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Our guest blogger today is Pamela Mares, an information officer with the California Contractors State License Board. Pamela is responding to a recent post titled: When a job goes bad, is the contractor the only one at fault?). Here's what she had to say about it:
 You are so right in your analogy about how people spend more time picking out a hotel than hiring a contractor. It is usually the lack of planning and research that leads to problems.
We receive more than 20,000 complaints each year at the Contractors State License Board (CSLB). About one-quarter of them are from consumers who hired unlicensed operators. These are usually the cases with the biggest money loss. That is why it is so important to hire only licensed contractors.
You have already mentioned the importance of checking out contractors and their status with CSLB. To get a license, contractors are tested and fingerprinted and must undergo a background check. They must have at least four years of experience, demonstrate knowledge of their craft and pass two tests to be licensed. They have promised by virtue of their license (and a $12,500 bond) to be accountable for the work they perform.
Another perilous area for homeowners are “consultants” who will offer to talk them through the owner-builder permit system for a fee. Unless you are knowledgeable about the construction process, it may not be worth it.
When subcontractors and suppliers are not paid on schedule, they may file mechanic's liens against your property.
If your workers are injured -- or your subcontractors are not licensed or do not carry liability insurance or worker’s compensation and are injured -- you could be asked to pay for injuries and rehabilitation through your homeowner’s insurance policy or face lawsuits.
If you don’t pull the necessary permits or pass inspection, it may be difficult to sell or insure your property.
Anyone can check out a contractor, file a complaint or get information about hiring a contractor at www.cslb.ca.gov or at (900) 321-2752.
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The economy might be picking up. Folks are looking for contractors:
Palm Desert/Coachella Valley
Thanks for your words of caution regarding tips to research a contractor for remodeling. I am considering buying a property that was foreclosed upon while a remodel was in process. Whether it is for this house or another, I will need to hire a contractor in an area where I have never before lived--the Palm Desert/Coachella Valley area. Any information you might provide would be welcome. Thank you. — Susan
Los Angeles
I've read these posts with great interest as I am embarking on a major remodel in Los Angeles. I am having a heck of a time finding a good general contractor. Was wondering if you could recommend one. Send e-mail to mittj@yahoo.com. Thanks. — Jeff
Any suggestions?
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 There's a story being reported in newspapers and TV stations around Southern California about a solider who returned from Iraq to find his house in Highland, California, a disaster from a remodel gone bad.
You can see different versions of the story on Contractor bails on soldier's renovation on KABC-TV, Who do you trust? Not unlicensed contractors in the Highland Community News and Soldier returns from Iraq to nightmare at home in the Inland Valley Daily Bulletin. There are tears and blame and recriminations from the soldier's wife, who was overseeing the project.
So here's where we all say in unison: That bad contractor! Shame on him!
But as I scour each article and get different parts of the story, I keep wondering about the missing information. What exactly did the contract say? How much was quoted for how much work? What were the agreements from each party? Information about that critical document -- the contract, if there was one -- is nowhere to be found in these articles.
But here are some parts of the story, as indicated by the various news-gathering organizations, and some added thoughts.
• First and foremost, one article quotes the "contractor" admitting he is not licensed as a contractor at all, but as an architect, and he had various reasons why that was so. In this state, it is illegal to do more than $500 of home improvement work without being licensed by the California Contractors State License Board.
But what I didn't read in any of these articles is how this contractor came to be hired by this family. When they checked on his license status and they found he had no license, why did they hire him? And if they didn't check on his license status, why not? Do they also hire unlicensed attorneys and doctors? Even a beautician should be licensed.
• Also, the various stories quote the homeowners saying the contractor took $86,000 for the work and didn't complete it. The contractor is quoted as saying it was a $103,000 job and that the homeowners ran out of money to finish it. I have no idea what the real story is, but I can tell you that both scenarios are plausible. Ask any legitimate, trustworthy, successful contractor and you'll find stories of homeowners who, for one reason or another, did not fulfill their part of the bargain. It's not always the contractor who is at fault.
• And finally, the homeowners are quoted as saying that other contractors have come by and told them only $25,000 to $30,000 worth of work had been done. I'd like to point out that these contractors have no skin in this game, are not testifying under oath, and the lower the number they come up with, the more justified the homeowners feel in their anger. I would be highly suspect of these numbers.
