Homeowner's guide to hiring a home improvement contractor

Under the law, registered contractors must follow certain requirements regarding contracts, payments, advertising, business practices, etc. These laws and regulations provide standards throughout the industry and provide protections for homeowners from being taken advantage of by a bad contractor. If you hire an unregistered contractor and a problem arises with the contractor's work, you will not be eligible to seek arbitration through the Office of Consumer Affairs and Business Regulation (OCABR), nor will you be eligible to apply for or seek money through the Guaranty Fund. You may however, submit a complaint to OCABR against any registered or unregistered contractor for violations of the home improvement contractor law.

Please note: new construction, buildings with more than four units, investment, vacation or secondary properties and homes not located in Massachusetts are not covered under this law. The requirements and protections of this program only extend to construction contracting that is performed on a pre-existing, owner-occupied, building with one to four dwelling units.

A holder of a Construction Supervisor License (CSL) is required to have passed an examination which demonstrates knowledge of the state building code. A CSL is generally required for any work that involves a building's structural elements.

A holder of an HIC registration is not required to pass an examination. The holder is required to register with the state by paying an application or renewal fee and paying a one-time fee which is deposited into the Guaranty Fund administered by OCABR.

Whether your contractor is required to have both a CSL and an HIC depends upon the scope of work of your project and the construction they perform or advertise to perform. Most construction projects will require both a licensed and registered contractor. However, if your contractor does not hold a valid CSL but the work he/she contracts to perform requires it, he/she must obtain a CSL or hire an active Construction Supervisor Licensee to supervise the project.

Think about the specific design you want (consult an architect or designer if necessary) and decide on a budget.

Think about the materials you want to use. Visit home improvement centers, read magazines featuring distinctive home designs, or talk to others who have completed similar renovations.

Clearly describe the work you want done in a specification sheet and floor plan for potential contractors. When all contractors who bid on a job work from the same design description, there is more likely to be a complete and accurate bidding process.

Contact a professional building industry association for advice on the home improvement process, including the selection of a contractor.

Selecting a contractor is the most important part of the home renovation process. You should always:

Interview at least three contractors and request a written, detailed estimate.

Check the license and registration status to make sure that the contractor or subcontractor you hire is currently registered with the state. You should ask the contractor to produce proof of insurance, although it is not required, and ask to see their Construction Supervisor License, if applicable.

Registered contractors must display their six-digit registration number on all advertisements, contracts, and permits. Wherever you see the company or contractor's name displayed, you should also find a registration number nearby. The state issues an identification card to all registered contractors. Ask to see it in order to verify that the registration is valid and has not expired. If you discover that a contractor is not registered, contact our office.

You can use the search tool on our website to see whether a contractor is registered as a Home Improvement Contractor. If you are unable to find the contractor, it may be because their HIC registration is expired and he/she has failed to renew it, the contractor has a complaint on file that has not yet been adjudicated, the contractor has not paid his/her registration fees, or the registration has been suspended or revoked because of a Hearing Officer's decision.

If the contractor or subcontractor is not registered, you will not be protected by the Home Improvement Contractor Law. However, there may be other remedies available to you through the court system.

Exemptions from HIC Registration: There are some exceptions to the registration requirement. Contractors who do not need to be registered include installers or providers of central heating and air conditioning, energy conservation devices (excluding solar panels), landscaping, interior painting, wall and floor coverings, fencing, freestanding masonry walls, above ground pools, shutters, awnings, ground level patios, driveways and certain licensed professionals such as architects, electricians and plumbers who provide services that are exclusively within the scope of their profession. Additionally, some part-time and small job (under $500) contractors do not need to be registered.

Additionally, any school, public or private, offering as part of a vocational education program courses and training in any aspects of home construction or home improvements, or person dealing only in the sale of goods or materials is exempt from registration. Homeowners personally doing residential contracting work on his/her own home and individuals who perform construction related labor or service for a home improvement contractor or subcontractor, for wages or salary, and who does not act in the capacity of a home improvement contractor or subcontractor are also exempt.

