home-improvement scam
Illustration: Sara Ghasletwala
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The Scam

Too many homeowners fork over big bucks for work that never gets done and materials that never make it to the job site. Illinois resident Fe Pascual hired a firm to turn her patio into an enclosed sunroom. She liked the $21,000 bid and was charmed by the salesman. “He told me I had to sign the contract and give him 10 percent down. He left with my check and a contract I had barely looked at.” Within weeks, Pascual received a blueprint for her sunroom, along with a bill for another 20 percent. After pulling the building permit, the company hit her up for 30 percent more. Pascual paid both fees. But that was the last she heard from the company. Through her state’s attorney general, Pascual filed a consumer-fraud lawsuit against the company; the case is still pending.

How Not to Get Taken: Payments beyond an initial one-third down (in California it’s 10 percent or $1,000, whichever is less) should be contingent upon completion of various stages of a job or delivery of materials that can’t be returned, such as custom cabinetry. For projects under $25,000, like Pascual’s, follow the 30-30-30 rule. Pay one-third of the cost at contract signing, a third midway through the job, and a third at the end. Retain 10 percent of the final payment in escrow until you’re satisfied with the work and all the subcontractors and suppliers have been paid. For bigger renovations, peg payments to milestones spelled out in the contract. For example, cut a check after the drywall goes up, then another once the cabinets are installed, and so on.
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