You hire a contractor for his or her expertise and knowledge. Hiring a registered contractor gives you some recourse in the event that something goes wrong. It also insures that you will not be liable for any worker's compensation claims. The State of Montana urges you to protect yourself from scam artists by doing some homework before beginning your construction project. You could start by checking a contractor's status Click Here, or buy calling the Department of Labor and Industry Contractor Registration at (406) 444-7724.
The State does not attest to the qualifications of a registered contractor. However, to become licensed, the State requires each contractor to meet stringent qualification requirements including passing a written examination. The qualifications of licensed contractors are thereby certified by the State through the licensing process. A contractor’s license as referred to here certifies the competency and qualifications of the license holder in a specific trade such as electrical or plumbing. It should not be confused with a business license which most city and county governments require commercial establishments to purchase and display within their place of business.
You should consider using a general contractor for any project that involves more than one contractor. A general contractor can manage all aspects of your project, including working with architects and designers, hiring subcontractors, obtaining building permits and scheduling permit inspections. Design/build contractors also provide architect and design services, as well.
Registration
A law passed by the 1995 Legislature requires all building and construction industry contractors and subcontractors who have employees to be registered with the State of Montana. A contractor may be exempt from registration if the:
- Total project cost, both labor and materials, does not exceed $2,500
- Contractor has no employees
- Contractor is licensed by the State of Montana as an electrician, plumber, engineer or architect
The law provides for a $500 maximum penalty for contractors who aren’t registered and a $5,000 fine for falsely transferring a registration certificate. Contractors possessing a “bid only” registration must upgraded their registration to “employer” status and have a workers’ compensation policy specific to Montana before actually performing work here.
If you use a contractor that is not registered and an employee is injured on the job, you may become liable for the costs of workers compensation. Before engaging a contractor, you should ask to see the prospective contractor’s license or registration certificate and confirm that all contractors and subcontractors that will be working on your project are in compliance with this law. The law provides that the general contractor and homeowner cannot be held liable for workers’ compensation accidents as long as the construction contractor and subcontractors are registered and in good standing on the date the contract begins.
It is important to note that in Montana, an exam is not required to become registered. The State does not certify the qualifications of contractors that are only registered by the State.
For further information on contractor registration contact the Department of Labor and Industry Contractor Registration 1805 Prospect Avenue Helena, Montana 59601 Post Office Box 8011 Helena, Montana 59604-8011 (406) 444-7734; Fax (406) 444-3465. To see a list of registered Montana construction contractors, Click Here.
Licensing
The State of Montana issues licenses for the following building construction trade disciplines: architects, engineers, electricians and plumbers. However, the State has no general contractor’s license and therefore does not certify the qualifications of general contractors.
Montana law requires all electrical work to be done under an electrical contractor’s license and all plumbing work to be done under a plumbing contractor’s license. A licensed electrical or plumbing contractor must have a "responsible electrician/plumber" who is engaged in a full-time capacity as the responsible person for all electrical or plumbing work performed by that contractor. The responsible electrician/plumber of a licensed contractor is responsible for obtaining any permit required by the state of Montana or the state or local building code enforcement entity and is responsible for ensuring that the work performed meets the requirements of the state of Montana and the national electrical code.
A licensed residential electrician is “limited” to residential construction consisting of less than five living units in a single structure. A commercial electrician, sometimes referred to as an "unlimited electrical contractor" is licensed to perform electrical work on commercial, residential, industrial and institutional electrical installations as covered by the national electrical code.
Before contracting electrical or plumbing work, you should ask to see the prospective contractor’s license. A licensed residential, journeyman or master electrician is required to have their license on their person at all times when employed at the trade.
Unlicensed and unregistered contractors pose a risk to your financial security because they expose you to significant financial harm in the event of injury or property damage. Few unlicensed and unregistered contractors have bonding or workers' compensation insurance.
More information about the States licensing requirements can be found by Clicking Here. For a list of licensed electricians or plumber Click Here.
Bonding
Some bonds are designed to protect you against substandard work that does not comply with local building codes. Bonds do not assure the financial or professional integrity or competency of a contractor. City, county and state agencies or commercial projects generally require contractors to secure bonds for large jobs.
Bonds may be classified as:
Contractor's License Bonds - Unlike some states, the State of Montana does not currently require contractor license bonding.
Contract Bonds - A contract bond sometimes referred to as a performance bond, guarantees both job completion and payment of all labor and materials. In general, the bonding company will not have to pay more than the face amount of the bond.
Bonding requirements may keep a new contractor or a contractor with a poor financial status, or track record from bidding on desired jobs. Bonding companies will not take a risk without verifying the technical and resource capabilities of the contractor. For a contracting business to qualify for bonding, it must practice sound business techniques.
Insurance
Home improvement contractors should tell you whether or not they carry general liability insurance and that it will protect against third-party bodily injury and property damage. If uninsured, they should be able to explain how they would cover losses that would ordinarily be covered by insurance.
If your contractor damages your property and doesn't carry general liability insurance, you or your insurance policy could end up paying for damages.
