What are the biggest red flags when hiring a general contractor?

General contractor red flags are higher-dollar than any other trade because GCs run multi-phase projects with subcontractors, supplier deposits, and payment cycles that can mask fraud until it's too late to recover. The downsides are paying for work that wasn't done, mechanics liens from unpaid subs landing on your property, and phoenix-company evaporation.

Progress payments outpacing work completed. The classic GC fraud: the homeowner pays 30% upfront, 30% at framing, 30% at drywall, 10% at completion. But the work is 20% complete at the 30%-paid milestone, and the GC then claims "supplier issues" or "I need to advance pay the subs" and asks for the next milestone payment early. The phoenix sequence ends with the GC disappearing at 60% paid for 30% complete work. Defense: tie payments to permit inspections (rough electrical, rough plumbing, rough framing, drywall, final), not to the GC's verbal claim of completion. Get a third-party inspector or owner's representative to sign off on each milestone.

Undisclosed subcontractors. The GC signs the contract but uses subcontractors who are not named in the contract. Two failures follow: (1) the subs may be unlicensed for their trade, creating permit-fail risk, and (2) if the GC doesn't pay the subs, the subs file mechanics liens against YOUR property — even though you paid the GC. Defense: require the contract to name all subcontractors with their license numbers, and require lien waivers signed by each sub at every payment milestone.

No mechanics lien waivers. A mechanics lien is a claim against your property filed by a subcontractor or supplier who wasn't paid. Even if you paid the GC in full, an unpaid sub can lien your property and force you to pay twice. Defense: at every payment to the GC, require an unconditional lien waiver from every sub and supplier who has worked on the project up to that payment.

Missing state GC license. California B-General Building, Arizona ROC B-1 or B-2, Nevada NSCB B-General Building, Florida DBPR Certified or Registered, North Carolina NCLBGC. 12 states have no state GC license (Colorado, Illinois, Indiana, Kansas, Maine, Missouri, Nebraska, New Hampshire, Ohio, Pennsylvania, Texas, Vermont, Wyoming) — in those states, verify trade subs at the state level and municipal GC license where applicable.

Phoenix-company pattern. The GC's LLC was formed within the last 12 months. The qualifying party's previous LLC has prior judgments, mechanics liens, or BBB complaints. This is the same operator under a new business name escaping prior debts. Defense: search Secretary of State by the qualifying party's PERSONAL name, not the company name, to surface all entities they've operated under. Groundcheck phoenix-company detection automates this.

Large upfront deposit. California caps GC deposits at 10% or $1,000. North Carolina, Florida, and most other states have similar consumer protection caps. A GC asking for 30%+ upfront is operating outside legal limits.

Missing workers compensation. If a GC's worker is injured on your property and there's no WC, the worker can sue YOU personally. Verify the WC carrier directly. Also verify subcontractor WC — if a sub's worker is injured, the worker can come after the GC and the homeowner.

No written contract with milestone gates. Verbal agreements with handshakes and "we'll figure out the details" are the single highest-risk pattern. Real GC contracts run 8-20 pages and cover scope, allowances, change order procedure, payment milestones tied to permit inspections, lien waivers, dispute resolution, and warranty.

License class too limited. North Carolina NCLBGC has Limited ($500K), Intermediate ($500K-$1M), and Unlimited (over $1M). A Limited license cannot legally bid a $700,000 project.

Groundcheck (earthmove.io/trust) verifies the state GC license, runs phoenix-company detection across Secretary of State, surfaces court records (judgments, mechanics liens against the GC), and bundles OSHA and BBB. For state-specific GC license thresholds, see earthmove.io/trust/license/general-contractor/[state].