- can turn your home improvement project into a complete nightmare.
- may not have the skills or ethics to repair damage properly.
- have no professional, legal or safety standards or regulations they must abide by. They can not pull permits to assure your home is being properly repaired or remodeled to city codes.
- are under no duty to provide any of these consumer benefits, which exposes homeowners to significant financial risks ranging from medical costs to repairs to rebuilding.
- are subject to arrest and prosecution for working without a license.
Your homeowners policy does not cover unlicensed contractors.
Risk to The Economy
- Unlicensed contracting is part of an estimated annual $140 billion dollar underground economy. These individuals do not pay taxes, have insurance or bonds. It is not unusual for them to be involved in other illegal activities as well.
- These contractors may force legitimate employers out of business contributing to an economic decline.
By law as the homeowner you can be held responsible for hiring an unlicensed contractor.
In some states, a homeowners who hire unlicensed contractors face several potentially costly penalties. The Department of Business and Professional Regulation can issue an order to stop construction and can levy a $5,000 fine for aiding and abetting unlicensed contractors.
Consumer Liability For Damages and Injuries on-the-job site.
Hiring an unlicensed contractor is the direct responsibility of the homeowner. Thus, the homeowner is accountable for all outcomes associated with the unlicensed contractor’s work.
Consumer-protection groups report a sharp increase in renovation-related complaints including:
- Contractors performing shoddy work and abandonment of half-finished projects.
- Taking money from consumer and never starting the project.
- The use of sub-standard materials.
Property Risk Involved
When in doubt get a current copy of the contractor’s insurances, including worker’s compensation, property damage and liability. If you use an uninsured contractor, it means the contractor has no way of repaying you for any property damage he or she causes. Also, if unlicensed contractor’s carelessness leads to injury or damage to your neighbors property, the problem is likely to become yours and you will have no recourse against the unlicensed contractor.
Payment Red Flags To Watch Out For
A contractor should not ask for more than a 10% down payment before the project begins. This upfront payment should be used specifically to purchase materials for your project. Once materials are delivered and work begins, the contractor will most like ask for more money to cover his expenses. This is normal in most construction project lasting days or weeks.
It could be a red flag:
- If the contractor asks you to pay more than 75% of the total project cost before it is completely finished.
- If you are asked to make your check payable to an individual instead of a company name.
- If you are asked to make a payment in cash or to make the check payable to cash. Licensed contractors will usually have a separate business account.
Before making any final payment, Do a final walk through inspection of all the work that was performed with the contractor to make sure everything is to your satisfaction.
WARNING! Avoid any contractor who needs large advance payments.
Put it in writing! The most important part of any construction project are the details of the job. small or large, all of the work being performed including: specific materials being used, labor cost, sub contractors names, work schedule, payment schedule, completion date, warranties and guarantees should all be documented before work begins.
Hiring a licensed contractor is no guarantee of customer satisfaction. But the most serious complaints involving substandard work or failure to perform any work at all involve unlicensed contractors.
Hire accredited, local business that have proven to deliver quality work to other homeowner in the community.
Hire A+ Certified Contractors:
These contractors have past a screening process through the Verified Contractor Service and have approved credentials.
Warning signs of an unlicensed contractor
- A large down payment is requested before work begins.
- Many requests for money during early phases of construction.
- The homeowner is asked to obtain the permit.
- Verbal contract only, the person is not willing to put all terms in writing.
- The contractor does not have proof of insurance.
- The contractor informs the homeowner that the job does not require a permit or inspection. (To verify if a permit is actually required, call the city Building Services.
- The contractor is only willing to work on weekends or after hours.
- Someone other than the person or company contracting to do the work obtains the permit.
- Contractor displays only a business tax receipt. (An business tax receipt [aka occupational license] is not a license to perform contracting work.)
- The homeowners is asked to make checks payable to an individual when the contract is with a company, or asked to make payments in cash, or to make the check payable to cash.
- Fake and unlicensed contractors will use inexpensive ways to advertise like on Craigslist, local newspaper, or leave fliers on the doorstep or roller-up in the driveways.
- Advertisements where only the telephone number appears and there is not a business address.
- License numbers are not on the vehicle, business cards, contracts, flyers, newspaper or yellow page advertisements.
Now that you know the risk in hiring unlicensed contractors, you can take the steps it takes to make an informed decision. You can also work to better protect yourself and your property. To perform a quick check on whether your contractor has a valid license go to Checkacontractor.us before you hire. To find already validated contractors go to VerifiedContractorService.com