Working with an unregistered business can be dangerous for you and your community. You can become liable for many of their mistakes, and your building could be left unfinished for months or even years. So, when should you be suspicious of a 'company', and how can you avoid unregistered contractors all together? Luckily, we're experts in the post-frame construction industry and have provided you with a list of 10 red flags that signal that you should steer clear of a builder.
RELATED: 7 Dangers of Hiring an Unregistered Builder
1. A 'too good to be true' price.
A price that's too good to be true probably is. Licensed builders are forced to have higher prices than unlicensed ones because they pay into necessary taxes and insurance such as worker's compensation, builder's risk insurance, and liability insurance. Unregistered businesses, such as many Amishmen and 'lone ranger' contractors, are able to offer a lower prices by leaving you, your project, and your property unprotected.
2. They are not willing to put a physical contract together in writing.
Even if your prospective builder is a 'friend of a friend', make sure to get an agreement in writing. If they're insistent on only giving verbal contracts, it's time to research other companies. Without a physical contract, you have no proof of what you agreed on, making it impossible to sue or get your money back in the future.
3. They do not not have proof of insurance.
When first meeting with a contractor, make sure to ask them about their builder's risk, liability, and worker's compensation insurance. They may try to force you to obtain insurance yourself, which can be difficult if you don't have access to an insurance company that specializes in construction.
4. They tell you that permits and/or inspections aren't required in your area, or ask you to obtain permits for them.
Unless you live in an extremely rural area, permits and inspections are always required. A good contractor will help you through the process of obtaining them, and do most of the work for you. If a builder refuses to interact with the local government to obtain permits and inspections, that a good sign that they're doing something suspicious and don't want to get caught.
5. The contractor asks for a large down payment before any work begins.
Down payments are always necessary, but an extremely large one can be suspicious, especially if it's over 50%. This is a sign that the builder has a pattern of making mistakes, and wants to make sure they get your money before that happens.
6. They make multiple pushy requests for payment in the early phases of construction.
Similar to #5, this is an indicator of mistakes and dangers to come. It's a sign that even the builder isn't confident in their work.
7. They ask you to make checks out to a person rather than a company, or demand payment in cash.
Unregistered contractors don't like to leave paper trails. If they are investigated by the government, they don't want to leave around any proof that they've done anything wrong. A trustworthy, registered business will ask you to make checks payable to the company, not an individual.
8. They only work weekends of after-hours.
If a contractor doesn't work during normal 9-5 working hours, this is a sign that your project isn't a priority for them. They probably have a different job during the day, and aren't an expert in construction or specialized in your particular building.
9. They can't give you a license number and don't have one displayed on any paperwork.
This red flag is pretty self-explanatory. A registered contractor should be able to give you some sort of proof that they are registered and licensed to be able to do the work that they're doing. If they're not - get out of there.
10. They are not registered with the Better Business Bureau, or they have a poor rating.
When conducting research on companies to hire to build your garage, barn, or commercial building, always check reviews. Trustworthy companies will be listed on the BBB website, and have a good rating. Not being listed on the website is a good indicator that they aren't a registered business, and a poor rating indicates unethical business practices.
We hope you use this information to find a trustworthy, hardworking, expert builder in your area. Don't be fooled by low prices and false promises. Always investigate your builder before signing a contract.
Kirkham Building System, Inc. is a licensed post-frame builder in the state of Ohio. We would love to help you plan your next residential, agricultural, or commercial pole building. Give us a call at 740-803-1235 or visit our contact page to schedule a free consultation.