What are the biggest red flags when hiring a contractor?

The single highest-signal red flag is a request for a large deposit before any work or materials arrive on site. Most states cap allowable deposits at 10% of contract value (California caps at the lesser of 10% or $1,000). A contractor demanding 30%, 50%, or "everything up front for materials" is either insolvent or planning to disappear with the money. This is the most common contractor-fraud pattern in the country.

The second-biggest red flag is a license problem: expired, inactive, suspended, revoked, or — most commonly — a license held by a different person or entity than the one quoting the job. Always confirm the license number on the contract matches a state-board lookup, and that the qualifying party named on the license is the person you are dealing with.

Other heavy red flags: no written contract or a contract that does not specify scope, materials, timeline, and payment schedule; cash-only or wire-only payment demands (legitimate contractors accept checks and cards); a business name that does not exist as a registered entity at the Secretary of State; a pattern of mechanics' liens filed against the contractor (subcontractors and suppliers suing for unpaid bills means the contractor is not paying their bills, which means yours will not get paid either); a pattern of new LLCs registered every 12 to 24 months under similar names (phoenix-company behavior); door-to-door solicitation after storms (storm-chaser fraud is its own felony category in many states); pressure tactics like "this price is only good today" or "I have leftover materials from a nearby job."

Moderate red flags: no online presence at all, a P.O. box address with no physical location, refusal to provide a certificate of insurance from a named insurer (always call the insurer directly to confirm the policy is in force), and refusal to provide references for similar work.

Groundcheck (earthmove.io/trust) surfaces these red flags as a verdict — Clear, Conditional, Caution, Critical, or Unverifiable — with the underlying sources cited. A "Critical" verdict means at least one of the heavy red flags above is present in public records.