Avoiding The Unlicensed Contractor

Recently, a multi-unit property manager sheepishly asked “what recourse do I have when an unlicensed contractor makes mistakes on my project?” To be honest, I was kind of shocked. He was asking about a large project not shed repair or door casing installation. Handymen can save you some money for those projects, but when it comes to larger, more complex, projects, it’s a no-no to skimp…as well as illegal in some cases. We’ll get to that.

First, what does it take to be licensed? My company holds a Class A Building Contractor’s License which involves yearly renewal, insurance, education, reputation, paying into a statewide recovery fund (consumer safety net), etc. – a variety of different hoops we jump through that help ensure accountability and ultimately say “this organization can be trusted to perform work.” Not having a license is evidence of the opposite. The process for obtaining a license requires paperwork (of course), registered training, a fee of around $300 – all of the things you would expect. It’s not prohibitive. So, why would someone perform construction work without a license?

The excuses you’ll hear are “I can’t afford the license” or “I’m working under someone else’s license” or “I’m licensed in another state.” All of these practices are illegal. In fact, according to the City of Minneapolis website, it is illegal to knowingly enter into a contract with an unlicensed contractor in many situations including, roofing, remodeling and nearly all residential construction. It’s a misdemeanor for both consumer and unlicensed contractor.

In many instances, a contractor without a license doesn’t have one because it was revoked due to unresolved workmanship errors. The typical scenario is that work was not performed as contracted, a complaint was filed with the Department of Labor, the situation was unresolved after an official request from the DOL and finally, the license was revoked. Some contractors think the state has no business regulating this contract between the consumer and the contractor and that it upsets a free market.  However, most understand that it’s a way for consumers to tell everyone else, “Hey! Here’s what happened to me. Watch out!”

So, what can you do if you need recourse from your unlicensed contractor? Not much. There’s no license to be revoked. There’s likely no insurance to go after for restitution. If you file a complaint against the company, the company will probably change its name and continue on. Even if you prove to a civil court that your unlicensed roofer has inadvertently created an indoor waterfall rolling down your sheetrock and judgment is legally applied to the contractor…what’s he going to pay with? There are no assets listed under a fictitious company. Homeowners can lose thousands – in an HOA, the cost can be astronomical. Steve Arrell II, owner of New Exteriors by SMA in Maple Grove, Minnesota adds, “Verification of credentials gives the consumer a safeguard for their biggest investment. It just makes good sense.”

Avoiding unlicensed contractors:

• Check with your state’s Department of Labor. They’ve got a comprehensive contractor search on their website as well as tips for hiring.
• Ask for references. You may be able to visit previous projects to get a look at a finished job.
• Check the contractor’s litigation history on your state’s court system website

Contractor licensing helps ensure proper installation and acts as a safeguard. You’re accountable to your HOA, make sure your contractor is accountable to you by being properly outfitted.