What are the signs of a bad contractor?

"Bad contractor" covers two distinct failure modes: outright fraud (steal the deposit and disappear) and chronic underperformance (finish late, exceed budget, deliver poor quality). The warning signs partially overlap but require different responses.

Fraud signs (walk away immediately):

1. No written contract or vague contract. Legitimate contractors use standardized contracts with itemized scope, materials, payment schedule, change-order process, and warranty. A handshake deal or one-page sketch is a fraud signature.

2. Large up-front deposit. 30%+ before work begins is a fraud signature. Most states cap deposits at 10% by law.

3. License mismatch. License number, business name, and qualifier name should all match. A contractor "using my buddy's license" is unlicensed.

4. Refusal to pull permits. The contractor says "permits aren't necessary for this work" or "I'll save you the permit fee." Permits are required by code for most structural, electrical, plumbing, and HVAC work. Skipping them exposes you to insurance denial, sale-time disclosure issues, and inspector orders to redo work.

5. P.O. box or out-of-state address. Combined with recent LLC formation in your state = storm chaser.

6. Cash-only or wire-only payment. No paper trail, no chargeback ability. Fraud signature.

7. Pressure to sign immediately. "Price is only good today." "I have leftover materials." Legitimate contractors do not use this language.

8. Door-to-door solicitation after a storm. Storm-chaser signature.

Underperformance signs (proceed with caution or walk away):

9. Pattern of mechanics' liens against the contractor. Subs filing liens means the contractor is not paying their bills. Predicts they will not pay yours either.

10. Recent bankruptcy filing. Chapter 7 in the last 24 months indicates active financial distress.

11. OSHA citation pattern. Three or more serious citations in five years predicts worker injuries on your property.

12. BBB complaint pattern with unresolved disputes. Read the complaint text — recurring themes (late completion, change-order surprises) are diagnostic.

13. License recently issued despite "20 years experience" claims. The qualifier may have lost a prior license to discipline and re-applied under a different entity.

14. Phoenix pattern. Multiple LLCs at the same address, recently dissolved, same officers. Strong fraud predictor.

15. Vague references. Contractor will not provide recent references or only provides "older" projects. Indicates recent customers are unhappy.

16. No online presence at all. In 2026, a contractor with zero web presence, zero Google reviews, zero permit history is either brand new (fine, but verify entity age) or operating under a different name.

17. Bid significantly below competitors. A bid 30%+ below other bids on the same work is either a fraud bait (low bid to get the signature, then change orders that triple the price) or a contractor who will fail mid-project for cash flow reasons.

Groundcheck (earthmove.io/trust) surfaces signs 3, 9, 10, 11, 12, 13, and 14 from public records. Signs 1, 2, 4, 5, 6, 7, 8, and 17 require you to evaluate the contractor's behavior directly. Signs 15 and 16 require independent reference and online checks.

A contractor with any single fraud sign (1-8) is a hard stop. A contractor with one or two underperformance signs (9-17) may still be acceptable if the rest of the picture is strong, but raise your scrutiny and your contract protections.