Confirm references for each contractor. Ask the contractor for a written list of his or her three most recent projects with names, telephone numbers, and addresses of the owners. Contact the other homeowners who have hired the contractor and find out if they have had any problems.

Ensure that the contractor has adequate liability insurance and workers’ compensation insurance (if necessary).

Check with our office, the Office of Public Safety and Inspections (if they have a construction supervisor license), and the Better Business Bureau to find out whether there are any complaints filed against the contractor or whether any disciplinary action has been taken against the contractor.

Always ask for a detailed written contract, even for small projects. It will protect you and help ensure that you and the contractor understand the scope of the job and the price. Your contract is also where you can outline the breakdown of costs, the project time frame, and when payments are due. State law requires that home improvement contracts over $1,000 be in writing. If contractors violate this provision, their registration may be suspended or revoked, and they can be fined or face criminal prosecution.

Be sure your registered contractor obtains the building permit. Building Departments are required to issue building permits upon application and approval. The permit card must be posted at the job site until completion. If you apply for the permit, you may not be eligible for compensation from the Guaranty Fund. Under the Home Improvement Contractor Act, it is the responsibility of the registered HIC to obtain all the necessary permits. If a contractor is reluctant to apply for the building permit on your behalf, it may be an indication that the contractor does not possess a registration,

By law, the contractor cannot collect more than 1/3 of the cost of the contract in advance, unless special order materials are needed.

If you are financing your home improvements, be aware that contractors are not allowed to lend you the money, or act in association with any lending institution if the loan is secured by a mortgage on your home. Similarly, a contractor cannot offer you financing with a specific lender if your home is used as collateral. You have the right to choose any lender who is willing to negotiate your loan. Get a cost estimate from the contractor for the work that needs to be done, and then shop around for the best financing option.

If you have a contract dispute or if you think that the job was performed in a shoddy or uprofessional manner, explore the following options:

Try to resolve the issue with the contractor directly.

Mediation: This allows both parties to reach a mutually agreeable resolution with the help of a facilitator. Mediation is voluntary, requiring both parties' consent. You may apply for mediation through your local consumer group, which is affiliated with the Attorney General's Office.

Arbitration: All registered contractors must, by law, agree to arbitrate. During arbitration, a neutral third party, the arbitrator, listens to both sides of the dispute, and decides whether to order the contractor to provide a refund for poor or unfinished work. You may be eligible for state-approved arbitration under the Home Improvement Arbitration Program if you can prove that:

• There was a written contract for the job
• The contractor was registered at the time of the contract
• The work was done on a 1-4 family, owner-occupied, primary residence in Massachusetts
• Your contract meets a minimum dollar amount

Court action: You may also pursue your claim through the court system. For claims under $7,000, small claims court is the least costly alternative. Larger claims may be more suitable to District or Superior Court. You should seek legal advice for all claims. 

A violation of the Home Improvement Contractor Law is a violation of the Consumer Protection Act. As such, you can file a private suit in court to enforce its provisions. As a first step, you or your attorney will need to send the contractor a 30-day demand letter. If you win your case in court you may receive your actual damages or $25, whichever is greater. If the court finds that the contractor's violation was willful or knowing, then the court may award at least double but not more than triple damages. You may also be awarded attorney's fees, unless you rejected a reasonable settlement offer made by the contractor within 30 days of the mailing of your 30-day demand letter. You should consult with an attorney for additional information.

*If you win your case in arbitration or in court and the contractor fails to pay the award or judgment, you can apply to the Home Improvement Contractor Guaranty Fund for up to $10,000 of your actual losses. 

File a complaint: If you believe that a contractor has violated any portion of the law, you should also consider filing a written complaint with our office for possible action against the contractor's registration. Please note that this procedure does not involve mediation of individual consumer complaints, but instead entails enforcement hearings on violations of the home improvement contractor registration law. After a hearing on the complaint, the Office can fine a contractor up to $2,000 for each violation and/or suspend or revoke the contractor's registration. No money is awarded to consumers who file complaints through this program, even if fines are assessed. This procedure is solely for enforcement action against a contractor's registration.