Most homeowners spend more time researching a refrigerator than the person they’re about to hand $40,000 and the keys to their house. That gap causes the majority of construction horror stories: the unfinished addition, the lien on the title, the contractor who vanished after the deposit cleared. Vetting a general contractor properly takes maybe three or four hours spread across a week. That’s a small price for avoiding a project that drags on for eight months instead of eight weeks.
Verify the License Before You Even Take a Bid Seriously
Every state licensing board has a public lookup tool, usually searchable by name, license number, or business name. Pull it up and check three things: that the license is active, that it covers the type of work you need (general building versus electrical versus plumbing are often separate categories), and that there’s no disciplinary history attached to it.
Also check how long the license has been active under that specific business name. A contractor who formed a new LLC eight months ago, even if the individual has 15 years of experience, is a pattern worth asking about directly. Sometimes it’s a legitimate restructuring. Sometimes it’s someone shedding a company with unresolved complaints or judgments and starting fresh under a new name.
- Confirm the license matches the exact legal business name on the contract, not just the contractor’s personal name.
- Check for any formal complaints filed with the state board in the past five years, and read what they were about.
- Ask for the license number in writing before the first meeting, not after you’ve already decided you like them.
Insurance Isn’t Optional, and “I’ll Email It to You” Isn’t Good Enough
Ask for a certificate of insurance directly from the insurance company, not a PDF the contractor sends you. Coverage lapses, and a certificate from six months ago tells you nothing about today. You want to see general liability coverage, typically at least $1 million per occurrence for residential work, and workers’ compensation if they have any employees or subcontractors on site.
Without workers’ comp, if someone gets hurt on a ladder in your backyard, you can be named in the claim. This isn’t a theoretical risk. It’s the single most common way homeowners end up in a lawsuit they never saw coming. Call the insurance agent listed on the certificate and confirm the policy is current. It takes five minutes and costs nothing.
Call the References, but Ask Different Questions Than Everyone Else
Every contractor hands you their three best customers. Calling to ask “were they happy with the work” gets you a predictable answer. Ask instead about the parts of the job that went wrong, because something always does on a renovation.
- “What was the original timeline, and what was the actual finish date?”
- “Did the final invoice match the original bid, or were there change orders? How were those handled?”
- “Did the crew show up when they said they would, or were there stretches of several days with no activity?”
- “If you had a problem after the work was finished, did they come back and fix it without a fight?”
Ask for at least two references from jobs completed more than a year ago. Recent jobs look great because nothing has had time to settle, crack, or leak yet. A reference from 18 months back tells you how the work holds up and whether the contractor still answers the phone after the final payment clears.
Check the contractor’s standing with your local building department too. Permit history is public record in most municipalities, and you can see whether past projects passed inspection on the first try or required repeated corrections.
Read the Contract Like You’re Looking for a Reason to Walk Away
A thin, vague contract is the biggest red flag in the entire process, bigger than a high bid or a bad reference. The document should spell out materials by brand and model number, not just “quality fixtures.” It should include a payment schedule tied to completed milestones, a start date, an estimated completion date, and a clear process for handling change orders in writing.
- Deposit requests over 10 to 15 percent of the total project cost, or anything close to one-third up front with no work completed. Many states cap deposits by law, often around 10 percent or $1,000, whichever is less, so check your state’s limit specifically.
- No mention of lien waivers. You want a clause requiring the contractor to provide a signed lien waiver from every subcontractor and supplier as each payment is made, so an unpaid subcontractor can’t place a lien on your home later.
- Payment terms that front-load the schedule, such as 50 percent due before any demolition starts.
- No defined scope of work, just a one-paragraph description that could mean almost anything.
- A clause that allows the contractor to substitute materials “of equal or greater value” without your written approval.
- Missing start and end dates, or a completion date described only as “approximately.”
- No language addressing what happens if the project is delayed, including whether you owe daily storage or living expenses.
If a contractor pushes back hard when you ask to add lien waiver language or a firmer payment schedule, treat that as information. A contractor confident in their own work rarely objects to clearer terms protecting both sides.
Put It All in Writing Before Any Money Changes Hands
Everything discussed verbally, the brand of windows, the paint color, the timeline for the kitchen demo, needs to appear in the written contract or a signed addendum. Verbal promises don’t hold up when a dispute lands in small claims court, and they rarely hold up in the contractor’s memory either once the job gets busy.
Before signing, ask for a certificate of insurance mailed or emailed directly from the insurer, pull the license lookup yourself rather than trusting a screenshot, and call at least three references with the specific questions above. Then sit with the contract for 24 hours before signing it. A contractor worth hiring will give you that day without complaint.
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