In Montana, if a contractor has employees, worker's compensation insurance coverage is required by law. This is important for you as a homeowner. If a worker is injured working on your property and the contractor doesn't have insurance, you could be asked to pay for injuries and rehabilitation through your homeowner's insurance policy. Don't let your insurance become your contractor's workers' compensation insurance coverage. Verify your contractor's workers' compensation coverage.
Check References
One of the best ways to select a licensed contractor is to seek out personal recommendations from friends or relatives who recently had similar projects completed and were satisfied with the job.
Ask the contractor for local references, and call them to see if they were satisfied with the contractor's work. Skilled contractors will be proud to take credit for their work. If possible, go out and look at finished projects. Some consumers even try to find jobs in progress to see how the contractor works and to speak with the homeowner about work habits, inconveniences, and the sensitivity of the contractor to the living needs of the homeowner. Remember, the person you hire to work in your home will be in and around your home until the job is completed.
When speaking to the contractor's customers, ask such questions as:
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Did the contractor keep to the schedule and the contract terms? |
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Were you pleased with the work and the way it was done? |
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Did the contractor listen to you when you had a problem, and seem concerned about resolving it? |
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Did the contractor willingly make any necessary corrections? |
In addition to talking with customer references, obtain references from material suppliers, subcontractors, and financial institutions, if possible, to determine whether the contractor is financially responsible.
You may also wish to check the contractor out with your local building inspection department, trade association or union, local consumer protection agency, consumer fraud unit in your city or district attorney's office, and the Better Business Bureau. Call these organizations to see if they have information about the contractor you are considering. Ask how long the company has been in business, and find out if there are any complaints about the firm or other relevant file information.
Ask the contractor for the address of his or her business location and business telephone number, and verify them. A contractor who operates a business out of the back of a pickup truck with a cellular telephone may be difficult to find to complete a job or fix something that has gone wrong after the last bill is paid.
If you want an arbitration clause in your contract, make sure the contractor you are considering will agree to arbitrate any disputes that arise out of the contract.
Don't be fooled or pressured by a smooth-talking salesperson. Take the time and effort to make sure that the person or business doing your home improvement is going to perform in a professional manner.
Bids
A bid is an offer to do work. It is advisable to get at least three written bids using identical plans and specifications so you can compare prices and contractors.
If you are like most homeowners, you may not be familiar with the current price of building materials and labor costs. The three-bids rule helps you decide if the bids are reasonable or not.
Make sure all bids are based on the same set of specifications, materials, and scope of work. Discuss the bids in detail with each contractor, and make sure you understand the reasons for any variations in price. Sometimes a higher price may be worth it, if the materials to be used are of higher quality or the work is more extensive. For example, if you are having your kitchen remodeled, and one bid is based on installing prefabricated cabinets in standard sizes while another is based on installing custom-made cabinets, the prices will not be comparable.
Please note: A license number on a bid or contract does not necessarily mean the license is valid. Although an unlicensed contractor may give you a low bid, the risks of possible financial and legal consequences you may face outweigh any benefits a lower bid may seem to offer.
Beware of any bid substantially lower than the others. It probably indicates that the contractor has made a mistake or is not including all the work quoted by his or her competitors. You may be headed for a dispute with your contractor if you accept an abnormally low bid.
Don't forget the old adage, "If the offer sounds too good to be true, it probably is!"
The Contract
Be sure to ask questions until you fully understand the contract and what the work will look like. Before signing anything, you may wish to discuss the proposed contract, plans and specifications with an attorney.
Get It In Writing
One of the best ways to stop problems before the job begins is with your contract. The contract binds you and the contractor to the project. Since a written contract protects both you and the contractor, all agreements should be put in writing. It should include everything you have agreed upon and the extent of work to be done. Get all oral promises in writing, and spell out exactly what the contractor will and will not do. If you intend to do some of the work yourself or hire another contractor to do it, this also should be written into the contract. Be as specific as possible.
Your contract must include a Checklist for Homeowners that specifies how to check out your contractor and how to check out the contract.
Never sign a blank or partially blank contract. Get a copy of the contract as soon as you sign it, and keep it for your records. Both you and the contractor are bound by everything set down in the contract, so read it carefully before you sign. If you have any questions or don't understand something, ask before you sign.
Be sure the financial terms of the contract are clear. The contract should include the total price, when payments will be made and whether there is a cancellation penalty. On any home improvement job, you should expect to make a down payment.
The contract should specify all materials to be used, such as the quality, quantity, weight, color, size, or brand name as it may apply. For example, the contract should say "Install oak kitchen cabinets, manufactured by Company XYZ, model 0318A, as per the plan," not just "Install kitchen cabinets as discussed."
Make sure your contract includes everything you feel is important to the job, including complete cleanup and removal of debris and materials, and special requests like saving lumber for firewood or saving certain materials and appliances. Also give instructions regarding pets, children or areas where materials may not be stored.
After you have a signed contract, and even after work has already begun, your contractor may offer suggestions that will change your original ideas for the work. The contract should clearly state your final agreement and accurately reflect everything involved in the work being done by your contractor. If you have added work, substituted materials or equipment, or changed the completion date, make sure that clearly worded and signed "change orders" reflect this.
