Hiring the wrong contractor is the single most expensive mistake a homeowner can make. A bad hire does not just cost money — it costs months of your life, creates legal headaches, and can leave your home in worse shape than when you started. Reddit’s r/HomeImprovement and Houzz forums are filled with cautionary tales of contractors who vanished mid-project, performed substandard work, or hit homeowners with surprise charges.
This checklist covers every verification step you should complete before signing a contract. Print it, share it, and do not skip any items — even if the contractor was referred by someone you trust.
Licensing and Credentials
- Verify the contractor holds a valid, current license for your state and municipality
- Confirm the license type covers the specific work you need (general contractor vs. specialty trade)
- Check the license directly with your state licensing board — do not rely on the contractor’s word alone
- Search for any disciplinary actions, complaints, or violations on the licensing board website
- Confirm the contractor has been in business for at least 3-5 years under the same business name
Every state has an online license lookup tool. Search “[your state] contractor license verification” to find it. In California, use the CSLB website. In Texas, check with the Texas Department of Licensing and Regulation. Many states also let you verify by phone. Write down the license number and expiration date for your records.
Insurance Verification
- Request a Certificate of Insurance (COI) directly from the contractor
- Verify the contractor carries general liability insurance (minimum $1 million per occurrence is standard)
- Verify the contractor carries workers’ compensation insurance for all employees
- Call the insurance company directly to confirm the policy is active and has not lapsed
- Confirm that subcontractors are also covered by liability and workers’ comp insurance
- Ask to be added as an “additional insured” on the policy for the duration of your project
If an uninsured worker is injured on your property, you could be held financially liable. If an uninsured contractor damages your home, your homeowner’s insurance may deny the claim. Verifying insurance takes 15 minutes and can save you tens of thousands of dollars.
References and Track Record
- Ask for at least 3 references from projects similar to yours completed in the last 12 months
- Actually call or visit those references — ask about timeline accuracy, communication, budget adherence, and punch list completion
- Ask references specifically: “Would you hire this contractor again?”
- Check online reviews across multiple platforms (Google, Yelp, BBB, Angi, Houzz) — look for patterns, not individual complaints
- Ask to see photos of completed work similar to your project scope
- If possible, visit a completed project in person to evaluate workmanship firsthand
Go beyond “Were you happy?” Ask pointed questions: “Did the project finish on time and on budget?” “How did the contractor handle unexpected issues?” “Were there any disputes about change orders?” “How long did it take to complete the punch list?” These questions reveal how the contractor operates under real conditions.
The Written Contract
Every legitimate contractor will provide a detailed written contract. If a contractor resists putting things in writing, walk away immediately.
- The contract specifies the complete scope of work in detail — not just “kitchen remodel” but every line item
- Materials are specified by brand, model, and grade — not generic descriptions like “granite countertops”
- Start date and estimated completion date are clearly stated
- A payment schedule tied to milestones is included (see next section)
- A change order process is defined in writing — how changes are requested, approved, priced, and documented
- Warranty terms are explicitly stated: minimum 1-2 years on workmanship, plus manufacturer warranties on materials
- The contract states the contractor is responsible for obtaining all required permits and scheduling inspections
- A dispute resolution clause is included (mediation or arbitration)
- The contract includes a right to cancel within the legally required period (3 business days under the FTC Cooling-Off Rule for contracts signed at your home)
- Lien waiver provisions are included — the contractor provides lien waivers from subcontractors and suppliers upon each payment
Without lien waivers, a subcontractor or material supplier who was not paid by your general contractor can place a mechanic’s lien on your home — even if you already paid your GC in full. Request conditional lien waivers with each progress payment and unconditional waivers with the final payment.
Payment Schedule
The payment structure is one of the strongest indicators of contractor legitimacy. Here is what a reasonable schedule looks like and what should raise alarms.
- Deposit is no more than 10-15% of total project cost (10% is ideal for projects over $50K)
- Payments are tied to verified completion of specific milestones, not arbitrary dates
- You retain 10-15% as a final holdback until the punch list is 100% complete and you have signed off
- The contract does not require cash-only payments
- The contract does not require full payment before work begins
- Payment milestones are specific and verifiable: “framing inspection passed” not “framing phase”
Example payment schedule for a $60,000 kitchen remodel:
| Milestone | Percentage | Amount |
|---|---|---|
| Contract signing (deposit) | 10% | $6,000 |
| Demolition complete, rough-in started | 20% | $12,000 |
| Rough-in inspections passed | 20% | $12,000 |
| Cabinets and countertops installed | 25% | $15,000 |
| Substantial completion | 15% | $9,000 |
| Final walkthrough and punch list complete | 10% | $6,000 |
Walk away from any contractor who demands more than 30% upfront, insists on cash-only payments, offers a suspiciously large “pay today” discount, or asks you to make checks payable to an individual rather than a business entity. These are among the most commonly reported patterns in contractor fraud cases.
Communication and Project Management
- Ask how the contractor communicates project updates (daily logs, weekly meetings, project management app)
- Confirm who your primary point of contact will be — especially if the company runs multiple projects simultaneously
- Establish expected working hours and days (typically 7-8 AM to 4-5 PM, Monday through Friday)
- Discuss how the job site will be maintained — daily cleanup expectations, debris removal, and dust containment
- Ask how the contractor handles delays and what their notification process is
Final Checks Before Signing
- Get at least 3 itemized bids from different contractors to benchmark pricing and scope
- Have an attorney review the contract if the project exceeds $25,000 — it is worth the $300-$500 legal fee
- Verify the contractor’s physical business address — not just a P.O. box
- Search for the contractor and business name in your county court records for any lawsuits or judgments
- Trust your instincts — if something feels off during the bidding process, it will only get worse during construction
Getting three bids is not just about finding the lowest price. It helps you understand the realistic cost range, identify what is and is not included in each bid, and evaluate how thoroughly each contractor assesses your project. If one bid is dramatically lower than the others, that is a red flag — not a bargain.