How To Report Contractor Fraud – Fraud by a contract is something you want to report, but how? How to report contractor fraud is what we are going to talk about in today’s article. This may be useful for those into commercial real estate investing.
This is a very important discussion because real estate investing as a rehabber or just doing some home improvements can be costly. If your contractor is doing you wrong or committing some sort of fraud, then it can cost you a fortune of money and heart ache.
How To Report Contractor Fraud
How To Report Contractor Fraud
You have a few options to consider when it comes to reporting a contractor for fraud. However, before we continue with the discussion on how to get it done, let’s be clear on exactly what contractor fraud entails.
What is Contractor Fraud?
Contractor fraud happens when a home owner or real estate investor hires a contractor to do work on their property. This could be anything from installing a new roof, patio, or laying carpet in the bedrooms. In short, a professional is brought in to complete a specific job. When this job isn’t done correctly or not done at all, then contractor fraud happens.
Typically, when you think of contractor fraud it occurs when an investor or home owner pays a contractor half the amount due to start the job, but the contract never completes the work. This is actually quite common unfortunately in the business of hiring contractors.
If a job is going to cost $10,000 to complete, the typical contractor will ask for a 50% down payment on the job. The funds are usually used to purchase materials, hirer subcontractors, and take care of miscellaneous expenses that come up during a job. This is a typical request on the part of contractors, so don’t be alarmed, but this is also where most people experience fraud.
How To Report Contractor Fraud
Hopefully, you will never be in this situation, but if you do then it is good to know what your options are. Many people get frustrated and don’t end up doing anything because they don’t know how to follow up and through on contractor fraud.
1. Better Business Bureau – The first thing you should do is contact the BBB. It is important to get the word out about these bad contractors to others that might be interest in hiring them in the future. We, as consumers, have to work together to protect each other. Don’t allow them to do this to someone else.
2. Civil Lawsuit – If someone has wronged you as a contractor, it is a good option to take them to court and file a civil lawsuit. The judge can get involved to try and help you redeem your funds you lost int he fraud case by the contractor. This could take you a lot of time and money in the process, but might be worth the reward to wipe that smug look off the contractors face.
3. Criminal Charges – Depending on your state and the case, you may be able to file criminal charges against the contractor. This is a great decision if you really would like to stick it to the contractor for committing fraud against you. You may be able to bring up a case of theft by deception against the contractor, which will show up on their record and follow them for the rest of their life.
Hopefully, you never have to experience something like this from a contractor, but if you do then you have to remember you have some options available to you.
The best thing you could do is protect yourself in the beginning by doing your homework on these contractors before hiring them. It is important to do your due diligence and only hire people that you can trust or based on recommendations of people you trust. - How To Report Contractor Fraud
The first step is definitely very important to avoid fraud.
But is it recommended to contact the contractor first and ask for an explanation or at least reach a compromise?
Actually, the first step should be to check the contractor’s license, and see if he/she has any pending lawsuits before you hire them. You can also check Angieslist.com, since lots of people will report bad contractors there. The next step is to file a complint with the state contractor’s board, and to attatch the contractor’s bond. Both of these are simple and easy to do, and don’t take much time. The contractor’s bonding company and insurance company are listed with the state, and you can see that information if you do a search on the states contractor website. (At least that’s the way it works in Washington state.)
Jack