A Carter Lake couple has been left with a nightmare in their dream home. After already paying $18,000, the city says the contractor did not follow the rules.

After paying nine months ago, Ray and Michelle Lynch’s house has an unfinished basement and a lien from an unpaid sub. “It was a dream house that has just become a nightmare,” says Michelle. “It's very stressful. I don't want to be in this house anymore.”

They paid the same contractor $6,000 to replace the hail-damaged roof. “Nothing, he's never brought any supplies or anything,” says Ray.

It’s not just leaks from above they worry about. An unfinished window well has sat that way since September and they worry about being flooded this summer.

Carter Lake building inspector Barry Palmer has the contractor named Bill Ryan red-lettered for starting the project without proof of insurance and not registering with the city. “It bothers me when contractors come in and don't play by the rules because it ends up hurting the homeowner,” says Palmer, who adds partially paid subs will be paid in full.

Ryan claims the Lynchs agreed roof money would be applied to basement costs, which they deny, and says no contractor registration with the city was an oversight.

The homeowners see what they should have done differently. “Way too much money up front, do your homework and do references.” The couple hired a new contractor to complete the project and they won't have to pay until it’s finished.

There are some ways to avoid falling victim to the same problem. Check with city permits in your community to see if contractors are required to be licensed and provide proof of insurance. Ask for lien waivers that show subs are getting paid and the Better Business Bureau recommends paying no more than one-third of the total cost up front.