Unlicensed contractor affordable but risky
Q: I am planning a kitchen remodel. Based on all the bids, I have short-listed two contractors. One is a licensed general contractor who has given me good references; the other is an unlicensed one who says he will get the job done by himself and his family members. His bid, for the exact same materials that I want him to buy from my chosen wholesale suppliers, is almost 30 percent less than the licensed contractor’s. The unlicensed guy has given me good references as well.
If Iemploy the licensed guy, he is willing to do all the permit work himself andhas given me a full quote including those costs. The unlicensed guy says I canget the homeowner-builder permit myself, and he will ensure full building-codecompliance and that the work passes inspections.
If I gowith the cheaper alternative of the unlicensed guy, apart from the risk that Iam taking for his lack of liability, and the fact that he is not bonded, am Ibreaking any California law?
Also,the law says a contractor undertaking work for more than $500 has to have acontractor’s license. Is this something only the contractor has to comply withor am I precluded by law from employing an unlicensed contractor? The totalcost of the project, as you can imagine, is way over $500.
A: Weapplaud your efforts to save a buck or two, but we just can’t recommend thatyou hire the unlicensed contractor. The parade of potential horribles is justtoo long.
It maywell be that the unlicensed guy is a fully capable, honest and upstandingtradesman, and has done a number of projects in your town, but the job you’rehaving done is way too large to entrust to someone who has not put forth theeffort and the money required to be licensed.
While alicense does not guarantee the quality of work, or whether it will be done in atimely manner, it does give the homeowner recourse if something goes wrong.
Licensing,bonding and insurance requirements are in place to protect the consumer. Italso is evidence that the contractor at least knows enough about business andbuilding practice to pass the state exam.
In termsof legal liability, we don’t think you’ll be tossed in the pokey or fined thecost of the kitchen if you hire the unlicensed guy. We don’t know if you arebreaking any state or local laws if you chose to do so, but he sure is.
Recentlythe Contractor State License Board has been cracking down on unlicensedcontractors, conducting stings, issuing citations and dragging these guys intocourt, where they face substantial fines.
When ahomeowner hires an unlicensed tradesman to work on a home, he becomes anemployer and the tradesman becomes the employee. In essence, the homeowner isthe contractor with all the ramifications that brings. This arrangement bringsinto play not only the “master-servant” relationship arena of tortlaw but also implicates insurance issues such as liability and workerscompensation.
It’slikely you would be responsible not only for the work the unlicensed persondoes but for any damage he may cause to your property or to the property ofothers, and (this is huge) for any injuries he or his “familymembers” might suffer on your job. We don’t know if you’ve had the opportunityto view a hospital bill lately, but a semi-major injury could cost you morethan the price of the kitchen remodel.
You mightrespond, “Yeah, but my homeowners insurance will cover it.” We canonly imagine that your insurer would be none to happy (and possibly denycoverage) when they discover that you are trying to shift liability to themwhen you hire an unlicensed tradesman who got hurt on a job that required astate-licensed contractor.
Securingthe permit for the job, while well within your capability, is asomewhat-complicated process. Expect plenty of questions from the buildingdepartment. Owner-builder permits are in place to allow do-it-yourselfers toget the job done themselves, perhaps with the assistance of a specialtytradesman such as an electrician or a plumber.
Weencourage people to take this route when they are willing to take up the toolsand get the job done. But when a homeowner is hiring out all the work, theowner-builder permit process is not meant to be a means to circumvent the statecontractor license laws.
We couldgo on, but suffice it to say that we recommend you go with the licensed guy.The risks are too great and the scope of the work is too large to do otherwise.
If youdecide to go against this advice, we recommend that you fully inform yourselfof the risks. Contact your insurance carrier first, explain what you areconsidering and determine whether you have coverage in the event of a claim.Next, contact your lawyer and seek counsel as to the potential exposure you mayhave if something goes drastically wrong.
We’d liketo take this opportunity to say a word to you unlicensed tradesmen out there,busting your tails to try to make a living. Did you know that if a customertries to stiff you on a contract and you are unlicensed you have no legalrecourse in a court of law?
If you area good craftsman and plan on staying in business, get a license. The effort youput into studying for the test will pay you back several fold, and the fewhundred dollars you spend is a minor expense, especially if you get busted forcontracting without a license.
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Copyright 2007 Bill and Kevin Burnett
