Why Homeowners Should Vet Contractors Carefully Before Rebuilding

I’m hearing too many reports of contractors taking advantage of homeowners in the Palisades, and the problem is becoming more troubling.

I understand the position people are in. After everything this community has endured, many homeowners now face a heavy financial and emotional burden as they try to rebuild, often with very limited budgets. That vulnerability is making some people easy targets.

Homeowners are being approached by different groups, nonprofits, referral services and contractors who say they can rebuild for less than $400 per square foot.

To be clear, I’m a contractor, and I know that building for under $400 per square foot can be done, depending on the scope of work and the level of finishes. There are legitimate contractors who can do that. But a promise like that does not guarantee the work can actually be delivered.

That is why homeowners need to do their homework.

Many people spend more time checking Yelp reviews before choosing a restaurant or hotel than they do researching the contractor they are trusting with hundreds of thousands, if not millions, of dollars.

Before you sign anything, take time to do the following:

• Contact at least three references. Speak directly with former clients and ask about their experience, whether the project stayed on budget and whether it was finished on schedule.
• Visit at least three active construction sites. If possible, look at projects in the Palisades. You want to see for yourself that the contractor is actively building homes similar to yours.
• Verify the contractor’s license, insurance and experience. Use the California Contractors State License Board license check tool to confirm the license is active, properly classified and in good standing. Review any available disciplinary history, bonding and workers’ compensation coverage.
• Know exactly what is included in the price per square foot. Does it cover site work, utility connections, permits, finishes, landscaping and other expenses? A low price means little if major parts of the project are not included.

Again, I’m not saying a rebuild under $400 per square foot is impossible. I’m saying you should confirm that the contractor making that promise has the experience, resources and capacity to deliver it in a reasonable time, especially in the Palisades.

Another troubling pattern I’m hearing about is homeowners paying large sums in advance for work that has not been completed.

In California, the maximum down payment for most residential home improvement contracts is $1,000 or 10% of the contract price, whichever is less. Limited statutory exceptions exist. After that, progress payments should be tied to clearly defined completed work or materials delivered to the project, consistent with applicable law.

For example, if your contractor has finished the drywall and the work has been verified, then paying for that completed work is reasonable.

Before making any payment, protect yourself by getting the proper lien releases from your contractor, subcontractors and suppliers. Use conditional releases when you pay, and get unconditional releases after the payment clears.

If an invoice says the drywall is 60% complete, do not just accept that at face value. Walk the house and inspect the work. If it is only 30% complete, have that discussion with the contractor and adjust the payment accordingly.

Do not pay for work that has not been done simply because an invoice says otherwise. This involves a great deal of money, so take your time, ask questions and make sure the work matches what you are being billed for.

The Contractors State License Board has released specific guidance for homeowners rebuilding after disasters, including warnings about excessive down payments, improper progress payments and unlicensed contractors. I strongly encourage anyone rebuilding to review the CSLB Disaster Help Center before signing a construction contract.

Palisadians are a smart group of people. We chose to live in one of the best towns anywhere, so clearly we value quality. But right now, our community is vulnerable.

Between the trauma of the fires, insurance problems, uncertainty about rebuilding costs and the desire to get families back home, it is understandable that people want to move quickly and find the most affordable path forward. Unfortunately, some people are exploiting that urgency.

There are many good, honest, hardworking contractors out there. The challenge is making sure you hire one of them. And while the lowest bid can be tempting, the lowest starting price does not always mean the lowest final cost.

I’m also hearing from more homeowners who are considering acting as their own general contractor in order to save money. There is nothing inherently wrong with that, and for some homeowners it can work. But you need to understand what it involves.

Managing subcontractors, coordinating schedules, reviewing invoices, handling inspections, verifying insurance, getting lien releases and understanding your legal responsibilities are all essential parts of the construction process.

Being an owner-builder is not simply a matter of hiring subcontractors and skipping the general contractor’s fee. You are taking on the responsibilities and risks that come with managing the project. If you choose that route, make sure you educate yourself on what to do, what not to do and how to protect yourself financially and legally.

My goal is not to discourage rebuilding or to suggest that affordable construction is impossible. Quite the opposite. I want as many families as possible to return home. But I also do not want homeowners who have already lost so much to lose even more because they did not take the time to verify who they are hiring or properly manage construction payments.

Do your homework. Check references. Visit job sites. Verify the work before paying. And do not let anyone pressure you into making a financial decision you are not comfortable with. We have all been through enough. Rebuilding should not create another financial disaster for our neighbors.