Don’t Hire a Contractor Until You’ve Checked These 7 Things

The quote looked fair. The contractor was friendly, showed up on time for the estimate, and promised the kitchen would be done in three weeks. You paid half upfront to “lock in materials.” The crew came twice, tore out the old cabinets, and then stopped answering calls.

This story is far more common than most homeowners think. Roughly 1 in 10 Americans have experienced a contractor scam, according to the National Council on Aging. And it’s not only outright fraud. In the same body of research, the most common complaint was a contractor who failed to complete the job or did poor-quality work that didn’t meet agreed-upon standards (63%), followed by contractors who frequently arrived late or missed appointments without a valid reason (40%).

The good news: most of these problems are visible before you sign anything, if you know where to look. Here’s how to vet a contractor in under an hour, using seven checks that cost you nothing.

1. Their License Is Real, Active and Actually Theirs

Most states license contractors through a state contractor board or licensing department, and nearly every one offers a free online lookup.

Before you go further, understand one distinction that trips up a lot of homeowners. A business license and a contractor’s license are not the same. Only a contractor’s license provides protections like investigations, corrective orders and disciplinary action. A city business license only means someone pays local fees. It says nothing about whether they’re qualified to rewire your house.

Look Up the License Number Yourself

Ask for the license number in writing and search it on your state board’s website yourself. Don’t settle for a photo of a card. When you find the record, check three things: the license is active, it covers the type of work you need (a general contractor license is different from an electrical or roofing license), and there are no disciplinary actions or open complaints.

Make Sure the Name Matches

This is where many scams slip through. Fraudsters pose as licensed contractors or home service professionals and may display fake credentials, use stolen license numbers, or create convincing websites. The name on the license must match the name on the quote, the contract and the truck in your driveway. In some states it has to appear everywhere: a legitimate license number should appear on every contract, bid, advertisement and company vehicle, as well as the contractor’s pocket ID card. If the names don’t line up, walk away.

2. The Company Exists as a Registered Business

This is the check almost nobody does, and it’s one of the most revealing.

If a contractor operates as an LLC or corporation, that company has to be registered with the Secretary of State in your state. Take two minutes to check whether the company is a registered, active business and look at three details:

• Status. Is the company active, or was it dissolved or administratively revoked? A dissolved company shouldn’t be signing contracts.
• Formation date. A contractor who claims “20 years of experience” but whose company was formed four months ago deserves a follow-up question. It might be innocent (a rebrand), or it might be an operator who closes companies after complaints pile up and reopens under a new name.
• Legal name. The exact registered name should match what’s on your contract. If something goes wrong, that’s the entity you’ll be dealing with.

This takes less time than reading a few online reviews, and it catches problems reviews never show.

3. The Person Behind the Company Has a Clean Track Record

A new company name can hide an old pattern. The license and business filing usually list an owner or principal, so take that full name and dig a little.

You can look up public records on the owner to see whether the same person has been tied to other companies, past judgments or a trail of unpaid suppliers. Then do a simple Google search with the owner’s name plus words like “complaint,” “scam” or “lawsuit.” Five minutes here can tell you more than a polished website ever will.

4. Insurance and Bond Are Current, Verified at the Source

Two policies matter most:

• General liability insurance covers damage to your home caused by the contractor’s work.
• Workers’ compensation covers injuries to workers. Without it, an injured worker on your property could become your problem.

Some states also require contractors to carry a surety bond, which gives homeowners a way to recover money if the contractor fails to meet obligations. By hiring contractors who are licensed and bonded, homeowners can have extra security, since surety bonds provide financial protection against contractor scams.

Call the Insurer, Not Just the Contractor

A certificate of insurance can be expired, cancelled the week after it was issued, or simply fake. Call the insurance company listed on the certificate and confirm the policy is active for your project dates. Even better, ask the contractor to have the insurer list you as the certificate holder, so you’re notified if the policy lapses.

5. Complaints, Reviews and Lawsuits Tell the Real Story

Check these four places before you sign:

1. Your state contractor board’s complaint history (usually on the same page as the license lookup).
2. The Better Business Bureau 
3. Google reviews. Sort by lowest rating first and read how the contractor responds. Defensive or insulting replies tell you how they’ll treat you when something goes wrong.
4. Local court records. Search the contractor’s name and company name for lawsuits from former clients or suppliers.

Read patterns, not single reviews. One unhappy customer is normal for any business that’s been around a while. Three reviews saying “took the deposit and disappeared” is a pattern.

6. Their Recent Work Holds Up in Person

“Ask for references” is the advice everyone gives, and it’s weak on its own, because nobody hands you a bad reference. Make it harder to fake:

• Ask for two or three clients from the last 12 months with a project similar to yours. Old references don’t tell you how the business runs today.
• Ask to see one finished job in person, or recent dated photos of work in progress.

