How to Check on a Contractor Before You Hire

To check a contractor before hiring, verify their license and insurance through your state’s licensing board, confirm their business is in good standing, search federal databases for safety and bankruptcy history, and call recent references — all before you sign anything. A few hours of research can surface license suspensions, lapsed insurance, unresolved lawsuits, and safety violations, any one of which should end the conversation. The checks below cover what to ask for, where to look, and what the contract itself needs to protect you after you sign.

What to Ask the Contractor For

Before you discuss scope, price, or timeline, ask for four things:

  • The individual’s full legal name and the registered name of their business. You will need both for every verification step that follows.
  • Their state license number. A specific number, not a general claim of being licensed, is what lets you look them up.
  • A Certificate of Insurance (COI) issued by their insurer, showing policy types, coverage limits, and expiration dates.
  • At least three references from recent projects similar in type and size to yours.

A contractor who hesitates on any of these is telling you something. Legitimate contractors expect to be asked.

Verify the License

Most states require contractors to register with a licensing board before performing construction work. Go to your state’s licensing board website, find the license lookup tool, and enter the number the contractor gave you. The result will show one of three statuses:

  • Active: the contractor has met current testing, insurance, and bonding requirements.
  • Expired: the license lapsed, often because the contractor failed to renew or let required insurance drop.
  • Suspended or revoked: a regulatory agency took action against them. Treat this as disqualifying.

The same portal usually shows disciplinary history, including safety citations and client complaints. One resolved complaint from years ago is not the same as a pattern of recent violations. Read what’s actually there.

General Contractors and Specialty Trades

A general contractor’s license allows broad construction work but does not automatically cover specialty trades. In most states, a general contractor must hire licensed subcontractors for electrical, plumbing, HVAC, and roofing work unless the general also holds a separate license in that trade. If your project involves any of these, ask who will do the work and verify each subcontractor’s license independently. Specialty trade work performed without the proper license can void warranties, create code violations, and leave you liable for injuries.

Surety Bonds

Many states require contractors to post a surety bond as a condition of licensure. A surety bond is a financial guarantee from a third-party bonding company that pays out if the contractor fails to meet their obligations. Required amounts vary widely, from as low as $1,000 in some states to $500,000 or more for large-scale projects, and some states leave the figure to local jurisdictions. The licensing board portal that shows license status usually confirms whether the bond is current.

Confirm Insurance Coverage

The Certificate of Insurance should list two coverages: general liability and workers’ compensation. General liability protects you if the contractor damages your property or injures a third party. Workers’ compensation covers the contractor’s employees if they are hurt on your job. Without it, an injured worker could pursue a claim against you as the property owner.

Check every expiration date on the COI and confirm it falls after your project’s expected completion date. Most jurisdictions require general liability coverage; minimums vary, but look for at least $500,000 to $1,000,000 per occurrence.

Don’t rely on the COI alone for workers’ compensation. Many states maintain a separate online tool where you can confirm that a contractor’s workers’ compensation account is active and paid. Search your state’s department of labor or industrial commission site for a contractor verification tool.

Check Safety and Lead-Safe Records

Two federal databases give you direct insight into a contractor’s safety record and regulatory compliance.

EPA Lead-Safe Certification

If your home was built before 1978, federal law requires any contractor whose work disturbs painted surfaces to be a lead-safe certified firm.1US EPA. Lead Renovation, Repair and Painting Program Renovation, repair, and painting projects in older homes can create dangerous lead dust, and only certified contractors are trained in the containment and cleanup methods that prevent exposure. Verify certification using the EPA’s Lead-Based Paint Professional Locator, which lets you search for certified firms by location and type of work.2US EPA. Lead-Based Paint Professional Locator If your contractor doesn’t appear and your home predates 1978, don’t hire them for any work that could disturb paint.

OSHA Inspection History

The Occupational Safety and Health Administration maintains a searchable database of workplace safety inspections. Search by the contractor’s business name to see whether federal OSHA has inspected any of their job sites and whether any citations were issued.3Occupational Safety and Health Administration (OSHA). Establishment Search Each record lists violation items and specific citations. A contractor with repeated serious safety violations is a risk to their own workers and to anyone on or near the job site.

Check Business and Legal Standing

License verification confirms trade qualifications. Separately checking the business entity and litigation history tells you whether the company is financially stable and legally authorized to enter into contracts.

Secretary of State Business Database

Every state maintains a business entity database, typically through the Secretary of State’s office. Search for the contractor’s registered business name and confirm the status is Active or In Good Standing. That means the business has kept up with annual filings and required fees. Dissolved or Inactive means the company may lack the legal authority to enter into a binding contract, and any agreement you sign could be harder to enforce if a dispute arises.

Court Records

Most county clerks offer online portals where you can search civil court records by a person’s name or business name. Look for lawsuits involving breach of contract, construction defects, or failure to pay subcontractors filed in the last five to seven years. A single settled case does not necessarily disqualify a contractor. Multiple pending cases or large money judgments suggest financial instability or a pattern of disputes.

