Summary

22 items · 1–2 hours of research and verification

Why This Verification Process Matters

Hiring a contractor is one of the most significant decisions a homeowner makes. Whether you're replacing a roof, renovating a bathroom, or adding an addition, the person you hire has access to your home, your investment, and in some cases your family's safety. Yet contractor fraud, shoddy workmanship, and unfinished projects are among the most common consumer complaints reported to state attorneys general across the country.

This checklist gives you a structured process to evaluate any contractor before work begins — not as optional due diligence, but as your fundamental protection. If you're still weighing whether to hire out or tackle work yourself, our guide to DIY electrical work illustrates where the line between safe DIY and necessary professional work typically falls.

Never Skip the License Verification Step

A contractor can show you a license card that is expired, suspended, or fraudulent. Always verify license status directly through your state's contractor licensing board website — most offer free, real-time lookup tools. Hiring an unlicensed contractor may void your homeowner's insurance for work-related damage and expose you to liability if a worker is injured on your property.

Permit Responsibility Belongs to the Contractor

If a contractor asks you to pull your own permit for the work they are performing, treat this as a serious red flag. When a homeowner pulls the permit, they legally become the contractor of record and assume responsibility for code compliance and inspections. Legitimate licensed contractors pull their own permits. See our guide on when permits are actually required for more context.

Tools and Resources You'll Need

Before you start making calls or reviewing bids, gather these resources. Having them ready lets you move through verification efficiently rather than scrambling between steps.

Required

State Contractor Licensing Board Website

Used to verify that a contractor's license is current, valid, and free of disciplinary actions in your state.

Required

State Insurance Commissioner Lookup

Confirms that the contractor's general liability and workers' compensation policies are active and not lapsed.

Required

Better Business Bureau (BBB) or Complaint Database

Helps surface unresolved complaints, patterns of disputes, or fraud alerts associated with a contractor's business name.

Required

Written Contract Template

A formal document outlining scope, materials, timeline, payment schedule, and dispute resolution — signed by both parties before work starts.

Required

Local Building Department Contact

Used to confirm which permits are required for your specific project and to verify whether the contractor has pulled them.

Required

Lien Waiver Form

A signed document from the contractor releasing their right to place a lien on your property after payment is made.

For projects that require permits — which is more common than many homeowners expect — check our article on permits and inspections to understand what your specific project likely requires before you even request bids.

The Complete Verification Checklist

Work through each group in order. License and insurance verification should always come first — if a contractor fails those checks, there is no reason to proceed further. The contract review group deserves at least as much attention as the credential checks; a poorly written contract is one of the leading causes of project disputes.

Watch Out for Door-to-Door Solicitation After Storms

Unlicensed contractors frequently canvas neighborhoods after storms or natural disasters offering quick repairs at low prices. These situations create urgency that can lead to rushed decisions. Take the same verification steps described in this checklist regardless of how or when you were approached — the pressure to act fast is a manipulation tactic, not a legitimate reason to skip due diligence.

Lien Waivers Protect You at Final Payment

Even if you pay your contractor in full, subcontractors and material suppliers can place a mechanic's lien on your property if the general contractor fails to pay them. Always request a signed lien waiver from the contractor — and ideally from major subcontractors — before releasing your final payment. Consult a real estate attorney if you are unsure how lien law applies in your state.

License & Insurance Verification

Look up the contractor's license number on your state licensing board's website and confirm it is active, not expired or suspended. Must
Request a certificate of general liability insurance and verify it directly with the issuing insurer — do not rely solely on the document provided. Must
Confirm the contractor carries workers' compensation insurance; if they don't and a worker is injured on your property, you may be held liable. Must
Check whether the contractor's license covers the specific trade for your project (e.g., electrical, plumbing, general contracting). Must

Business Legitimacy

Search the contractor's business name and owner name on the Better Business Bureau and your state's attorney general consumer complaint database. Must
Confirm the contractor has a verifiable physical business address — not just a P.O. box or mobile number. Should
Verify the contractor has been in business long enough to have a track record; ask how long they have operated under this business name. Should

References & Past Work

Request at least three references from projects completed within the last 12–18 months that are similar in scope and type to yours. Must
Contact each reference directly, ask about timeline adherence, communication quality, and whether they would hire the contractor again. Must
Ask if you can view a recently completed project in person if the scope involves visible structural or finish work. Nice to have

Bids & Estimates

Obtain at least three written bids for the same clearly defined scope of work before making any hiring decision. Must
Be wary of bids that are dramatically lower than others — this can signal cut corners, inferior materials, or an intent to pad costs with change orders later. Must
Confirm that bids specify materials by brand, grade, or specification so you are comparing equivalent proposals. Should

Contract Review

Ensure the contract includes a complete scope of work, a payment schedule tied to milestones, start and estimated completion dates, and a change-order process. Must
Confirm the contract specifies who is responsible for obtaining required permits and scheduling inspections. Must
Review warranty terms for both labor and materials — understand what is covered, for how long, and what voids the warranty. Must
Clarify the dispute resolution method (mediation, arbitration, or litigation) before signing, not after a problem arises. Should

Payment & Final Steps

Never pay more than 10–30% upfront as a deposit; structure remaining payments to milestone completions rather than dates. Must
Pay by check or credit card — not cash — to maintain a clear payment record. Must
Withhold final payment until work passes all required inspections and you have received signed lien waivers. Must

If you're a first-time homeowner still building your home improvement knowledge base, the first-time homeowner improvement guide covers the broader framework for managing contractors and projects from day one. For ongoing upkeep decisions, the home maintenance hub is a useful ongoing reference.

This article is for general informational purposes only and does not constitute legal or financial advice. Regulations, licensing requirements, and lien laws vary by state and locality. Consult a licensed attorney or your local building authority for guidance specific to your situation.

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Home & Living Editorial Team · Contributor

Home & Living Editorial Team is the collective byline for our editorial team and contributor network. Articles published under this byline or an editorial pen name are researched, written, and reviewed according to our editorial standards for clarity, consistency, and independence before publication.

The content on this site is for informational purposes only and is not a substitute for professional advice. Always consult a qualified professional for guidance specific to your situation.