has an excellent pamphlet, "How to Choose a Homebuilder or Remodeler" (BCS/LBL-001) available on line that goes into even further detail on how you can protect your interests when contracting for home improvements. This is the time not to let guards down. This is the time to be even more cautious. The old saying, "If it seems to be too good of a deal, it is" is of more significance today.