The U.S. Economy today has impacted every homeowner, as well as every business connected to the U.S. housing industry. If you're considering a home improvement project this year, you may want to be sure that the general and subcontractors you are considering will be financially viable enough to complete your project and pay their people. You also want to assure yourself they complete their work in a professional and timely fashion.

Virtually every homeowner can share stories or know at least one person who has experienced poor quality craftsmanship or long delays in getting home construction projects completed. I've even seen cases where the contractors went out of business or simply left town, leaving the frustrated homeowner holding the bag.

Don't get scammed
A dozen or so years ago, my sister-in-law and her family encountered trouble with a contractor they hired to build an additional room in their home. The work began professionally, with workmen completing demolition work and framing on schedule. My brother-in-law was referred to the general contractor, and even knew him socially.

But the builder's financial troubles soon became apparent. Rough interior work was left untouched for weeks at a time. Then, different workers would do some of the inside work piecemeal. Subcontractors would complain that they hadn't been paid.

The general contractor wouldn't return phone calls and as time passed, his phone was disconnected and his storefront business closed. Havoc ensued in the family, and they eventually got new workers and family to help them complete the job. But flaws in the previous work remain to this day, such as improperly leveled floors and settling cracks.

Attempting to find and sue the original general contractor went nowhere. Their home improvement budget was blown, and unpaid sub-contractors filed mechanic's liens for payments, which were subsequently settled, with the liens removed. But this took several years and created considerable headaches! So how do you protect yourself when hiring home contractors?

I recently came across a really great article in the Chicago Sun-Times which gave tips on how to avoid shady contractors.

Associated Press reporter, Melissa Kossler Dutton, interviewed Angie Hicks, who founded Angie's List, an Indianapolis IN, membership-fee-based online directory of home repair and improvement contractors of various stripes, as well as Shari Purves-Reiter of the Washington State Department of Labor and Industry, Kip Morse, Regional Governor for Better Business Bureaus, and President of the Central Ohio Better Business Bureaus.

Here are a few of my favorite tips from the AP article and a few suggestions of my own:

1. Check company credentials thoroughly, and ask for examples of previous work. Be wary if the contractor refuses to give you references, even if they are well known and advertised in your area. Be especially careful with those who have relocated their business locations frequently. My real estate team has had negative experience, with roofing contractors who offer "lifetime guarantees," but have a habit of moving around the Chicago area frequently, with slight changes to their company name in order to avoid living up to their warranties.

2. Get a complete list of all subcontractors the general contractor plans to hire. Contact them, and inquire how the general contractor's payment habits. Have the subs been paid in a timely fashion? In full? Have they had any disputes with the general? Again, if info is lacking you should be concerned. Very concerned!

3. If unsure about any company, check their credentials with the Better Business Bureau, or on Angie's List or a similar service. Call your local chamber of commerce and check with neighbors to see if they have any knowledge of poor performance by the contractor you are considering. Some verification companies and local government agencies, such as the Chicago Department of Consumer Affairs, may also help you check credit credentials of home contractors, and whether the firm has been sued by other homeowners.

4. Get a written contract, spelling out in detail specific work schedule and payment terms. Minimize your down payment. You should be concerned about contractors who require sizable down before work begins, and never make your final payment until ALL WORK is completed to your satisfaction. Written confirmation of a work schedule, perhaps building in a small contingency for unanticipated delays, may incentivize the company for finishing early, or penalize a company for delays in the project. Before signing any contract, review with your lawyer or professional adviser, if you are unsure.

5. Get lien waivers from the general contractor and all of the subcontractors after their portions of the work is completed. No waivers, no final payment! If possible, pay the subcontractors directly, rather than passing their payment through the general. This assures with certainty that the subs will indeed be paid. Avoid the potential for mechanic's liens against your home!

My real estate team also maintains our own Professionals Guide, which you can find on our Web site. It lists Chicago area companies previously used or personally checked out by our team members.

You can also contact us by phone or e-mail for a referral. We would rather you consider working with someone we have had successful experience with, and with strong reputations in business, versus a company you do not know. Please share this checklist with those you know and work with.

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