Home Improvement Fact Sheet

  1. Know what work you want done.
    • Make a thorough list and be specific. This will enable you to easily negotiate with various contractors, lock in firm prices and avoid surprises. Having a written list will also help in ferreting out unscrupulous contractors who might try to convince you to have additional work done that you don’t want or need.
  2. Know what permits are needed.
    • Even though a qualified contractor should be aware of necessary permits and inspections, you should know them too.
    • Check with your local building and codes office before beginning a project.
  3. Shop around.
    • Look at multiple contractors. Get quoted prices for the work you want done and compare.
    • Also, find out the proposed timeline for when each contractor can start and finish the project.
  4. Get references and check them.
    • Ask your friends and neighbors which contractors they used for home improvement projects and whether or not they were satisfied with the results.
    • Get references from the contractor directly and speak directly to former customers.
  5. Get proof of insurance.
    • If a worker is injured, or damage is caused on your property, you could be held liable if the contractor does not have the proper insurance. So, make sure the contractor is insured.
  6. Check licenses.
    • Home improvement contractors must be licensed in New York City, Suffolk, Nassau, Westchester, Putnam, and Rockland counties.
  7. Never pay the full price upfront.
    • Establish a payment schedule and stick to it. Often this could include an initial down payment and subsequent incremental payments until the work is completed.
    • Withhold final payment until all the work is completed and all required inspections and certificates of occupancy are finalized.
  8. Put it in writing.
    • New York state law requires a contractor to provide a written contract for home improvement work. The contract should include a timeline for work to be completed, a payment schedule and as many specifics as possible about the project, such as types or brands of materials.
    • On larger projects, architect or engineer plans should specify virtually every detail of a project.
  9. Know where your payments are going.
    Contractors are required by state law to either:
  • Put your payments into an escrow account and use it only for your job until it is substantially complete (contractors are legally required to disclose where money will be held in escrow).
  • Prove they have bond insurance to protect your money. Ask for proof of which option they use before hiring them.
  • Never do business with a contractor who is unwilling to abide by any of the conditions above.
  • If the contractor doesn’t meet the above criteria, look elsewhere. Even if the contractor seems reputable, it’s simply not worth the risk.

Finally, check the Attorney General’s web site www.nyknowyourcontractor.com for more information.

This website is a crucial resource for anyone looking to have work done on their property. It’s easy to use and contains a wealth of important information to help you from becoming a victim of a bad contractor.

State law regulates the sale of home improvement goods and services and applies to most types of improvements costing more than $500 purchased by homeowners, co-ops owners and tenants. Some important provision of the law are summarized below:

Progress Payments: Any schedule of progress agreed to in the contract must bear a "reasonable relationship" to the work done, materials purchased or other project-related costs.

Escrow Accounts: Any contract payments received by a contractor from a customer prior to substantial completion of the job must be put into a trust (escrow) account in a bank located in New York State within five business days and the customer must be informed where the money is being held within ten business days. The contractor can withdraw the deposit only in the following circumstances:

  • Under the terms of the payment schedule agreed on by the contractor and the customers;
  • Upon substantial completion of the job; or
  • If the customer violates the contract, but only to the extent that the amount covers the contractor’s reasonable costs.

Alternative Surety Bond: As an alternative to the escrow account, the contractor must deliver to the customer a "bond" or "contract of indemnity," guaranteeing that the customer’s money will be properly used or returned. The bond must be delivered within ten business days after the contractor receives the customer’s money.

Other Contract Requirements: Home improvement contracts must be in writing, legible and in plain English. A copy must be given to the customer before any work is done. The contract must contain:

  • The contractor’s name, address and telephone number;
  • The approximate start and completion dates, including any contingencies which would change the completion date;
  • A specific description of the work and materials, including brands, model numbers and other identifying information, along with the price;
  • A consumer notice that reads as follows:
The customer has an unconditional right to cancel the contract until midnight of the third business day after the contract was signed. Cancellation must be done in writing.

The contractor is legally required to deposit all progress payments received prior to completion in an escrow account or post a bond to protect these payments.

If the contractor or subcontractor who does the work is not paid, he may have a claim against the customer’s property under the Lien Law.

Penalties Against Contractors: A customer may sue for actual damages, plus a $500 penalty and reasonable attorneys’ fees if the contractor has used fraudulent written statements to get the customer to sign the contract. The Attorney General is also authorized to go to court to stop illegal practices and order contractors to compensate defrauded customers. Contractors can also face $100 civil fines for violating the Home Improvement Contract Law, and fines from $250 to $2,500 for violating provisions of the law dealing with the protection of a customer’s payments.

Local Licensing Laws: A contractor must also continue to comply with any local licensing laws. For further details, refer to Article 36-A of the General Business Law and Section 71-a(4) of the Lien Law.

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