As a homeowner, protecting yourself from fraud is essential when making home repairs and improvements or constructing a new home. Fraud can involve false representations or promises made by contractors to induce you into signing a contract. It can be very costly, so it’s essential to be aware of the signs of fraud. This blog will discuss what contractor fraud is, how to protect yourself, and what to do if you’ve been a victim.
Licensed Contractors in Texas
It’s essential to ensure that any general contractor or subcontractor you hire for home repair work or improvements or who works on building a home for you has the proper licenses and permits for the area where you live.
According to LevelSet, “The state of Texas doesn’t require general contractors, home improvement specialists, or handyman services to hold a license. But remember: The area in which you’re working might have other ideas on paperwork. In Texas, contractor license bonds are enforced at the city or county level.”
Ensuring that your contractors and subcontractors have the proper licenses to follow all laws and regulations in your area can help prevent losing money.
Warning Signs of Contractor Fraud
Several signs may indicate something wrong with your home builder or home service repair or improvement technician.
Home improvement scams target vulnerable individuals, often using high-pressure sales tactics and false claims. If a contractor is pressuring you to sign a contract, do not sign until you have done your due diligence and have researched the contractor’s credentials.
If a contractor asks for full payment upfront or guarantees they can complete the work in an unrealistic timeframe, these are also potential red flags. When construction workers are in a hurry to get paid in full before finishing a project, you can lose money in the process.
Even if someone is charming and seems friendly, it could be a home improvement scam if they are pressuring you! Even a subcontractor for a legitimate general contractor can attempt to take advantage of you!
Watch out when a contractor does the following:
- Makes promises that seem too good to be true
- Asks for a large down payment before starting renovations or construction work
- Refuses to provide written estimates or contracts
- Uses high-pressure sales tactics
- Don’t carry the necessary insurance or licenses required by Texas law
If you find a contractor acting in the ways above, you should be extremely wary and look for an alternative contractor for the job.
When Contractors Commit Workers Compensation Insurance Fraud
Sometimes, contractors are involved in fraud that is not directly related to your real estate transaction. A contractor could be drawing insurance benefits despite reporting injuries to their worker’s compensation insurance company showing they can’t work.
Other times, someone may fake an injury at your home to collect benefits. Hiring a contractor to work at your home can bring unexpected costs when someone is attempting to obtain insurance company compensation at your expense.
Either way, talking with your real estate attorney can help you ensure the protection of your rights as a real estate owner.
Ensure Protection from Contractor Fraud
Homeowners should always get written estimates or legal agreements for work and carefully read them before signing. Having your real estate lawyer review any contracts before signing gives you extra protection.
It’s also important to never pay more than 10% of the total cost in advance and always get a detailed invoice when making project payments. Additionally, never sign anything without understanding it completely, and never give out personal or financial information over the phone.
Look at More Than One Previous Job Before Hiring
Check references for more than one previous job before signing any contract with a contractor. Look at the contractor’s previous paying customers and ask about their experience.
Get Everything in Writing
Ensure you get everything in writing, including estimates, contracts, and guarantees. A written agreement can help protect you from contractor fraud.
Know Your Rights as a Consumer
Knowing your consumer rights and being aware of contractor fraud is crucial.
You have the right to cancel any contract within three days of signing it, and you may be able to recover your losses through legal action if you’ve been a victim of contractor fraud.
According to Texas Administrative Code law, “The owner and owner’s spouse may rescind the contract for work and materials within three calendar days after execution by all parties of the contract for work and materials. To count the three days, the day after the contract is executed is day one.” (1)
Get Multiple Estimates
Before making a decision, homeowners should get multiple estimates from different contractors. Obtaining several estimates will give you an idea of the average cost for the job. Seeing standard quotes can help you avoid overpayment or accepting an offer that would be taking advantage of you.
Read Online Reviews
Read online reviews of local references before hiring. Pay attention to the homeowner complaints filed by other customers. Previous complaints can give insight into their services and help you avoid problems.
Understand Any Contracts You Sign
Ensure you understand exactly what is included in the contractor’s homeowner services. Real estate lawyers in Texas can help both buyers and sellers by providing legal advice on the full range of contractor fraud.
Serving as a trusted advisor, a real estate lawyer can help read, review, and prepare legally sound contracts that protect their clients from contractor fraud. Real estate lawyers understand how to apply Texas real estate laws and can provide the necessary advice and guidance to prevent contractor fraud.
What To Do if You Suspect Contractor Fraud
If you’re a homeowner who suspects contractor fraud, contact an experienced real estate attorney immediately. They can help you determine whether there are any broken laws or rules and provide guidance on how to pursue legal action if necessary.
They can also advise homeowners on the best course of action for recovering any losses caused by contractor fraud.
What to Do If You’ve Been a Victim of Contractor Fraud
If you’ve been a victim of contractor fraud, it’s essential to understand your legal rights and seek help from an experienced real estate lawyer as soon as possible. A qualified lawyer can help you identify any violations of law or fraudulent activity and provide guidance on how best to proceed
Some steps you can take to try and recover your losses include:
- Filing a complaint with the Texas Attorney General’s Office
- File a complaint with the Better Business Bureau
- Add a review to any pages about the contractor online to warn others
- Contacting the contractor and trying to resolve the dispute through negotiation
- Filing a lawsuit against the contractor to recover your losses
A real estate lawyer can provide guidance on these and other options for recovering any losses due to contractor fraud. They can also help you build a case and represent your interests in court if necessary.
Real estate lawyers have experience understanding contractor fraud and can help you make a claim for losses.
Contractors who engage in contractor fraud can cost you money and peace of mind.
Know your rights as a consumer, get multiple estimates, read online reviews, and understand any contracts you sign. If you suspect contractor fraud, contact an experienced real estate lawyer immediately for guidance on pursuing legal action and recovering any losses.
An experienced real estate lawyer can be instrumental in identifying contractor fraud and save you time and money in the long run.
Our Experienced Real Estate Attorneys Can Help
At Jarrett Law, our experienced real estate attorneys understand how stressful it can be to get taken advantage of. We want to help you navigate these problems and find legal solutions to move forward!
Talk with us at The Jarrett Law Firm to get advice on contractor fraud, understand your homeowner rights, and for help handling contractor fraud quickly and legally. We can provide legal advice and guidance to ensure your rights are respected.
Get in touch today and learn how we can help you avoid fraud or recover your losses.
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