California requires contractors to be licensed. It is important to make sure that any license presented to you is valid, and that it belongs to the person with whom you are speaking. In California, any type of contracting work which exceeds $300 in value must be performed by a licensed contractor. Avoid scams by checking the license with the Contractors State License Board in Sacramento (their automated phone number is: 1-800-321-2752 - have the license number of the contractor handy when you call). It is important to remember that a contractor cannot ‘loan’ a license to anyone for the purpose of performing work anymore than you can loan your drivers license to someone else to drive a car.

Make sure that the contractor has valid insurance. Your contractor should have two types of insurance in order to protect you while the work is being performed. They are:

General liability insurance - Covers any accidental damage that could occur on your property during the job.

Workers compensation insurance - Covers possible work related injuries at the job site (your home!). California requires all employers, except sole operators, to have this type of insurance.

References: The three most important references a contractor can provide concern their current client and the two most recent clients for whom they have performed work. Here are some questions for you to consider when interviewing the references:

(a). Was the job started on time?
(b). Was the job finished on time?
(c). Were there any surprises during the job?
(d). Was the job completed for the pre-agreed upon price?
(e). Did you find it easy to get in contact with the contractor while the work was in progress?
(f). If you had this work to do over again, would you hire the same contractor?

Suppliers. Ask the contractor for the names of his or her primary material supplier (s) and then call upon them to inquire about the contractor in question. Ask whether the contractor pays bills promptly and whether or not the supplier would recommend the contractor to any of their customers?

Contracts. Remember these fundamental rules:

(a). Never give a contractor cash, and never provide any type of payment without a written contract.
(b). Never pay a contractor more than 10% of the contract as a down payment after the contract is signed.
(c). Always develop a materials list. Specify the materials, parts, product codes, etc.
(d). As the work progresses, you will use a system of 'progress' payments to pay off the contract. These payments should be made at the end of each step of actual work. Example: The foundation has been poured and is set. A payment is due for the concrete and all related labor, or, the framing is completed, then pay for the lumber and the labor costs.

Also, remember this, various stages of your project will require a building inspection. Example, electrical, plumbing, framing, etc., all require a sign-off by the building inspector. It is common to require that you see the sign-off by the building inspector before you make the progress payment. The inspector is an impartial third party and he or she will not sign off until the work meets approval. (e). Withhold at least 10% of the contract amount to be issued as a final payment. Do not make final payment until you have reviewed the completion notice and have a lien release for each sub-contractor as well as material supplier. Also, you should have a final approval from your local building and safety department.

Paperwork. Keep a good file with all of your paperwork. All receipts, bills, the contract, copies of the building permit (s), etc. If it pertains to your job, no matter how insignificant you think it is, keep it!