Beware of building scams and rip-offs

Has this happened to you?

A contractor comes into your house and offers you the lowest quote for the remodeling project you’ve been planning.

The contractor tells you their company’s work will be cheaper without a building permit.

However, what the contractor doesn’t mention is that not only is lacking a permit against the law, but it means there will be no inspection for quality of work.

This is just one of the many scenarios practiced by unlicensed builders who prey on unsuspecting consumers with building scams and rip-offs, reports the Upper Peninsula Builders Association.

The “deals” unlicensed builders boast end up costing Michigan consumers more than the work of distinguished licensed contractors.

“There are a number of different scam tactics unlicensed con artists use,” said Ross Broughton, executive officer of the Upper Peninsula Builders Association (UPBA). “They will tell you it’s cheaper to do the job without a building permit or that no permit is needed. They do this because without a builders license there will be no inspections done to assure the quality of work or that it meets the requirements of the Michigan Residential Code (MRC).”

Under Michigan law, all contractors offering to do work which totals $600 or more in labor and materials must be licensed by the Department of Energy, Labor & Economic Growth (DELEG).

A Residential Builders license allows a contractor to build a complete structure and do maintenance or alteration (remodeling) work, Upper Peninsula Builders Association officials said.

A Maintenance & Alteration license indicates that the holder has met requirements for one or more of 14 different trades. The trades in which a contractor is qualified to practice are listed on the license.

“Consumers should also be wary of builders who offer a “special low price” or claim they have materials left over from another job they can use on their project,” said Broughton. “Legitimate builders and remodelers do not over buy materials for a job. Consumers are also warned to be cautious about any builder who asks to be paid in cash or requires total payment up front.”

Hiring unlicensed builders also exposes the consumer to potential liability issues that could be very costly.

Consumers that contract with an unlicensed contractor can be held liable for on-the-job injuries sustained by that unlicensed person and their employees. This exposes the consumer to liability, including having to pay medical bills and lost wages. Licensed contractors must carry workers compensation insurance to cover injuries to their employees. Unlicensed builders do not.

Licensed contractors offer consumers several benefits, including:

– The contractor knows his/her trade and has been tested and approved, including a credit check by the state of Michigan.

– They are required to show continuing competency in their profession to keep their license. They know and build to the Michigan Residential Code.

– Liability for on-the-job injuries will rest with the licensed contractor, not with the consumer.

All licensed contractors carry a pocket license card, which consumers should ask to see.

If they cannot show their license, consumers should call the Michigan Department of Labor and Economic Growth’s (DELEG) Builder’s Unit at (517) 241- 9254 or visit the DELEG website at, to confirm that an individual or company has a license.

Consumers are encouraged to file complaints against unlicensed builders.

By doing so, consumers not only assist in legal crackdowns against unlicensed builders, but also will help friends and neighbors from being ripped off.

Complaints against unlicensed builders must be in writing and signed. Necessary forms may be obtained at, or a consumer may request a form and information by telephone at (517) 241-9202.

Consumers filing complaints are urged not to include any information such as your Social Security number, that you do not want to be released to the respondent.

While licensing won’t guarantee success, it does indicate a degree of professionalism and suggests the contractor is committed to his or her job.

According to experts, the following signs should signal a warning:

– A contractor who makes unsolicited phone calls or visits. Be especially wary of people who offer a bargain price, claiming they’re doing a job in the neighborhood and have left-over materials. These are common scam tactics.

– A contractor whose address can’t be verified, who uses only a post office box, or who has only an answering machine and no separate listing in the telephone book.

– High pressure sales tactics or threats to rescind a special price if you don’t sign on the spot.

– A contractor who can’t (or won’t) provide references for similar jobs in the area, or whose license or insurance information can’t be verified.

Once a contractor has been selected, make sure the contract includes:

– His or her name and address.

– License number.

– Timetable for starting and finishing the job.

– Payment schedule.

– Names of subcontractors.

– The scope of work to be done.

– Any other pertinent information.

The Upper Peninsula Builders Association was chartered in 1978 as the Home Builders Association of the Superiorland.

It is a professional trade organization comprised of builder and associate members dedicated to promoting the building industry. The organization encourages professionalism within the industry, educates the members and general public and positively impacts government on building related issues.