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Avoid a contractor scam

Updated August 21, 2012

Several Cerritos homeowners have recently been scammed by a home-improvement contractor.

After receiving final payment, the contractor has neglected to pay his own employees and materials supplier. Liens were then filed against the properties where the work was completed to cover the unpaid bills. As a result, the homeowners have been forced to pay twice for labor and materials.

To protect yourself against this scam, take the following precautions:

  1. Beware of contractors who ask for a large deposit prior to beginning, or completing, work.
  2. Obtain a labor release and material release from the contractor for all work done. If you have any doubt that the material bill has been paid, contact the material supplier for verification.
  3. Verify that all final inspections have been made by the City's Building and Safety Division.

In another scam, a local resident was conned into have expensive work done on her modest home by an unscrupulous contractor.

A salesman talked the woman into signing blank written estimates, then later filled in big dollar amounts. Although state law gives homeowners a three-day grace period to cancel home-improvement orders, the company rushed to work the day after the woman signed paperwork. When the woman refused to pay, the company threatened to place a lien against her property. The matter was later investigated by the Los Angeles County Sheriff's Department.

Unfortunately, a very small percentage of contractors are con artists willing to prey on trusting homewoners. But anyone can protect themselves by knowing the rules.

  • Be wary of anyone who comes to your door and points out work that need to be done. It may be a scam.
  • Shop around before settling on a contractor. Obtain bids from at least three companies.
  • Once you've chosen someone, check with the Contractors State License Board at (800) 321-CSLB to verify that he or she is properly licensed.
  • Check with the Better Business Bureau, call the contractor's references and look at the work the contractor has completed.
  • Don't let the contractor talk you into obtaining your own building permit - he or she must handle this.
  • Don't agree to any downpayment that is more than $1,000 or 10 percent of the final bill, whichever is less. This is state law.
  • Make sure everything you and your contractor agree to is outlined in a written contract, including the total price.
  • Inspect your contractor's work frequently, and do a final walk-through. Don't be afraid to ask questions.
  • Don't pay the final bill until you obtain signed labor and material releases from your contractor verifying that he or she has paid all employees and suppliers.
  • Verify that the City has completed final inspections before issuing final payment.

You can also download a copy of "What You Should Know Before You Hire a Contractor," a free booklet that offers hundreds of tips for choosing a reputable contractor, at cslb.ca.gov.

For any home-improvement related questions, call the City's Building and Safety Division at (562) 916-1209. If you have a concern or complaint about a contractor, call the Contractors State License Board Southern Region Office at (714) 994-7430. If you know of an elderly resident who has been conned in any way, call the Los Angeles County Elder Abuse Hotline at (800) 992-1660 or the Cerritos Sheriff's Station/Community Safety Center at (562) 860-0044.

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