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posted: 8/31/2012 5:50 AM

Warning signs that a remodeling contractor may not be on the level

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A demand to be paid in full before work begins is just one sign that a contractor might not be on the level.

Q. We are planning a large remodel and have interviewed several contractors for the job. One contractor says he will do the work for a price that is about 40 percent below all of the other bids, but only if we are willing to pay him for the entire job upfront in cash. Is this the deal of a lifetime, or is the guy trying to cheat us? P.S. He is willing to write up a contract and have it notarized.

A. Frankly, I wouldn't trust the lowballing contractor, even if his tongue were notarized.

Bids from legitimate contractors rarely vary by more than 10 percent or 15 percent, assuming each one would supply the same materials and get the proper permits. A super-low bid is a warning sign that the contractor who made it might not be legitimate, according to a recent advisory from the Federal Trade Commission.

Further, it's illegal in most areas for the contractor on a large job to require full payment before starting work or to insist that payments be made in cash. Such demands are additional signs that a remodeler isn't on the level, the FTC says. If the contractor took all your money and then skipped town without doing any work, the notarized contract he left behind wouldn't be worth the paper it was written on.

The FTC says homeowners should also be wary of contractors who solicit work door-to-door, offer discounts for helping to find additional customers, use high-pressure sales tactics or say they can offer a deep discount because they have material left over from another job.

Never hire a contractor without first verifying his license with state officials, confirming that his insurance is up-to-date and personally inspecting the work he has performed for other customers.

Of course, you should also have the contractor put all of his promises in writing. It's not necessary to have the document notarized, but you might want to have it reviewed by an attorney if the project will cost more than a few thousand dollars.

Q. I am researching the title to a home I want to buy. The deed at the local recorder's office says the home is owned by a man "in severalty," but only the man's name is listed. How can I find out the names of the other owners?

A. There aren't any other owners. "In severalty" means that title is held by one person as sole owner. In other words, interest in the property has been severed from all others and is held all alone.

Q. You recently told a reader who took his loan out in 1999 that his credit report would show that he has made his payments promptly even though the loan was sold to another company a few months ago. The $190,000 loan I took out last winter was sold in May, but the application I filed two weeks ago to refinance was rejected because my credit report erroneously suggests I now have two mortgages -- one with the original lender and one with the new company. What should I do?

A. I can see why the bank rejected your recent refinancing application. You mistakenly appear to have a pair of $190,000 mortgages, so it probably figured that you're drowning in debt. Clearing up this mess shouldn't be difficult, but it will probably take an hour or two of your time, and then a few weeks for the credit bureaus themselves to update their information.

When a mortgage is sold or transferred to another company, payment information reported by both the new institution and the old one will appear on the borrower's credit report. The report is also supposed to note the date that the sale or transfer occurred. I don't have a copy of your report, but I'll bet this all-important date somehow didn't make it into your file, which creates the impression you have two $190,000 mortgages instead of one.

To straighten this all out, contact the credit bureau that provided your report to the lender who rejected your refinance application. You might be able to get the ball rolling with a mere phone call to the bureau, but don't be surprised if you're instead asked to write a letter or two. The correct information will then be used to update your report, clearing the way for you to refinance.

• For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers, P.O. Box 4405, Culver City, CA 90231-4405.

2012, Cowles Syndicate Inc.

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