Everything You Need to Know About Contractor Receipts
Don’t let contractors give you the runaround
Highlights
Laws regarding contractor receipts vary among states and counties.
Put the details of a required post-work receipt in a contract signed by both parties.
Contract law is more robust than receipt-related law.
Work contracts include start and end dates, payment plans, and several clauses intended to protect consumers.
Picture this. You hire a local contractor to install some lovely wrought-iron rails, but after they finish the work, the receipt includes a flat fee for the whole project, providing zero information about material costs and any subcontracting hires. That is frustrating, and it is a warning sign of bad contractor behavior, especially if you agreed beforehand to purchase materials at cost.
So, does a contractor have to provide receipts? What should you look for when procuring one? And should your contractor provide you with sub-invoices and any underlying receipts they held onto throughout the project? Here is everything you need to know about the wild and wooly world of contractor receipts.
Legal Requirements
The laws and statutes regarding contractor receipts vary wildly from state to state and even from county to county. Additionally, existing laws require a written contract to be signed by both parties, clearly detailing expectations and deliverables. This means your location matters if your contractor refuses to provide an itemized bill, as they may have no legal requirement to do so.
Generally speaking, contractors have no obligation to provide detailed receipts for fixed-fee projects. If they, for instance, got a fantastic deal on materials and charged you a markup, everything is legal so long as the cost does not balloon past the agreed-upon fee.
How to Ensure Accurate Contractor Receipts
Just because the law is a bit fuzzy doesn’t mean you’re left in the cold. Before the project starts, there are plenty of things to do to ensure you receive accurate contractor receipts and adequate consumer protections.
Get It in Writing
Before hiring a contractor for any project—large or small—get specifics and promises down as a legitimate work contract. A bid or a proposal isn’t a contract, and they rarely include enough details to protect you if issues arise later. In other words, ask for a detailed agreement and post-work receipt, and make both absolute dealbreakers. If they seem hesitant, trust your gut when hiring a contractor and move on to the next bid.
As for the language of the contract itself, the plainer, the better to avoid any misinterpretation down the line.
Revise Before Signing
Many contractors use prepared contract forms, which may lack crucial details. However, you can and should revise any contract before signing. Remember: Contracts are set in stone once you sign them, so don’t feel bad about necessary revisions. Ensure it includes written promises to deliver all labor costs, material costs, and any subcontractor fees—at a bare minimum.
Details, Details, Details
Labor and material costs are a good place to start with, but they aren’t the only game in town. Here are some more items to think about when revising that contract.
Start and completion dates: Sure, the real world doesn’t always adhere to estimates regarding completion dates, but this is still a good detail to have in your work contract. These dates still allow for reasonable delays but help stave off any excessive work stoppages.
Building permits and inspections: The costs of building permits and related inspections creep up on you, so ensure the final receipt includes all these details. Also, make sure the contractor obtains these permits. Otherwise, you’re responsible for any issues down the road.
Cleanup: Not all contractors offer cleanup services, but it never hurts to ask, especially if the project creates a lot of debris. If the technician agrees to clean up, get any additional costs and expectations down in writing in the contract.
Payment schedule: If you agree on an appropriate payment plan, get it down in writing. Many homeowners issue contractor down payments as a show of good faith, but this initial payout should not be more than 10% of the overall job. As for a payment schedule, come to an agreement that satisfies both parties, as contractors need cash flow to buy materials and pay wages.
Material warranty information: Ask for copies or originals of any warranties accompanying big-ticket material items.
Holdback Clauses and Change Order Clauses
Two important sections of a work contract deserving special notes are the change order clause and the holdback clause.
Change order clause: This agreement states the contract can’t be modified without written consent by both parties. For instance, if the contractor finds mold before laying down some drywall, both of you should revise and sign the contract before they subcontract a mold remediator. Always put significant changes in writing.
Holdback clause: This clause allows you to withhold the final payment until you’re satisfied with the work. Obviously, this works as an incentive for the contractor to fix any outstanding issues, finalize inspections, and provide you with a detailed and itemized work receipt.
Subcontractor Receipts
Outside of contract law, there’s no regulation dictating that your technician must reveal the amounts they paid to any subcontractors. But there are several statutes indicating they must show you proof these subcontractors were paid in full. Otherwise, they could put a lien on your home—and that’s never good. This proof comes as a written receipt, a canceled check, or a signed statement indicating both parties are financially satisfied.
Attorney Perusal
If you have the money or the project is particularly extensive, consider hiring a lawyer to peruse the contract before signing it. They’ll find any possible problems and offer additional provisions to increase your protection.
Talk to Your Contractor Openly
Most importantly, communicate with your pro by using these tips to work through issues with your contractor. If your contractor refuses to provide an invoice, sometimes all you have to do is ask again. In many cases, they will be receptive to concerns or suggestions because most contractors want to make their customers happy. There are plenty of questions to ask your contractor before signing anything. Feel free to ask them about liability insurance, licensure, checking contractor references, guarantees, and anything else relevant to the work.
What to Do if Your Contractor Does Not Adhere to the Contract
Sometimes, even if you have done your due diligence and hired a good contractor, you can find yourself in a situation that does not match your expectations. The first step is to review your written contract and make sure that the contractor truly violated your agreement. If the work or materials do not match the contract, put your concerns in writing and schedule a meeting with your contractor to go over the discrepancies. In many cases, talking with your contractor and discussing the specific issues and how you feel they do not match the stated contract can be enough to help you find a resolution to the problem.
If talking with the contractor does not work, you have a few other options. These include the following:
Post a negative but fair review online.
Hire an inspector or another local general contractor near you to look over the work.
Take the contractor to small claims court.
Discuss the situation with an attorney for legal guidance.
File a complaint with the state licensing board.
File a claim against the contractor’s bond (if they have one).
During this process, remember to remain calm, communicate clearly, keep a detailed record of discussions with your contractor and other individuals or entities, and always present the honest facts of your situation.