12 Questions to Ask Any Contractor Before You Sign

The Federal Trade Commission publishes a list of things home improvement scammers do. Most of the items are what you would expect: knocking on your door because they are “in the area,” claiming to have materials left over from another job, pressing for an immediate decision, demanding everything up front or in cash.

One item on the list sounds like a favour. Scammers, the FTC says, ask you to get any required building permits.

It reads as helpful delegation. It is the opposite. The permit applicant is the party the building department holds responsible for code compliance and inspections, so a homeowner who pulls the permit has quietly assumed liability that belongs to the contractor. It is also the standard workaround for someone who is unlicensed or cannot pull permits in their own name.

That is the shape of this whole subject. The dangerous answers sound accommodating.

The twelve questions

1. What is your licence number, and may I see your pocket licence and photo ID? California’s Contractors State License Board advises asking for both, and verifying the licence is in good standing with the board directly rather than accepting a number on a business card. A contractor who cannot produce identification matching the licence is a different person from the licence holder.
2. Do you carry general liability insurance and workers compensation, and may I verify it with the carrier? The FTC advises considering only contractors who are licensed and insured, and asking for proof of insurance. Verify with the insurer, not from a certificate handed to you. Washington State’s Department of Labor and Industries directs homeowners to confirm a contractor is bonded and insured through the state’s own verification tool.
3. Who is pulling the permits? The answer should be the contractor. The board’s instruction is to confirm that your contractor will obtain all necessary permits from your local building department, and the FTC lists the reverse as a scam indicator.
4. What is the down payment, and what does my state cap it at? In California the rule is specific: the down payment may not exceed 1,000 dollars or 10 percent of the contract price, whichever is less. The FTC notes generally that some states limit down payment amounts. A request for 50 percent before anyone arrives is a serious signal wherever you live.
5. How are progress payments tied to work actually completed? California’s rule is that payments cannot exceed the value of the work performed, apart from the down payment. The board’s plainer version: do not let payments get ahead of the work.
6. Who are your subcontractors and suppliers? You need their names because of the lien mechanism below. Ask for current contact information for the contractor, the subcontractors and the suppliers.
7. Will you provide lien waivers, and will you accept joint checks? The board calls joint checks, endorsed by both parties, the simplest way to prevent liens and ensure subcontractors and suppliers are paid.
8. Are you an EPA Lead-Safe Certified firm? For any home built before 1978 where paint will be disturbed, this is a legal requirement, not a preference. Ask to see the certificate.
9. What are the start and completion dates? The FTC requires these in the written contract, alongside the contractor’s name, address, telephone number and licence number.
10. Will every promise you have made to me appear in the contract? The FTC’s requirement is that the contract include all promises about scope, labour and materials, and that it contain no blank spaces. A blank space is a term someone else fills in later.
11. May I have references and the addresses of similar recent projects? The board advises asking for references and examples of similar work. Washington advises obtaining at least three written bids, which is also how you learn what the job should cost.
12. What is my cancellation right, and when does it expire? See below, because the answer depends on where you signed.

How you can pay twice

This is the mechanism most homeowners have never heard of, and California requires it to be printed in the contract in these terms: even if you pay your contractor in full, unpaid subcontractors, suppliers and labourers who helped to improve your property may record mechanics liens and sue you in court to foreclose the lien. If a court finds the lien valid, you could be forced to pay twice or have a court officer sell your home to pay the lien.

The board is equally direct about the limit of your own diligence: paying your contractor, or getting a release from your contractor, does not guarantee that subcontractors and suppliers have been paid.

Two defences exist. Preliminary notices arrive from subcontractors and suppliers who might later need to file a lien, and in California may be delivered before work begins and up to 20 days afterwards. Keep every one; they tell you exactly who could place a lien on your home. Lien waivers are the release, and California recognises four statutory forms: conditional and unconditional, each on progress payment and on final payment.

The distinction matters enormously. A conditional waiver binds only when the claimant has actually been paid. An unconditional waiver relies on the claimant’s assertion that payment was received. Never sign or accept an unconditional waiver before the payment has cleared.

The insurance question has a sharper edge than it looks

Question two is not only about whether damage to your house is covered. In California the statutory chain runs like this. Labor Code section 2750.5 provides that anyone performing work requiring a contractor’s licence must hold one as a condition of independent contractor status, so an unlicensed person doing licensed work cannot be an independent contractor. Section 3351(d) includes within the definition of employee a person employed by the owner of a residential dwelling for duties incidental to its ownership or maintenance. Section 3352(a)(8) excludes only casual work: employment contracted for less than 52 hours, or for wages of not more than 100 dollars, in the 90 days before the injury.