Obviously this is a tragic event, and this soldier and his family deserve a serene, nurturing home to live in. But simply defaulting to the "contractor is a bum" position does not help any of us avoid getting ourselves in this situation.
The real issue is: How much time and effort did this family spend researching their contractor? It's been said that people spend more time researching a $100 hotel room than they do the contractor who will execute a $100,000 remodel.
It is my hope that nobody reading this blog will ever put their home, their family and their finances into such a risky situation. If you need help researching a contractor, e-mail me at podblog@aol.com and I'll give you some tips on how to do that.
(Photo: Highland Community News)
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 The story I read today about the demise of Tim Davis' remodeling company played out in Lakeland, Fla., but it could have happened anywhere.
Davis started his company 19 years ago with a pickup truck and a toolbox, according to the article in the Lakeland Ledger newspaper, and grew to a $4-million company. Here's what happened: The problems started in early 2007 as construction activity began to dry up in Polk [County]. Clients backed out of jobs as the economy worsened and Davis' annual sales were soon 40% below projections.
By the start of 2008 he had laid off roughly two-thirds of his 24 employees and was under intense pressure from his bank, which froze his accounts and gave Davis a month to pay back $350,000 in outstanding credit. Without enough contracts to keep the business afloat, he finished his remaining jobs and shut down Davis Remodeling, vacating the firm's Harden Boulevard offices two months ago.
So who suffers? As a homeowner, you want to make sure you're not the one holding the bag if a business fails. Even if you don't have money out for work not yet done, having to start in the middle of a job with another contractor would be a major hassle, as best.
Here are the bouquets and brickbats I offer for this story:
Bouquet: Davis is the president of the Polk County Builders Assn. In the world of builders, this is a high-profile, high-esteem, high-falutin' position. You could expect someone in his position to have maximum integrity, and it seems to me that he does, as evidenced by the fact that he finished his remaining jobs before shutting the doors.
Brickbat: According to the article, the company recently did a big remodel of its offices, and that cash outlay was part of the reason the company lacked funds to continue when business turned south. Many in the construction industry knew the crazy rate of growth in 2005 and 2006 was not sustainable. It was probably not the best time to do that remodel.
Brickbat: The story notes that Tim was a high school dropout who later went on to get his GED. That is commendable. But it also makes me appreciate the new type of remodeler I've seen in recent years who comes out of business school rather than up through the trades. Some people are just not cut out for organized education and intuitively know how to manage the ups and downs of the economy. But I can't help thinking that someone with more formal business education could have seen the downturn coming and prepared for it.
Bouquet + Brickbat: Part of the problem seems to be that Tim held on to his employees past the time it was financially wise, according to the story. That's a bouquet to him, for caring about his employees, but also a brickbat for putting himself out of business. Could there be anything more difficult than letting go of a hard-working carpenter with a family?
This story shows why so many contractors have streamlined their companies to use fewer employees and more subcontractors. Then, when business is slow, nobody gets fired.
Observing the photo of Tim Davis above, I have two thoughts: 1) This experience is very personal and very painful, and 2) Tim will rise again.
(Photo: The Ledger)
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 According to a press release from the California State Contractors License Board:
"The Contractors State License Board (CSLB) and partners from the Palm Springs Police Department and the Riverside County District Attorney's Office are warning Coachella Valley residents to be aware before hiring people for home improvement projects. The warning comes after a two-day undercover operation in the Warm Springs area of Palm Springs led to the arrest of 32 suspected phony contractors."
Earlier this month, "members of CSLB's Statewide Investigative Fraud Team (SWIFT) posed as homeowners at a sting house and invited suspected unlicensed operators to bid on projects including landscaping, fencing, concrete, swimming pool plastering and decking, flooring and painting. When suspects bid more than $500 for a job they were arrested and given a Notice to Appear (NTA) in Riverside County Superior Court to answer misdemeanor charges of contracting without a license. California law requires a state contractor's license for home improvement jobs that are valued at $500 or more in labor and materials."
Also: "28 of the suspects will also face a misdemeanor charge of illegal advertising. CSLB investigators also gave administrative citations to 26 suspects. Those carry total potential civil penalties of $46,750. One of those arrested is a three-time offender. Another was a repeat offender. Several suspects showed up without a valid drivers' license and had to arrange for someone to pick them up."
