FEMA Warns Residents to be Careful in Hiring Contractors Following Katrina

Michael Brown, under secretary of Homeland Security for Emergency Preparedness and Response and head of the Federal Emergency Management Agency (FEMA), has warned people who suffered damages from Hurricane Katrina to be extremely careful when hiring contractors to clean and repair disaster damaged property or remove disaster debris.

“Unfortunately, in disaster situations, scam artists are often ready to take advantage of the misfortunes of others,” said Brown. “People should be especially alert for phone or door-to-door solicitors who hand out flyers and promise to speed up the insurance or building permit process, and those who ask for large cash deposits or advance payments in full.”

“Whether they are architectural, engineering, electrical, or general contractors, most service providers in the building industry are honest,” Brown continued, “But disasters attract scam artists. Some claim to be ‘FEMA certified,’ when, in fact, FEMA neither certifies nor endorses any contractor.”

Tips for hiring contractors include:

* Get a written estimate. Compare services and prices before making a final decision. Also, read the fine print. Some contractors charge a fee for a written estimate, which is often applied to the price of subsequent repairs they make.
* Check references. Contractors should be willing to provide the names of previous customers. Call several former customers who had similar work done to make sure they were satisfied with the job.
* Ask for proof of insurance. Make sure the contractor carries general liability insurance and workers’ compensation. If the contractor is not insured, the homeowner may be liable for accidents that occur on the property.
* Use reliable, licensed contractors. Call your local Better Business Bureau to inquire about a business before signing a contract.
* Insist on a written contract. A complete contract should clearly state all the tasks to be performed, all associated costs and the payment schedule. Never sign a blank contract or one with blank spaces.
* Make sure the contract clearly states who will apply for the necessary permits or licenses. Have a lawyer review the contract if substantial costs are involved, and keep a copy for your records.
* Get any guarantees in writing. Any guarantees made by the contractor should be written into the contract. The guarantee should clearly state what is guaranteed, who is responsible for the guarantee and how long the guarantee is valid.
* Obtain a local building permit if required. Permits may be required for site work, other than demolition, and for reconstruction. Contact your local government for permit information.
* Make final payments when the work is completed. Do not sign completion papers or make the final payment until the work is completed to your satisfaction. A reputable contractor will not threaten you or pressure you to sign if the job is not finished properly.
* Pay by check. Avoid on-the-spot cash payments. The safest route is to write a check to the contracting company. A reasonable down payment is 30 percent of the total cost of the project, to be paid upon initial delivery of materials. Federal law gives consumers a three-day “cooling off” period for unsolicited door-to-door sales of more than $25.
* Canceling a contract. This should be done within three business days of signing. Be sure to follow the procedures for cancellation that are set out in the contract. Send the notification by registered mail with a return receipt to be signed by the contractor.
* Report problems with a contractor or fraud to your state Office of the Attorney General.