Federal Bankruptcy Records

County records won’t show federal bankruptcy filings. Use the PACER Case Locator, a nationwide search tool for federal court records including bankruptcy cases. Registration is free, and search fees are waived when you spend $30 or less per quarter.4PACER Case Locator. PACER Case Locator Select the Bankruptcy Search option and enter the contractor’s name or business name. A recent or active filing is a strong signal that the contractor may not have the resources to finish your project.

Check Reputation and References

The Better Business Bureau assigns letter grades from A+ to F based on factors including complaint history, transparency, and responsiveness to customer grievances. Customer reviews do not affect the letter grade; only the business’s direct interactions and complaint resolution record do.5Better Business Bureau. Frequently Asked Questions About the Better Business Bureau Reading individual complaints often reveals patterns, like repeated project delays, unauthorized cost increases, or work left unfinished.

Calling former clients directly remains one of the most reliable ways to evaluate a contractor. Ask specific questions, not general ones:

  • Did the contractor finish on or near the agreed completion date?
  • How often did they provide updates, and how quickly did they respond to concerns?
  • Did the final cost stay close to the original estimate, and were change orders clearly explained before extra work began?
  • Was the job site left in acceptable condition each day and at the end of the project?

A contractor who cannot produce three recent references for similar work is a risk. The references exist to confirm the contractor can turn a signed contract into a completed project.

Protect Yourself in the Contract

Background checks protect you before you sign. The contract protects you after. A good agreement covers every term that matters if something goes wrong:

  • Scope of work: a detailed description of what will be done, including materials, brands, and specifications. Vague language like “kitchen renovation” invites disagreements.
  • Payment schedule: payments tied to completed milestones, not calendar dates. A reasonable structure uses a small initial deposit, progress payments at defined stages, and a final payment after your inspection.
  • Start and completion dates: specific calendar dates, with milestone deadlines for the major phases of a larger project.
  • Change order process: any change to scope or materials requires a written change order signed by both parties before the extra work begins, with the cost adjustment stated clearly.
  • Permits: the contract should put responsibility for pulling all required building permits on the contractor. Contractors who ask the homeowner to pull permits are shifting legal responsibility for code compliance onto you.
  • Dispute resolution: specify whether disputes will be resolved through mediation, arbitration, or court.
  • Warranty: the length of the warranty, what it covers (labor, materials, or both), and the process for making a claim.

Deposit Red Flags

Be cautious of any contractor who demands a large upfront payment before starting work. Some states set statutory caps on deposits, and anything above the cap is a violation. Even where there is no specific cap, a deposit above 10 to 15 percent of the project cost, or above the actual cost of materials the contractor needs to order, should raise questions. Paying most of the money up front eliminates the contractor’s financial incentive to finish and leaves you with no leverage if work stalls.

Lien Waivers

Even if you pay your general contractor in full, an unpaid subcontractor or supplier can place a mechanic’s lien against your home. A lien can cloud your title, block a future sale, or force you into court to resolve someone else’s debt.

The protection is to collect lien waivers with every payment. A lien waiver is a signed document in which the contractor or subcontractor gives up the right to file a lien for the amount covered by that payment. Request a conditional waiver (which takes effect only after the payment clears) from every subcontractor and supplier at each progress payment, then collect an unconditional waiver (which takes effect immediately on signing) once the funds have cleared. Before releasing the final check, collect unconditional waivers from all parties. This paper trail keeps anyone further down the payment chain from coming back against your property.

Your Right to Cancel After Signing

If you sign a home improvement contract at your residence, rather than at the contractor’s office or showroom, federal law gives you three business days to cancel without penalty. The FTC’s Cooling-Off Rule applies to sales of $25 or more made at the buyer’s home, including contracts signed after a contractor visits to give an estimate.6eCFR. 16 CFR Part 429 – Rule Concerning Cooling-Off Period for Sales Made at Homes or at Certain Other Locations The contractor must give you a completed cancellation form when you sign. If they don’t, the cancellation window may stay open past the standard three days.7Federal Trade Commission. Cooling-Off Period for Sales Made at Home or Other Locations

One narrow exception: if you contacted the contractor and asked them to come repair or maintain personal property (such as an appliance) to address a genuine immediate emergency, you can waive the cancellation right in writing.6eCFR. 16 CFR Part 429 – Rule Concerning Cooling-Off Period for Sales Made at Homes or at Certain Other Locations Any additional services the contractor sells you during that visit, beyond the original emergency repair, are still covered by the three-day rule. Many states also have cancellation laws that provide equal or longer cooling-off periods.

State Recovery Funds If Something Goes Wrong

If a licensed contractor abandons your project or performs seriously deficient work, you may be able to recover part of your losses through a state-run guaranty or recovery fund. At least ten states operate these funds. Claim limits range from $10,000 to $75,000 per claim depending on the state, and are typically subject to lifetime caps per contractor.

Eligibility almost always requires that the contractor was properly licensed at the time of the work. Homeowners who hire unlicensed contractors are not eligible, which is one more reason the license check at the start matters. Filing a formal complaint with the state licensing board or home improvement commission is usually a required first step before you can draw on the fund. Recovery funds generally cover only the direct cost of completing or correcting the work, not consequential damages like temporary housing or attorney’s fees.