Read the paper, not just the price

A good price on a bad contract is a bad deal. The contract is the only record of what the contractor agreed to do, so anything said out loud and not written down is hard to enforce. The Federal Trade Commission recommends asking for a written contract even where state law does not require one, and lists what it should contain.

According to the FTC, that means the contractor's name, address, phone number and license number, the estimated start and completion dates, and any verbal promises about the scope of work and the labor and material costs. It should have no blank spaces left to fill in later. And if you sign at home or anywhere other than the seller's permanent place of business, it should include a written statement of your right to cancel within three business days.

Money: when and how much

The FTC says not to pay the full amount up front, and notes that some states limit down payments, so it is worth asking your state or local consumer agency what the limit is where you live. It also says never to make the final payment until the work is finished and you are satisfied. The NAIC's disaster guidance agrees: do not pay cash or write a check before work is done, pay in installments, and make the final payment after repairs are complete.

Tie each installment to something you can see. If a payment is due when the materials arrive, you can check that they did. If another is due when the framing is done, you can look at the framing.

When an insurance claim is paying

Insurance changes the picture. First, the contract's scope should match what the insurer agreed to pay, and you should keep both documents together so the difference between them is visible. Second, the Texas Department of Insurance warns that permanent repairs before the insurer inspects can lead to a denial, so start permanent work only when the insurer has had its look. Third, North Dakota's insurance department points out that claim payments are generally issued jointly to you and any mortgage company or lienholder, and that after payment you and your lienholder generally choose and oversee the contractor. The insurer may share responsibility only if it arranged the contractor.

That last point surprises people. If the company sent you a contractor, it may carry some responsibility. If you picked your own, the quality of the work is between you and them.

Worked example: a contract with a blank line

A homeowner is handed a contract with a blank in the price line and told the contractor will fill it in after ordering materials. The checklist's no-blanks item says not to sign. She asks for the figure first and for the scope to be written next to it. The contractor does, and also adds the dates. She then checks the cancel-right statement, which is present because she is signing at her kitchen table. She pays a first installment tied to materials arriving and notes the schedule for the next one. Nothing dramatic happened, and that is the aim: no surprise appears later because every promise was already on the page.

Keep a copy

Put a signed copy of the contract in the same folder as your claim records. If a dispute comes up, you will want the contract, your estimates, your photographs and your receipts side by side. See hiring a contractor for how to pick the person, and the claim documentation checklist for what to keep with the contract.

Before Signing a Repair Contract Checklist