Many homeowners told the I-Team they filed complaints with the Contractors State License Board, but the board did little to help. The I-Team’s Carolyn Johnson reports for the NBC4 News at 6 p.m. on Monday, Sep. 30, 2024.
Aracely Reyes hired Next Generation Builders (NGB) to convert her Whittier garage into an accessory dwelling unit or ADU. She’s caring for her 88-year-old mother, and her family needed more space.
“I don’t have to worry about the stairs in her room whether she falls or she doesn’t,” she said.
But Reyes’ mother is now sleeping in the family’s living room because NGB ditched the job after she paid them $84,000, just $20,000 short of the contracted amount.
“It was my family’s savings. My account is zero. I have nothing. They took all of it,” she said.
Get top local stories in Southern California delivered to you every morning. Sign up for NBC LA's News Headlines newsletter.
The I-Team talked to several homeowners throughout Southern California who have similar stories. Lily Rodriguez in East Los Angeles paid NGB $200,000, but the company abandoned the project long before it was done.
“I think these people are in it for money. They’re doing it just to see how far they can go and how many people they can get money from,” she said.
Many homeowners told the I-Team they filed complaints with the Contractors State License Board, but the board did little to help. Instead, they say the board told them to file a claim against the contractor’s bond.
But they were stunned to learn that NGB's bond is only $25,000. And any payout is split among everyone who files a claim. And in this case, there are multiple homeowners who are out money.
“They only have a bond of $25,000? How does the state allow these people to operate like this? It’s pretty much giving them permission to do the fraud. ‘Go ahead and do this to the public,’ it’s really what it is,” said Reyes.
The I-Team asked the board why the state-required bond is so low. After all, in Los Angeles, a kitchen remodel can cost you $70,000, a bathroom remodel can run $40,000, and a new pool can cost well into six figures. Yet, if something goes wrong, and you’re out a lot of money, the most you’ll recover is $25,000.
“We recognize that $25,000 may not be enough, but that’s what’s currently required for a contractor to have to be a valid licensee,” said Jessie Flores with the Contractors State License Board.
The board says it’s discussing increasing the bond. But until that happens, Reyes and Rodriguez are scraping together money to finish their ADUs, devastated that NGB left them with a mess and that the state does so little to help.
“I’m going to have to use my credit cards. There’s no other way. Those people took my savings,” said Reyes.
The I-Team reached out to two people linked to NGB, both who said they were CEO. One didn’t return our phone calls and texts. The other told us in texts that his attorney would reach out to us, but we never heard from them.
Tips when hiring a contractor:
- Limit your deposit to $1,000 or 10% of the cost of the contract, whichever is less.
- After that, only pay for materials used and services performed.
- Confirm the contractor is licensed with the state.
