Contractor disputes account for millions of dollars in annual civil litigation and consumer complaints. Whether you are expanding a corporate office or remodeling a flagship retail location, selecting the right general contractor determines whether your project finishes on budget or turns into an open-ended financial hemorrhage.
Question 1: Are You Bonded and Insured in This Specific Jurisdiction?
Being "licensed" in a neighboring municipality does not automatically grant operating rights in your project’s city or county. Verify that the contractor holds an active license with the local building department and carries a Surety Bond. Surety bonds protect the property owner against unfinished work or failure to pay trade subcontractors.
Question 2: Who Pulls the Municipal Building Permits?
Red Flag Alert: If a contractor asks you as the property or business owner to pull the building permit, discontinue negotiations immediately. Unlicensed operators request owner-builder permits to evade scrutiny and bypass workers' compensation enforcement. A professional contractor always applies for and signs all municipal permits.
Question 3: What Is the Milestone Payment Schedule?
Reputable contractors do not demand 50% upfront for standard commercial jobs. Most states legally cap upfront deposits (e.g., 10% or $1,000 maximum in California). Agree on a milestone payment structure tied to passed municipal inspections:
- Deposit: 10% upon contract signing and scheduling.
- Milestone 1: 25% upon completion of rough plumbing, electrical, and framing inspection approval.
- Milestone 2: 25% after drywall, insulation, and paint sign-off.
- Milestone 3: 25% upon fixture installation and mechanical testing.
- Retainage (Final 15%): Released ONLY after final inspection sign-off and receipt of unconditional lien waivers from all subcontractors.
Question 4: Do You Provide Unconditional Lien Waivers?
If a general contractor takes your payment but fails to compensate their lumber supplier or roofing crew, those suppliers can place a mechanics lien directly against your real estate. Demanding partial and final unconditional lien waivers protects your property title.
Question 5: Can You Furnish 3 Commercial References Within the Last 12 Months?
Contacting past clients is non-negotiable. Inquire about change order frequency, punctuality, cleanup protocols, and how the contractor resolved unforeseen structural delays. Look for businesses listed on LocatorBranches where verified customer feedback is cross-referenced with genuine business branch credentials.