According to CSLB Registrar Steve Sands, "Unlicensed operators will often underbid legitimate contractors. It is not unusual for these individuals to have other run-ins with the law and not be qualified to do the work they are hired for. Homeowners may end up paying twice for a job when they have to hire a professional to fix the problem."
See a list of suspects cited in the sting.
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 Three SoCal contractors — in El Cajon, Fullerton and San Diego — have been included in the 2008 Big 50 list compiled by Washington, D.C.-based Remodeling magazine.
According to the website for the respected magazine, which has named 50 top contractors each year since 1986, this is an "elite group of remodeling professionals . . . whose exemplary business practices, unique design sensibilities, and exceptional management skills elevate them above their peers."
The three from our area include:
Larry, Candace and Michael Zolezzi of LZ Construction, El Cajon (staff pictured here)
Design/build remodeling; 22 years in business; 2007 volume: $3.4 million; staff: 5 office, 6 field
Quoted from the magazine: LZ Construction is the relatively rare remodeling company that employs its own plumber, a hire (Larry) Zolezzi made because he couldn't find a satisfactory subcontractor in his market. Pleased with the added efficiency it has brought to his business, Zolezzi says he'll soon add an electrician to his modestly sized field crew. Read more
Paul A. Paniagua, All Pro Builders, Fullerton
Full-service remodeling; 20 years in business; 2007 volume: $1.2 million; staff: 3 office, 6 field
Quoted from the magazine: All Pro Builders has most recently focused on implementing standard operating procedures, creating a manual that encompasses all areas of doing business. Paniagua also has what he calls his “bible,” which every employee has on his or her desk, with information about vendors, jobs, architects, engineers, inspection codes, and subcontractors. “We live by this book,” he says. Read more
Jeff Jertberg, CR*, and Robert M. Jertberg II, CKBR**, Vanberg Construction, San Diego
Design/build remodeling; 21 years in business; 2007 volume: $3 million; staff: 2 office, 8 field
Quoted from the magazine: The Jertbergs match designers and interior designers with each individual client “to alleviate any finger-pointing,” Jeff says, and they partner with a variety of local designers to develop their diverse projects. “With an in-house designer, you can build the same thing over and over again,” Rob says. Read more
* CR = Certified Remodeler
** CKBR = Certified Kitchen and Bath Remodeler
(Photo: LZ Construction)
See all SoCal contractors in past Big 50 lists
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Julia and Mark are planning a remodel but are missing one critical piece of the puzzle: a good contractor. Here's what they wrote: We live at the top of Beachwood Canyon in a cantilevered home circa 1955 and plan to add a second story, go green, add a roof garden, etc. We are not interested in staying modern but want more of a traditional look inside with some whimsy. We have a designer we like and have just submitted our plans to the permit queue. Now we need to hire a contractor. We wondered if you have anyone you'd highly recommend?
Any suggestions for them? Please post below.
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 Company name: DAD's Construction Inc.
Website: www.dadsconstruction.com
Principals: Dan Derkum and Lori Derkum
Contact info: Lori Derkum, 25422 Trabuco Road, Suite 105-220, Lake Forest, CA 92630, phone: (949) 380-0177, e-mail: lori@dadsconstruction.com or dan@dadsconstruction.com
Years in business: 25-plus
Specialize in: Kitchens, bathrooms, and full interior remodels
Professional memberships: National Assn. of the Remodeling Industry (NARI), National Kitchen and Bath Assn. (NKBA), Western Regional Master Builders Assn. (WRMBA), Building Trades Assn. (BTA), International Code Council (ICC), the Better Business Bureau (BBB), the American Institute of Architects (AIA), Build It Green (BIG), and the U.S. Green Building Council (USGBC)
Professional certifications: California Licensed General Contractor (No. 802617), Certified Green Building Professional (Build It Green), MBA
Awards: Some of the awards our projects have received:
• 2007 Award of Merit - Pacific Coast Builders Conference Gold Nugget Awards, Best Specialty Project
• 2005 Watermark Awards, Builder and Custom Home magazines' "Grand Award" & "Kitchen of the Year"
• Lake Forest Homeowners Assn. 2004 House of the Quarter
• 2004 Award of Merit - Pacific Coast Builders Conference Gold Nugget Awards, Best Attached Project
How did you get interested in green building? DAD's never "got into green building.” We have always done what is today called "green building”: using exhaust fans in bathrooms, double-glass low-E windows, skylights, insulated water pipes, formaldehyde-free insulation, engineered lumber, low-VOC (volatile organic compounds) paints, asbestos-free products, florescent lighting, whole-house fans, recycling removed building materials, tankless water heaters.