Put together: if you hire an unlicensed person for work that requires a licence, and they work 52 hours or more, or earn more than 100 dollars in the 90 days before they are hurt, you are the employer for workers compensation purposes. Whether your homeowners policy responds is a separate question worth putting to your own insurer before, not after.

Your cancellation right, and when it does not exist

The FTC’s Cooling-Off Rule gives three business days to cancel, and the thresholds are 25 dollars or more for a sale made at your residence and 130 dollars or more elsewhere, such as a hotel or convention centre.

The exclusions are where people are caught. The rule does not apply to sales made following prior negotiations at the seller’s fixed permanent retail location. It does not apply where you initiated contact and specifically requested the seller visit your home to repair or maintain personal property, though it does cover anything additional they then sell you. It does not apply to bona fide immediate personal emergencies where you have signed a dated waiver, or to transactions conducted entirely by mail or telephone, or to real property, insurance and securities.

So the rule protects you against the salesperson at your door. It does not protect you from a bad contract you drove to a showroom and signed. That is the case people assume is covered and is not.

Where the right does apply, California requires the contractor to return payments within 10 days of receiving the cancellation notice, and permits cancellation by email, post, fax or delivery to the contractor’s place of business by midnight of the third business day.

After a storm, a different set of rules

The FTC maintains separate guidance for weather emergencies, and its red flags add three: contractors who claim they do not need to be licensed, who offer a discount conditional on signing immediately, and who tell you to sign over your insurance check.

The FTC’s payment instruction is unambiguous: pay by credit card or cheque, never by wire transfer, gift card, payment app, cryptocurrency or cash. Rather than signing over an insurance payment, it suggests arranging with your bank for a certificate of completion so funds release in stages as work is approved.

One number that changed

A great deal of published advice still states that California work under 500 dollars does not require a licensed contractor. That threshold rose to 1,000 dollars on 1 January 2025. The conditions matter: the work must not require a building permit, and the unlicensed person may not employ anyone on the project. A 900 dollar job that needs a permit still requires a licensed contractor. Any article still quoting 500 dollars has been wrong for over a year.

For scale

The FTC’s Consumer Sentinel Network Data Book for 2024, published in March 2025 and still the most recent edition, recorded 81,925 reports in the Home Improvement, Repair and Solar category, 1.27 percent of all reports and sixteenth by volume, against 6,471,708 total reports and 12.537 billion dollars in reported fraud losses.

Home improvement is not the largest fraud category. It is among the most expensive per household, because the amounts are large and the money is usually gone before anyone reports it.

What to do, in order

1. Get three written bids before speaking seriously to anyone about price.
2. Verify the licence with the state board and the insurance with the carrier, independently of whatever the contractor shows you.
3. Check your state’s down payment cap and refuse anything above it.
4. Keep every preliminary notice and require conditional lien waivers with each payment.
5. Never pay in cash, and never sign over an insurance cheque.
6. Make the final payment last, after the work is finished and you are satisfied, which is the FTC’s own instruction.

The uncomfortable asymmetry here is that a contractor does this every week and you do it perhaps three times in your life. Nearly every protection described above is a state rule rather than a federal one, which means the reader in Ohio cannot rely on the California figures quoted here and has to go and find their own. That is a real burden, and it is the reason the first question on the list is a licence number: it is the one string that lets a state board answer all the others for you.

Where these figures come from

• Federal Trade Commission, How To Avoid a Home Improvement Scam, and How To Avoid Scams After Weather Emergencies and Natural Disasters
• Federal Trade Commission Cooling-Off Rule, 16 CFR Part 429
• Federal Trade Commission, Consumer Sentinel Network Data Book 2024
• California Contractors State License Board, consumer guidance, sample home improvement contract, and Industry Bulletin on Assembly Bill 2622
• California Civil Code sections 8132, 8134, 8136, 8138, 8400 and 8404; California Labor Code sections 2750.5, 3351 and 3352
• Washington State Department of Labor and Industries, Hiring a Contractor
• US Environmental Protection Agency, Renovation, Repair and Painting Program

General information, current as of September 2026, and not personalised legal advice. Licensing rules, payment caps and lien procedures are set by each state; check your own state’s requirements before signing anything.