Then ask the references three specific questions:

1. Did they finish on time and on budget?
2. How did they handle unexpected problems?
3. Would you hire them again for a bigger job?

That last question is the most honest one you’ll get.

7. The Contract and Payment Terms Protect You

This is where most homeowners lose money, and it’s the part they rush through.

Get Everything in a Written Contract

A solid contract should include:

• Full scope of work and materials (brands and models where it matters)
• Start date and estimated completion date
• Total price and payment schedule
• Who pulls the permits (it should be the contractor)
• Warranty on workmanship, ideally at least one year
• How change orders work

On that last point, insist that the contractor will advise in writing about any extra charges or change orders, including pricing, and wait for written homeowner approval before starting. Verbal “we’ll figure it out” changes are how a $20,000 job becomes $34,000.

Keep the Deposit Small and Tie Payments to Progress

According to the Consumer Federation of America, deposits typically range from 15 to 25 percent, and your state or local law may limit the amount that can be requested upfront. Some states are stricter. In Nevada, for example, law caps upfront deposits at 10% of the total contract price or $1,000, whichever is less.  

After the deposit, every payment should follow a finished milestone (demo done, rough plumbing inspected, cabinets installed), never just a date on the calendar. And never pay the full amount until the work is done to your satisfaction.

Ask for Lien Waivers Before Each Payment

Here’s the risk most people never hear about. If your contractor doesn’t pay subcontractors or suppliers, they can file a lien against your home, even if you paid the contractor in full. When contractors misappropriate funds and don’t pay their subcontractors or suppliers, the homeowner often ends up with a lien filed against their property.

The fix is simple: ask the contractor to give you a written release of lien stating that all subcontractors and suppliers have been paid before you make the final payment. Better yet, collect signed lien waivers before every payment, not only the last one. If a lien does show up on your property later, you can check for liens or legal disputes tied to your home.

Red Flags That Mean You Should Walk Away

• They knock on your door after a storm offering a “great deal.” The Federal Trade Commission warns homeowners to be cautious of salespeople going door-to-door after major storms, as this can be a sign of a roofing scam. 
• They want cash only.
• They ask for most of the money upfront.
• They pressure you to sign today to “hold the price.”
• They ask you to pull the permit yourself.
• They have no physical business address.
• They won’t put anything in writing.
• Their price is far below every other quote.

If two or more of these apply, move on. There’s always another contractor.

It’s also worth knowing when to be extra careful. The Nevada State Contractors Board notes that summer is its busiest season for fraud complaints, since longer daylight hours give scam artists more time to canvas neighborhoods while more homeowners are home and eager to improve their houses.

A Quick 30-Minute Checklist Before You Sign

1. Search the license number on your state board’s website and confirm the name matches.
2. Confirm the company is registered and active, and check its formation date.
3. Search the owner’s name for past companies, judgments and complaints.
4. Call the insurer to verify liability and workers’ comp coverage.
5. Check the state board, BBB, Google reviews and local court records.
6. Call two recent references and see one finished job.
7. Get a written contract with a small deposit, milestone payments and lien waivers.

FAQs

How much deposit should a contractor ask for?

Deposits between 10% and 25% are common, depending on the project and materials involved. Some states cap deposits by law, so check your state’s rules. Never pay the full amount before the work is finished.

How do I check if a contractor is licensed?

Search the contractor’s license number on your state contractor board’s website. Confirm the license is active, covers the type of work you need, and has no disciplinary actions.

Is a business license the same as a contractor license?

No. A business license usually just means the company is registered to operate locally and pays fees. A contractor license means the person met state requirements, and it gives you access to complaints, investigations and sometimes recovery funds if things go wrong.

What should I do if a contractor took my deposit and disappeared?

Send a written demand for the return of your deposit and keep copies of everything. Then file a complaint with your state contractor board and state attorney general’s office. For smaller amounts, small claims court is often the fastest route.

How many quotes should I get?

Get at least three. This shows you the real going rate in your area, and it helps you spot a quote that’s suspiciously low, which is often a red flag rather than a bargain.

What is a lien waiver and do I need one?

A lien waiver is a signed document confirming that a contractor, subcontractor or supplier has been paid and gives up the right to file a lien on your property for that amount. You need one before each payment, especially on larger projects with multiple subcontractors.

Vetting a contractor takes about an hour. Losing a deposit, dealing with half-finished work or finding a lien on your home can take months to fix. Run through these seven checks before you sign anything, save the checklist, and share it with anyone you know who’s planning a renovation. The best contractors won’t mind the questions. The wrong ones usually disappear the moment you start asking them.