Choosing a contractor for your residential project does not have to be a daunting task, learn what the most important steps are to finding the right contractor. When you choose the contractor that fits your needs the project runs smoothly. If, on the other hand, you don’t put in the time to find the right contractor, then you could have issues with your project that could last many years.

Additionally, choosing a licensed contractor instead of an unlicensed contractor has substantial benefits and help guard you against poor workmanship, unfinished projects, and provides protections by law that a licensed contractor adheres to and complies with. This includes the 10 year construction defect law which every licensed contractor must adhere to for every project.

To help you with this process, we have compiled a list of important items to consider when choosing a contractor including some of the important questions to ask and consider for your project.

Why use a Licensed Contractor?

In California, the Contractors State License Board (CSLB), a division of the Department of Consumer Affairs, issues licenses and keeps current records for all contractors past and present. You can visit their website and search a contractor by license number, business name or personnel name. All contractors must complete an exam that measures their proficiency of not only the type of work they will be doing but the laws associated with contracting in California. Another useful link on the CSLB site is the Consumer Portal, where you will find lots of great information that can help protect yourself and your home or business.

License contractors should know the California Building Code, understand when permits are required, have the details on the zoning laws, and which rules and regulations are required when completing a project. Think, for example, if you were having a deck built for your home:

• What happens if the foundation was not built correctly?
• Will the deck cave in over time or cause injury down the road?
• What happens if the deck was built within a city easement?
• Will it have to be torn down or rebuilt?
• Who is responsible for that?

When you choose a licensed contractor, they are responsible for these legalities from the beginning, helping to guard against issues that could arise. Unlicensed contractors do not have a regulatory agency to ensure that they are adhering to these types of laws and leave the payee prone to being taken advantage of.

What is a Home Improvement Contract?

This is a required contract between two parties (homeowner and contractor) for the exact work to be completed for any residential upgrade or improvement. An HIC is required for any work that is more than $500. Licensed contractors are required by the CSLB to have these contracts written in detail and outline the exact scope of work, the exact price, payment schedule, who will pay for permits, materials to be used, identifies the contractor and payee, and details the warrantee of the contractor in addition to any special request by home owner.

(Directly from the CSLB website) “The down payment cannot be more than $1,000 or 10 percent of the contract price, whichever is less, for a home improvement job or swimming pool, excluding finance charges. There are no exceptions for special-order materials.” You can also view this on the CSLB website.

Tip: Always have changes and promises in writing, even when there is no cost involved.

General Contractors and Specialty Contractors

Not all contractors are created equally. A General Contractor can specialize in one type of construction or service while another GC could specialize in high rises or remediation. Additionally a C-10 Electrical contractor may only perform industrial work and another may only perform lighting design. The importance of finding the right contractor starts by knowing what to look for and what kind of project you would like to complete.

Make sure your contractor is licensed in the area of expertise you are having work done. Legally, anyone doing a project of a value of $500 or more (including labor and material, even if the materials are purchased by the homeowner) must have a contractor’s license. Contractor’s licenses are grouped into three common categories and can be seen at https://www.cslb.ca.gov/About_Us/Library/Licensing_Classifications/.

In California, we also have a limited specialty classification (C-61) which covers all other work not listed in the three common categories. This classification is indicated with a “D”, which covers anyone doing just about anything from construction clean up to installing an awning and setting up scaffolding. Below is a brief description of the three common classifications.

They are as follows:

(A) General Engineering Contractor

(B) General Building Contractor

(C) Specialty Contractor

“A” License

If you are planning or building any of the following: water power plants, water supply, flood control, inland waterways, harbors, docks, shipyards and ports, dams and hydroelectric projects, levees, river control, railroads, highways, streets and roads, tunnels, airports, sewer systems and sewage disposal plants, waste reduction plants, bridges, and just about anything else that is not a building or a home. You will need an “A” engineering contractor.

“B” License

Contractors holding a “B” General Building Contractor license, allows them to conduct or manage construction of two or more trades under the same license. If you are looking to have one project completed then a specialty trade is what you want. For example concrete work, drywall patching, electrical troubleshooting, roofing, etc. But, if you are looking for work with many facets such as adding a room or remodeling which includes drywall, painting, flooring, etc. then you will want to search for a “B” General Contractor. Before you choose a contractor that fits your needs, check to make sure that their license is current and in good standing with the CSLB by looking here. Ask your potential General Contractor what their specialty is and what do they have the most experience with.

