If your home has been damaged by a natural disaster, you may need to hire a contractor to rebuild or renovate. This can be difficult because the number of people who need contractors may be larger than the number of available contractors. And, unfortunately, disreputable contractors and scam artists often prey on people who have been devastated by a natural disaster.

Finding a reputable contractor

• Be wary of anyone who comes to your door offering his or her services. Do not be pressured into signing a contract because a contractor is offering a one-time-only "special price" for people who sign immediately. These are common tactics employed by disreputable contractors.
• Verify the name, address, and phone number of any contractor you speak with. Also ask for local references. Contractors and carpenters often come from nearby towns or communities looking for work in communities that have been hit by natural disasters. Many of them are legitimate, but the only way to be sure is to call and check on them. Ask for a business card and call the number on the card. Do the same with local contractors. Be careful about hiring an out-of-state contractor. In many states, only contractors who have a license from that state can work legally.
• Ask friends, neighbors, and family members for recommendations. There may be many people in your neighborhood and your community who also need to rebuild. Ask people you know whom they have hired.
• Find out whether local relief agencies maintain a list of approved contractors.
• Always ask to see a contractor's license and proof of insurance. Check to make sure the license is up-to-date and that the contractor is fully insured, including disability and workers' compensation coverage. You can check on the status of a contractor's license by contacting your local building department or your state's licensing agency.
• Ask for local references and check out any contractor you are considering hiring with the Better Business Bureau. You can find out if complaints have been filed against a contractor by searching the Better Business Bureau's online database. You can get additional information on whether complaints have been filed against a contractor by contacting the consumer protection agency in your state, city, or county.
• Report any contractor you think is disreputable. You may save someone else lots of time, money, and heartache. If you suspect a scam, call the consumer division of your state attorney general's office. You can also file an online complaint with the Federal Trade Commission.

Before you hire a contractor, you may want to visit the "Rebuilding Resources" section of the website for the Federal Emergency Management Agency. This section has extensive information on how you may be able to make your home less vulnerable to damage when you rebuild. If this is important to you, make sure a contractor is up-to-date on the technology and safety measures that can help to protect you against future losses.

Negotiating a price and contract

Before you start any work on your home, be sure that you have met all of your insurance company or state or federal loan agency's requirements. Some companies or aid organizations require that property damage be assessed before any rebuilding occurs.

• Get multiple bids. It's a good idea to get at least three bids. This is the only way to be sure that the quotes you are getting are in line with the going rate.
• Do not pay for a job in advance.
• Try to make payments during the project contingent upon completion of a defined amount of work. This way, if the work is not proceeding according to schedule, you can delay the payments.
• Don't make the final payment or sign an affidavit of final release until you are satisfied with the work and know that the subcontractors and suppliers have been paid. Lien laws in your state may allow subcontractors to file a mechanic's lien against your home to satisfy their unpaid bills.
• Pay only by check or credit card; never pay with cash. Do not sign an insurance settlement check over to a contractor.
• Be wary if a contractor asks for payment to the individual who will be performing the work rather than to a company.
• Read any contract carefully before you sign it. It might also be a good idea to have a friend or family member read it over, too.
• Be sure that your contract includes the following:
  • The contractor's name, address, phone number, and license number, if required.
  • The payment schedule for the contractor, subcontractors, and suppliers.
  • An estimated start and completion date.
  • The contractor's obligation to obtain all necessary permits.
  • The process for handling change orders. A change order - common on most remodeling jobs - is a written authorization to the contractor to make a change or addition to the work described in the original contract. It can affect the project's cost and schedule. Remodelers often require payment for change orders before work begins.
  • A detailed list of all materials including color, model, size, brand name, and product.
  • Warranties covering materials and workmanship. The names and addresses of the parties honoring the warranties - contractor, distributor, or manufacturer - must be identified. The length of the warranty period and any limitations also should be spelled out.
  • What the contractor will and will not do. For example, is site cleanup and trash hauling included in the price? Ask for a "broom clause," which makes the contractor responsible for all cleanup work, including spills and stains.
  • Any oral promises made by the contractor.
  • A written statement of your right to cancel the contract within three business days if you signed it in your home or at a location other than the seller's permanent place of business. During the sales transaction, the salesperson (contractor) must give you two copies of a cancellation form (one to keep and one to send back to the company) and a copy of your contract or receipt. The contract or receipt must be dated, show the name and address of the seller, and explain your right to cancel.