Hiring a contractor in Wisconsin? What to know about licenses, insurance and lien waivers
Hiring a contractor for your home project can be overwhelming, and people fall victim to home improvement scams every year.
That's why Public Investigator interviewed Michelle Reinen, head of the consumer protection division in the state Department of Agriculture, Trade and Consumer Protection, and Billy Brown, the owner and president of Billy Brown Insurance in Delafield, to gather their advice about how to protect yourself.
Here are some questions they suggest asking before hiring a contractor.
Is the contractor licensed in Wisconsin or in your city?
Contractors should be willing to provide consumers proof of their licenses and certifications, such as registration cards.
To check if a contractor is licensed in the state of Wisconsin, visit license.wi.gov/s/license-lookup. You can search for the contractor's license with their full name or their company's name.
Not all contractors, depending on your project, are required by state law to have a license. However, dwelling contractors must have a license to obtain building permits. Electricians and plumbers must have licenses as well.
The City of Milwaukee requires home improvement, electrical, plumbing and concrete contractors to have an additional city license to take out permits. You can verify if the contractor holds a license in Milwaukee on the city's license search.
Does the contractor have insurance?
Before signing on the dotted line, ask the contractor for a copy of their certificate of insurance. Most contractors will hold general liability and property damage insurance. These insurance policies help protect consumers and contractors from footing the bill for negligence and injuries that may occur during the project, Brown explained.
Additionally, potential customers can call the "insurance producer" listed on the contractor's certificate of insurance to verify that the contractor is actually currently insured.
More: An older couple said this Milwaukee contractor took their money. They aren't the only ones.
What does liability insurance cover?
Liability insurance typically covers cases of negligence and on-site injuries, Brown said.
For example, Brown said, if a contractor were to cause a fire in your home, the insurance would cover the property damage. Another example he gave was if a ladder used for a project fell on a child, the insurance would cover that also, he said.
Usually, the insurance policy does not cover when a contractor fails to complete a contractual agreement, Brown said.
Brown recommends that consumers ask for performance bonds to guarantee that a project will be completed within the terms of the contract. The performance bond pays the consumer if the contractor doesn't complete the contract, Brown said. In order for a contractor to secure a bond, they'll have to have a good credit score, Brown said.
What do their previous customers say?
To verify a contractor's track record, ask to speak with their previous customers. Unless the business is newly established, there are likely previous customers who are willing to share their experience working with the contractor.
Check reviews and complaints from disgruntled customers on Better Business Bureau, Google and social media. You can also call the Wisconsin Department of Agriculture, Trade and Consumer Protection at (800) 422-7128 to see if complaints have been filed against the company.
To see if former customers and creditors have sued the individual contractor or the company, search the contractor's name and business on the Wisconsin Circuit Court Access website.
Get an estimate
If you are seeking a contractor, it is good practice to contact several businesses to establish a clear range of prices for the service needed.
According to the Federal Trade Commission, consumers should request written descriptions of the labor to be completed, needed materials, completion date, and the price. After collecting estimates, customers can evaluate the difference between estimates and, if they drastically differ, ask a contractor why their costs are low or high.
Consumers are advised to not automatically choose the lowest cost service.
Get a contract
Wisconsin law requires a written contract if payment is needed before the work starts. Contracts help ensure that the project is completed based on the agreed terms.
Wisconsin law requires the following aspects to be included in the contract:
The name and address of the contractor and the sales representative or agent, if involved
A detailed description and list of the materials needed for the project, such as the name, type, size, quantity, model year, etc.
The total price of the project including cost of materials, finance charges or the hourly labor rate
The start and completion dates of the project
A statement regarding guarantee or warranty for materials and labor
DATCP recommends waiting to sign the contract until you understand it completely, and potentially having an attorney review the contract.
Under Wisconsin's 'right to cure' law, consumers must submit a written notice of concerns to the contractor before they can sue. The contractor then has 15 to 25 "working days" to remedy the situation by resolving defects at no cost to the consumer, offering payment or a combination. The contractor can also reject the claim.
Consumers have the right to cancel a contract within three business days, according to Wisconsin law.
Ask for lien wavers
Reinen recommends requesting lien waivers from the contractor, especially before final payment. Under Wisconsin law, if contractors fail to pay subcontractors for their labor or the materials used in the project, those unpaid companies can place a lien on your property.
Lien waivers document payments made by the contractor to subcontractors and material suppliers. The waivers must be signed by the contractor and by those providing the labor and materials.
Consumers can use lien waivers to confirm and track that all bills are being paid as the project progresses.
"It's more than a receipt," Reinen said. "It's proof that the contractor has been paid an allotment of money and protects the consumer from anyone else that may be involved with the job."
The law also requires home improvement contractors to provide consumers a “Notice of Consumer’s Right to Receive Lien Waivers.” Reinen says to reconsider working with a contractor if they fail to share this notice with you.
Common signs of a contractor scam
The Federal Trade Commission recommends that consumers remain vigilant about the following behavioral signs of contractor scams:
A contractor who attempts to pressure a consumer into paying a significant amount of money ahead of completing work.
An individual or group who knocks on the door and offers services because they are "in the area" or have extra materials left over from a job.
Businesses that only accept cash for contracting services and do not provide a receipt.
A contractor who asks their customer to acquire any building permits related to the service.
Contractors who recommend that their customer borrow money from a lender that they know or have previously worked with.
Where consumers can submit complaints on contractors
Tamia Fowlkes is a Public Investigator reporter for the Milwaukee Journal Sentinel. Contact her at tfowlkes@gannett.com.Gina Castro is a Public investigator reporter for the Milwaukee Journal Sentinel and can be reached at GCastro@gannett.com.
This article originally appeared on Milwaukee Journal Sentinel: What to know before hiring a contractor in Wisconsin: Licensing, insurance, lien waivers