We strive to build and remodel projects that greatly exceed codes and that will last a lifetime. So how does this help the environment? Tearing out a bathroom over and over again to fix cheap and substandard work generates more waste and more demand for building materials. We want to avoid that. Although the manufacturers may not appreciate this, our customers and the environment do.
Read on »
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 A new chapter of NARI (the National Assn. of the Remodeling Industry) has started up in the Los Angeles area. There is an active NARI chapter in San Diego and more than 60 chapters nationwide.
Members of NARI include contractors, interior designers, architects, product suppliers, manufacturers and service providers. Several contractors in Southern California have long been members-at-large of the national organization, and some of them will now belong to the L.A. chapter.
According to Claudia Butler, vice president of the new chapter, "NARI’s mission is to promote the highest level of quality, professionalism and ethical business practices in the remodeling industry." Contractors who join must have a valid state contractor’s license or registration, liability and worker’s compensation insurance and must pledge to conduct business in compliance with NARI’s Code of Ethics.
Those interested in joining can call Butler at (310) 591-8846 or e-mail her at Claudia@Remodeleze.com.
For homeowners from NARI:
Budget worksheet
Remodeling tips
Warning signs
Questions to ask references
P.S. Would you pronounce it NAR-ee, NAIR-ee? I go for the former, but I hear the latter quite often, especially from East Coasters.
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 Question: My contractor just handed my contract to me, and I’m in shock! He wants 22% of the cost of materials, 22% over the cost of labor, 22% for subcontractors and 22% for labor management crew. I think this is way too much. First, the subcontractors are making a profit, and now the builder wants 22% on top of that for the same job. I feel if he can’t do the job and he has to subcontract out, then it should be no more than 5% for babysitting. That also goes for paying his employees’ wages. I have no control over the employees he hires. What if they are slow and lazy at my expense at $30 per hour plus 22%? No way! What should a contractor charge?
Answer: Oh my, where to start! First of all, I can understand your frustration. Every dollar the contractor charges for markup is another dollar you don't have to upgrade your project. So if you don’t like the markup, don’t hire the contractor. It’s so simple. There’s no need to get upset, just find someone else whose numbers are more to your liking.
That being said, what’s the obsession with contractor markups? What kind of markups do you think Wal-Mart or Home Depot make on that stuff they import from China? I’m sure it’s a lot. And contractors are people from your own community, hiring your neighbors, purchasing from local lumberyards. By the way, subcontractors are not hired because the contractor's employees cannot do the job. Subs are usually hired because they are state-of-the-art experts in what they do. Professional plasterers or masons or plumbers are often elegant artisans in their respective crafts, and that's who you want doing the work.
I think the confusion over markups is based on misunderstanding how a good contracting business works. There is an office and office staff to maintain, and bookkeeping, and employee benefits, training, insurance, licenses, certifications. And there should be money for callbacks when things go wrong. You can find a guy with a pickup truck and a dog in the back who won’t charge any markup. He’s scrambling from one job to the next barely making wages. And if something goes wrong later on with your job, he won’t have time to take care of it.
Also, you don’t want your contractor undercharging and then going out of business. The most important issues to consider when hiring a contractor are the company’s reputation, staying power and quality of work. Focusing too much on saving money on the markup just brings grief. If you think “babysitting” subcontractors is what a contractor does, you might consider acting as your own contractor and hiring those subs. Then you could save the 22%.
Am I being too harsh? From the disasters I've seen when markups are challenged, and sub-standard contractors are hired, I get a little riled up about this topic. Any answers for this person that are more sympathetic than mine?
(Photo: www.istockphoto.com)
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You are so right in your analogy about how people spend more time picking out a hotel than hiring a contractor. It is usually the lack of planning and research that leads to problems.
