Attorney General Mayes Warns Arizonans: Construction Fraud Is Targeting ADU Projects

PHOENIX – Attorney General Mayes is warning Arizonans of a growing pattern of construction fraud specifically targeting homeowners seeking to build Accessory Dwelling Units (ADUs) — also known as casitas, guest houses, in-law suites, or backyard rental units. Families have lost tens of thousands of dollars — in some cases up to $250,000 — after paying construction companies that collected large upfront payments, failed to obtain proper permits, and never broke ground on projects.

How This Scam Works

Fraudulent ADU contractors typically follow a recognizable pattern:

• They make big promises. Scammers present polished proposals, offer personalized consultations, and claim expertise in local zoning and permitting — building trust before collecting your money.
• They cash your check immediately — then stall. Victims report that large deposits were cashed within days of signing, while the company repeatedly promised construction would begin "soon."
• They never pull permits. Homeowners who contacted city offices directly discovered that no plans were ever submitted and no permits were ever requested — despite the contractor's assurances.
• They use another contractor's license. Some fraudulent operations recruit or pressure licensed local contractors to allow their credentials to be used, leaving that licensed contractor legally exposed for any complaints, while the fraudulent company does the actual (non-) work.
• They stop returning calls. Once it becomes clear victims are seeking refunds or legal remedies, these companies go dark — ignoring calls, texts, and emails.

Red Flags to Watch For

Before signing any ADU construction contract or any home improvement contract, be alert to these warning signs:

• The company is based out of state but claims to operate locally
• They request large upfront payments — especially by check, cash, Zelle, cryptocurrency or gift cards
• They pressure you to sign quickly or discourage you from getting multiple quotes
• They claim permits are "already in process" without being able to show documentation
• They appeal heavily to personal trust, shared faith, or community ties to gain your confidence
• Their business address doesn't match a visible, established local office

How to Protect Yourself

• Hire only licensed contractors in good standing. Arizona law requires contractors to be licensed through the Arizona Registrar of Contractors (ROC). Before signing any contract, verify that your contractor holds an active, valid license with no unresolved complaints at roc.az.gov or by calling 1-877-692-9762. A license in good standing is one of the strongest indicators that you are working with a legitimate professional.
• Get multiple written estimates. A legitimate estimate includes a detailed scope of work, materials, timeline, and total price, including labor. If a price seems unusually low, it likely is. Be wary of any contractor that discourages you from getting multiple quotes.
• When you are ready to make your purchase, make sure you review and understand all of the terms of the contract/agreement.  Make sure the contractor’s name, contact information, license number and a clear description of the work to be performed are listed in the contract/agreement.   
• Never pay the full amount upfront. Legitimate contractors typically require a reasonable deposit, with payments tied to project milestones. Use a credit card when possible so you can dispute fraudulent charges.
• Do your homework. Search the company's name online along with words like "complaint," "scam," or "review." Check the Better Business Bureau and the ROC's complaint database.
• Be especially cautious if using your home equity. Homeowners are often encouraged to tap the equity in their homes to fund construction — amplifying the financial damage if the project never materializes. Research the option of getting a construction loan to see if that is a better choice than liquidating your home's equity.

File a complaint with the Arizona Registrar of Contractors: roc.az.gov/file-complaint  or call (602) 542-1525. Report to the BBB Scam Tracker: bbb.org/scamtracker. File a consumer complaint with the Arizona Attorney General's Office: azag.gov/consumer or contact the office at (602) 542-5763 in Phoenix, (520) 628-6648 in Tucson, or (800) 352-8431 statewide and a complaint form can be sent to you.