Denning is an assistant professor of public law and government at the University of North Carolina at Chapel Hill.

Earlier this year, she hired a local building contractor to remodel her basement. He was recommended by an old college friend, so she didn't bother to thoroughly investigate his background. For example, she didn't check to see if his company was licensed with the N.C. Licensing Board for General Contractors. She eventually learned that he wasn't.

"Frankly, I just assumed that he wouldn't be bidding on the job if he didn't have a license," Denning said.

He estimated the job would cost about $60,000 and asked for 40 percent up front.

Denning paid the $24,000 and waited for the work to start. That was May.

She's still waiting.

Denning admits that she should have known better. She wanted to share her story to remind others to do their homework.

The first thing you should know is that there are far more honest building contractors than dishonest ones. And they are willing to provide all the necessary documents, certifications and references that the consumer needs to make a sound business decision.

"If they are not willing to provide references, just dismiss them immediately," said Therese Crahan, executive director of the National Association of Homebuilders.

Terri Pullen, co-owner of Pullen Construction in Raleigh, N.C., said that too often people want the work to begin immediately and they don't take the time to find out who they are working with.

"People have got to slow down," said Pullen. "They just need to do the common sense thing and take the time to go through the references."

So if you are planning to have renovations done to your home, before hiring the contractor:

• Call your state's licensing board for general contractors to make sure the license is current and there are no complaints against the business.

• Look up the company with your state's secretary of state office to find out how long the company has been in business. If it has been open for less than a year, be extra cautious about checking references.

• Get a physical address of the owner, not just a Web address.

• Check to see if the company is a member of any trade or business organizations, such as the Chamber of Commerce.

• Try to contact suppliers to find out if the company is paying its bills.

• Drive by previous work sites and check out the contractor's finished work.

• Negotiate the up-front payment. If a company asks for half, you may counter by offering to pay 25 percent up front and an additional 25 percent once the work starts. This is an important step because it's common for builders to ask for some part of cost up front to avoid taking all the risk. If the company is worried that you might not pay as agreed, you can offer to set up an escrow account to prove you have the money. You could check with a contract lawyer or your bank about setting up a special account for home remodeling.

Certainly, a person can do all of the above and still get taken for a ride. If that happens and you exhaust all your options trying to get a refund, including taking the company to court, you may be able to recoup part of your loss from the General Board of Contractors' Homeowners Recovery Fund. However, you are only eligible to apply to this fund if the contractor is licensed in the state or applied for a building permit for your address.