It's common knowledge that up-front money should be limited in any contractor agreement. The Colorado Attorney General even suggests you never make a payment until some work has been completed. But given the cost of materials, it's reasonable to expect to pay a deposit on larger jobs. If contractors use this money accordingly, it generally works out fine for all parties involved.
When the deposit is spent before the supplies are purchased
Most of us have at one time or another resorted to "creative financing" when it comes to paying bills. So it's easy to understand when contractors use advanced payments to pay for other business and personal expenses. But those who misapply advance payments are violating Colorado law. The Colorado Revised Statutes (CRS) clearly state how money paid to contractors in advance of work may be utilized. The CRS states:
"All funds disbursed to any contractor under any building, construction, or remodeling contract or on any construction project shall be held in trust for the payment of the subcontractors, laborer or material suppliers for which such disbursement was made. Any person who violates this provision commits theft." [Abbreviated, from section 38-22-127.]In other words, your money must be held and used for the sole purpose of completing your project.
If additional funds are requested and/or work must be delayed, ask for receipts related to how your advanced payment was spent. If the deposit was not spent on items directly related to your project, the contractor is subject to criminal prosecution for a misdemeanor if the amount paid is under $1000 or a felony if the value is $1000 or more (18-4-401). Getting action on this offense simply requires a call to our District Attorney's office, where you can discuss your issue. If circumstances indicate your deposit was misused, they'll suggest you file a police report, which can be initiated over the phone and requires little more than a copy of your cleared deposit check.
Dealing with other contractor complaints
Lawyers and police are not your only options for dealing with contractor issues. Try one or more of the following if you can't get satisfaction from your contractor.
- Contact the Fort Collins Licensing Department to discuss your options.
- File a complaint with the Colorado Attorney General.
- File a complaint with our area Better Business Bureau (BBB). Don't underestimate the power of a well-written complaint, filed on this site. Smart businesses do everything they can to resolve these complaints and even national companies will address concerns expressed through the BBB.
- Post a few online reviews and don't forget social media. Take a little time to think through what you write and be careful to only include information that is truthful and appropriate for public consumption (never include account information or social security numbers. You might also consider posting reviews for excellent jobs that left you very satisfied.
- File a complaint with the Federal Trade Commission at http://ftc.gov/complaint. This won't receive any individualized action but it may help to close down constant offenders.
Beware of door-to-door solicitors and make sure you get at least three quotes. If a contractor is trying to pressure you into a time-limited deal, chances are you when the job is done. And you'll never identify the market price for a job based on a single quote.
Before you get a quote from any contractor, it's a good idea to search their business name on our local Better Business Bureau site. You'll want to know how long they've been in business along with how many complaints and the nature of complaints which have been filed against them. When getting quotes, be sure to ask each contractor for references and plan to spend some time in conversation with those references -- even those who were hand-picked potential contractors will give clues about the potential downsides of doing business with these contractors.
Get everything in writing. This includes details about the job, the finishes, the time it will take and the final cost of each project. Verbal promised should be written on the contract before you sign it and if you want an "out," be sure to include that in your contact. In general, consumer contracts cannot be easily canceled without a mutual agreement.
Resist payments in advance. On larger jobs, you may be asked to pay 20 - 30% down to help cover the cost of materials. Just make sure you understand what you're paying for and make sure your start and finish dates are acceptable and in writing.
It's a good idea to get a lien waver signed upon final payment for your project. Contractors who work on your house can place a mechanic's lien on your home if you do not pay for work received. Even subcontracts can place a lien on your home if the general contractor does not pay them -- so make sure to include lien wavers for everyone attached to your project.
Additional Reading
- Federal Trade Commission: Hiring a Contractor - Excellent and detailed.
- Lifehacker: How to Hire a Contractor Without Getting Hosed - Excellent, with a nice writing style.
- Larimer County: Contractor Complaints - This has some outdated numbers and links but it's included in the hopes that it may be updated soon, with local information.
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