“C” License

There are 43 different classifications for specialty contractors listed on the CSLB https://www.cslb.ca.gov/About_Us/Library/Licensing_Classifications/, check each one to find the specialty contractor you are looking for. Some classification are more clear than others such as plumbing or electrical while other classifications are a little tricky. For example, windows can be performed by a Glazing Contractor C-17 or a “B” General Contractor. Another example is C-35 Lathing and plastering, which makes sense to a contractor, but if you are not in the industry you may have never thought that this license would include stucco. While you are looking at the classifications on the CSLB website read the short description of each license to determine which licensed contractor you will need to perform the project. Again, not all contractors are created equally.

Understand a Contractors Bond and Insurance

• What is a contractors bond?
• Why is it important to have liability insurance?
• Who is required to have workers compensation insurance?

These are all very important questions to be answered before selecting a contractor.

Contractor License Bond:

This section only identifies the “contractor license bond” as there are a number of bonds in the construction industry that are used for various reasons. The “contractor license bond” is required by CSLB therefore you should not see it advertised, unless the contractor is offering an additional bond, such as a performance bond, completion bond or others. California requires that all contractors have a minimum $12,500 contractor bond in order to have an active contractor’s license. This essentially means if you have an issue with a contractor for not finishing work and you have already made partial or full payment, or even if the contractor is not willing to fix an issue, you can then contact the bonding company who will investigate the issue. The bonding company may pay out up to the maximum bond amount to help pay to have another company do the remaining/repair work. At which point the bonding company will be responsible to get there monies back from the non-responsive contractor.

You can check if the contractor has a contractor bond on the CSLB site here www.cslb.ca.gov/OnlineServices/CheckLicenseII/CheckLicense.aspx. The CSLB keeps these updated on a regular basis. You could also call the bonding company once you have the information to verify that the bond is current.

General Liability:

General liability insurance IS NOT A REQUIREMENT it covers the project and the existing structure if the contractor makes a mistake, or has an accident, such as setting a wall on fire when soldering a plumbing pipe. Dependent on the size of your project and the potential loss we suggest that the contractor has a $1 million aggregate and $1 million per occurrence minimum general liability policy. Check this by requesting a certificate of insurance from the contractor and calling the insurance company to check that it is current. You should also request your name be listed as additionally insured on the policy before work is to start, which then allows the insurance company to inform you (usually within ten days) of any changes or cancellations to the policy.

TIP: Not all home owners insurance will cover your home while you are having construction work done, so check your policy and make sure your contractor has their general liability insurance.

Workers Compensation

Workers compensation insurance is coverage required for any worker on the job site that is working under the contractor in the event they get hurt on the job. For example, if a worker falls off a ladder and breaks an arm, workers compensation will cover the employee. If the contractor does not have workers compensation there could be issues with who’s at fault and who will pay for damages. Check this through the CSLB website and call the insurance provider once you have the information to verify coverage. Once you have selected a contractor be sure to receive a certificate of workers compensation and ask to be listed on the policy, doing this will insure that if there is a gap in coverage you will be notified. Always check with the CSLB, but also be aware that there are times when a business has not reported their workers compensation insurance making it impossible to verify through the CSLB. This is when you ask the contractor that you want to work with to show you the proof of compensation insurance and then call to verify.

The best contractors will have a copy of the certificates of insurance and there workers compensation certificate to show you immediately. Don’t hesitate to ask, if the contractor does not have it with them it should only take a phone call to their insurance provider and the agent will fax or email directly to you. Be aware of a contractor who hesitates or takes days to produce a certificate.

Make sure your contractor is properly bonded, insured, and if they have help or employees they must have workers compensation insurance.

Find a contractor

Here are a few places to find a contractor:

• Ask for referrals from friends, family, property managers, realtor or other similar people that may deal with or have used home improvement contractors.

• Ask a trusted specialty trade contractor for referrals to other types of trades. Many tradesmen are networked with other tradesmen. If you see that they do good work they will refer you to another contractor that also does good work.

Check on the Better Business Bureau (BBB).

Verify the Contractors past work and references:

Always check references and past job performance before choosing a contractor. Any reputable contractor should readily have photos and contact information of past jobs and customers. Check these references and ask questions about job quality, timeliness, cleanliness, professionalism, value for the price, whatever is needed to make you feel comfortable choosing the contractor.

Prepare to Ask Questions:

Most contractors are passionate about their trade and will be happy to answer questions about how the process works. What is the daily routine? How many times a week you can expect to see or hear from them? What happens when there are complications that come up, how will these issues get handled? How the progress payments are scheduled, and so on. Asking these questions up front will help you choose the contractor that fits best with your personality, time constraints, and specific needs.

Don’t miss our “How to protect yourself” article coming up.

The information, resources and articles you will see on our website are meant to build awareness and provide general information. We suggest always doing further research that is needed for yourself and for your project. In addition, the materials and content of this site is based on our interpretation of the laws and our experience working in California. This information may not be up to date and should be verified with your state as it may differ from California.