Start with a licensed contractor. The Department strongly recommends that you hire a contractor who is licensed by the state of Minnesota.  By hiring a licensed contractor, you ensure that the company has met certain requirements, including having a principal of the company pass an appropriate examination and having liability and property damage insurance.  A licensed contractor must also take a certain number of continuing education classes each year.

Hiring a licensed contractor provides another very important benefit-it gives you access to the Contractors Recovery Fund, which reimburses consumers who suffer losses. Minnesota law legally exempts certain contractors from the license requirements, among them contractors who gross less than $15,000 annually, specialty contractors who provide only one skill, and homeowners doing work on their own homes.  Although these contractors are operating legally without a license, if you hire an unlicensed contractor and suffer a loss, you will not have access to the Contractors Recovery Fund.

Check on the license status of a contractor by calling the Department of Commerce at 651-296-2488, or statewide toll free at 1-800-657-3602. The Department can verify if the contractor has a license and also if there are any actions or sanctions on record. For the names of licensed builders in your area, you can call the local chapter of the Builders Association of Minnesota.

The following are some indications that the contractor may not be reliable. It is probably best to avoid working with a contractor who:
• Arrives in an unmarked van or truck.
• Appears to be willing to do the job at an unusually low price.
• Requires full or substantial payment before work begins.
• Refuses to provide you with a written estimate or contract.
• Refuses to provide you with a Minnesota Department of Commerce license number.
• Refuses to provide you with references.
• Shows up at your door unsolicited.
• Uses high-pressure tactics.
• Asks you to obtain any unnecessary permits.

The contract you sign with you builder or remodeler should be specific and fairly detailed. It should include the kinds of materials to be used and, when possible, specify brand names, colors, grades, styles, and model numbers.  The contract should also include the names of any subcontractors and all material suppliers. This is especially important in case of any action against you by a contractor or subcontractor.

Other items to include are:
• Building permits. The contractor should obtain the necessary permits so that the contractor is responsible for meeting all building codes; if you obtain the permits you will be responsible.
• Starting and completing date: Since delays can and do occur, however, a general statement allowing for reasonable delays is a good idea.
• Change order clause. This is an agreement that the contract cannot be modified without the written consent of both parties.
• Schedule of payments. A down payment is customary, but it should not be more than a modest percentage of the total job. Since many contractors are small businesses and need some influx of cash to buy material and pay wages, a payment schedule might be set up based on the amount of work done to date.
• Holdback clause.  This allows you to withhold payment until sometime after the job is complete, giving you time to inspect the job.
• Cleanup. This should be included, especially if a project is likely to create debris.

Minnesota law requires Minnesota builders and remodelers to warrant that the new home or home improvement project is:
• Free of major construction defects for 10 years. "Major construction defect" means damage affecting the stability and safety of the dwelling.  It does not include damage caused by flood, earthquake, or other natural disaster.
• Free for two years of mechanical defects caused by faulty installation of plumbing, electrical, heating, and cooling systems.
• Free for one year from defects caused by faulty workmanship and defective materials.
• This statutory warranty is in addition to any other warranty you may have with the contractor. It is in effect regardless of whether you have it in writing. The Department of Commerce has no authority to interpret or enforce this warranty law, however. If the contractor fails to meet the warranty, the homeowner has the right to pursue private, civil action to seek damages necessary to remedy the defect or to make up the difference between the value of the home without the defect and the value of the home with the defect.  In the case of a home improvement project, damages are limited to the amount necessary to remedy the defect or breach.
• The warranty is limited to the items listed above; it does not extend, for example, to loss or damage caused by defects in design, installation, or materials supplied by the owner, or to damage resulting from negligence or improper maintenance by anyone other than the contractor.  Nor does the warranty cover damage from dampness and condensation due to insufficient ventilation after occupancy. A complete list of exclusions is found in Minnesota Statutes Chapter 327A.