1. Be Prepared
Know exactly what you want to accomplish.
Have sketches, photos, clippings, etc. on hand to illustrate what you want done. If yours is a larger project, you may want to first consult a qualified architect.
Set a budget. Let them know your limit, or your parameters.
Be aware of your own local planning, zoning, and building department expectations and restrictions. Most projects will require some form of permitting.
Interview your potential contractor. Try to select a knowledgeable, organized, experienced, and established contractor who will take a personal interest in the outcome of your project.
Always ask for 3 or 4 references from your contractor; and be sure to contact all of them. Former customers will be happy to share details if you ask. If you can't reach them ask for more.
4. Buyer Beware
Never take the risk of hiring an unlicensed contractor.
Understand which trades may be required to perform work on your project. Each trade or (sub-contractor) generally requires a separate State License and there are now approximately 44 different license classifications in California. If your project will require more than 2 or 3 different trades, you will be wise in hiring a General Contractor unless you are very experienced at coordinating and managing construction activity.
6. Check State License Status
Check License status of your contractor by calling the Contractor's State License Board.
Never verbally agree to anything. Get even minor changes in writing. Be sure to receive a complete written contract from your Contractor, clearly spelling out what the responsibilities of both parties will be, as well as the entire scope of work with a breakdown of all associated costs. Make certain a time limit is indicated for completion of agreed work. Anything less than this should be unacceptable - assume nothing.
8. Pay 10% Down
Pay 10% down or $1000.00, whichever is cheaper. That's the Law.
9. Advance Payment
Advance payment for uncompleted work should be strongly avoided. Exception: Some special order items may require a deposit up front.
As mentioned above, sub-contractors are required to hold specialized licenses for the trades they perform. To protect their rights to be paid, (in the event that they are not receiving payment directly from the owner himself, but from the General Contractor) some sub-contractors will file what is known as "Preliminary Lien Notice". This is not a lien against your property, but merely a notice to you that he or she is indeed working on your property for the General Contractor. In the event that the sub-contractor does not receive payment for his work from the General Contractor, the sub-contractor then would have 60 days to file a "Mechanics Lien" against your property. To protect yourself from this unlikely event, you may want to request a "Lien Release" from each sub-contractor, prior to the release of the final payment.