A home is the most expensive and long-term purchase most people will make in their lifetimes. Not only do people invest a considerable amount of money into their homes, but they also invest a great deal of time. This includes time spent living in the home and time spent working both to maintain and improve it. Homeowners rely on construction contractors and others to keep their homes in good working order, and state and federal consumer laws protect their interests from deceptive and abusive practices.
The construction business includes several types of service providers, and consumers should understand their roles.
General contractors perform a wide range of construction and repair services. For larger projects, like new home construction or major remodels, they manage the overall project and supervise subcontractors hired for specific roles, such as framing, concrete, plumbing, or painting.
Specialty contractors install, repair, or service particular products. Some specialty contractors must be licensed or certified by the state, such as plumbers and electricians. Others, such as cabinet makers, may need permits for specific projects but do not need licenses in order to do business.
Architects design homes and other structures, and they must be licensed by the state. They may be assisted by other professionals, such as structural engineers.
Consumers should be wary of scams by contractors, and their warning signs. Some examples include:
State laws, like Illinois’ Home Repair and Remodeling Act and Home Repair Fraud Act, regulate home construction and remodeling businesses and offer protection for homeowners. Many states’ consumer protection statutes also allow homeowners to recover damages for many types of home construction and repair scams. Contracts signed in a homeowner’s residence are subject to the three-day “cooling-off” rule.
General contractors may offer express warranties on home construction and other services. In many jurisdictions, they are also bound by the implied warranty of habitability. Homeowners can purchase a home warranty from a third-party company, which assumes responsibility for certain types of claims. This type of warranty is similar to an insurance policy on the home. Some mortgage loan programs, including the Federal Housing Authority (FHA) and Department of Veterans’ Affairs (VA), require third-party home warranties as a condition of financing new home construction.
New home construction often requires a purchase-money mortgage loan, subject to the same rules and restrictions as loans used to purchase existing homes. Homeowners often need financing for remodels, and they may refinance their existing mortgage or take out a new home equity loan or home equity line of credit. Consumers should be wary of financing services offered or recommended by contractors, and they should perform due diligence to identify any conflicts of interest and other red flags.
Fires, floods, and other natural disasters can leave homeowners devastated and, in some unfortunate cases, destitute and homeless. Many repairs may be covered by homeowner’s insurance. Some homeowners may be required to purchase fire or flood insurance, but it depends on the jurisdiction, the home’s location, and the requirements of any lienholders.
Damage from severe natural disasters, such as hurricanes, earthquakes, and tornadoes, may entitle homeowners to disaster relief from state or federal agencies. These programs, however, may be difficult for homeowners to navigate, and they may be slow to respond. Disasters also seem to bring out scammers who prey on people in desperate situations. Homeowners must try to exercise the same caution regarding emergency repairs that they would for any other home repair.
