“Danger, Will Robinson!” Don’t Hire an Unlicensed Contractor!
For those under 40, you might not recognize “Danger, Will Robinson,” but it has become a popular catchphrase for not doing something stupid or even dangerous. For you trivia buffs, it was first uttered by Robot B9 on the TV program “Lost in Space,” which aired in the late 1960’s.
Catchphrase or not, it’s in your best interests to not hire an unlicensed contractor, be it an electrical contractor, plumbing contracting, HVAC services, or any other type of home construction contractor with whom you are dealing.
Here’s a typical narrative: John Smith saved for two years to build a ground floor bathroom in his home because he has arthritis and stairs are hard for him. He paid a contractor $10,000 to do the work. Two years later, it still wasn’t done right. For months, John and his daughter felt like prisoners in their home because the contractor left gaping holes in the walls, so they didn’t dare leave. The water pipes were built outside the structure, and they froze in the winter. The foundation was unstable, and the siding immediately started to peel off. Unfortunately, the family hadn’t checked out the contractor until after everything went wrong. It turned out he was an unlicensed contractor and had a complaint record a mile long.
Dollars to donuts, the primary incentive for practicing a trade without a license or hiring an under-skilled unlicensed contractor usually comes down to one thing: cash.
C’mon, that guy is so much darn cheaper! How bad can he be?
Sure, it’s easy for these unlicensed guys to quote the job at half of what the real deal contractors are quoting, either because they aren’t pulling permits or they don’t have general liability and workers compensation insurance.
Licensed contractors pay a hefty sum to be appropriately licensed and insured, which can make it difficult to compete with those who don’t.
A licensed contractor will have worker’s compensation insurance to cover its workers. A contractor who doesn’t possess worker’s compensation and is injured on the job can sue a homeowner for medical bills or any injuries that happen on their property. Even homeowner’s insurance doesn’t always cover all the bills.
No license could mean they’re not bonded. A “bonded” contractor is one who has purchased a type of insurance that provides you compensation if the contractor does not complete a job as you’ve contracted.
A worst-case scenario is when the unbonded contractor makes a big mistake that will need to be fixed. In this case, you will have to find another contractor and pay them to do the work, so you end up paying twice for the same job. If you want to take the original contractor to court and sue for faulty work, you will have to spend a lot of time and money. An unlicensed contractor may be cheap, but lawyers are not!
Many unlicensed contractors do not carry liability insurance, and few insurers are willing to extend it to an unauthorized, illegitimate third party. If the unlicensed contractor makes a massive blunder like puncturing a water main, any damages would have to come out of the pocket of the hiring party — the homeowner. These damages could skyrocket, especially with litigation costs. Even when insurers do cover the unlicensed party, they can come back to the hiring party by filing for subrogation.
License, schmicense. What could possibly happen if I hire my wife’s second cousin?
You wouldn’t hire an unlicensed doctor and trust him or her with your health, and you wouldn’t employ an unlicensed tax preparer and trust them with your money. So why risk hiring an unlicensed or uninsured electrician or plumber with your hard-earned cash or, worse yet, jeopardize the safety of your home and family. Hiring an unlicensed contractor is just not worth the throw of the dice.
One of the first principles of gambling is this: Never take a risk you can’t afford to lose.
When you hire an unlicensed contractor to do work on your property, or you fail to secure the necessary permits for that work, you are doing just that, gambling.
Why? When a general contractor takes a job, he will hand off parts of it to one or more subcontractors, but the general contractor has overall responsibility for legal compliance, safety, quality of workmanship and just about everything else that occurs on the job.
Now here’s a dirty little secret: If you don’t hire a licensed and insured contractor to handle the project, you are the general contractor!
If your unlicensed contractor breaks a sewer line, you’re responsible. If a worker gets hurt and can’t work for a couple of years, and there’s no workers’ compensation in place, you are on the hook for that workers’ medical bills and lost wages.
Thinking about selling your home at some future point?
Many home projects require permits to complete the work, but unlicensed contractors may not always apply and obtain the proper paperwork. Remember, when selling a home, specific facts must be disclosed to the buyers. Unpermitted work, especially if it’s not to code, could impact the value of the property and failure to disclose this information could lead to liability of the seller.
Another thing . . . your own insurance policies could be at risk if you hire an unlicensed provider for work on your home. Homeowners policies can have strict regulations on certain types of work, as can any warranties on your home and/or appliances or parts. Things like your air conditioner, water heater and the like usually have warranty coverage, only if you follow the exact stipulations of their policy. Failing to get someone with the appropriate certification mean you could end up paying everything out of pocket.
Perhaps most importantly, failing to hire someone with a license can be out-and-out dangerous, especially when dealing with electrical and/or plumbing related projects. One small mistake can be devastating, leading to fires, water damage or worse.
Here’s a horror story you don’t want to be a part of, ever!
A plumber (we’ll call him Charlie) was nearly electrocuted after bumping against an ungrounded fluorescent light fixture while holding a copper pipe. Charlie was found in the basement of a house where he had been working on the plumbing. He lay on the floor unconscious. Blood spilled from his mouth. He had bit almost entirely through his tongue.
Fortunately, Charlie was found and resuscitated, but was taken to the hospital and lost the next week of work. And it happened because of shoddy electrical work performed in the house earlier by an unlicensed electrician. It was a sobering 110-volt reminder about the importance of licensing.
If they don’t hold a license, there is a reason for it. Either they were too lazy to put effort into obtaining one, or they don’t have the skills, education or experience required to be granted one. Remember, a license is something you earn, not something handed to you.
So, they say they’re legit. What should I look for to prove otherwise?
Some signs may suggest your hireling is actually an unlicensed contractor. They include:
- The contractor asks for a substantial down payment before work begins and makes multiple requests for money in the early phases of construction.
- The contractor says permits and inspections are not required, or he asks you to obtain the permit.
- The contractor gives a verbal contract only. He is not willing to put terms in writing.
- The contractor does not have proof of insurance.
- The contractor only works weekends or after-hours.
- The contractor asks you to make checks payable to a person or “cash” rather than a company.
- The contractor’s advertisements, vehicles, cards, and so on do not display a license number.
Let’s speak a bit of legalese.
Licensing and insurance requirements for contractors vary from state to state. Some states require a license and insurance; others don’t. The rules can be confusing not only for the homeowner but for some contractors they are confusing as well.
The Pennsylvania Home Improvement Consumer Protection Act (HICPA) requires all contractors who perform $5,000 or more in home improvements in a year to register with the Office of Attorney General. Contractors must re-register every two years.
However, the state of Pennsylvania has no requirements regarding the certification or licensure of contractors that are engaged in the construction industry. Consequently, it is one of the relatively small numbers of states that do not, for example, require a state license for work as an electrician or electrical contractor.
Some of Pennsylvania’s 2,562 municipalities have established local licensure or certification requirements for contractors or construction tradespeople. Typically, these requirements pertain to home improvement contractors, electrical contractors (or electricians) and plumbing contractors (or plumbers). Since the Commonwealth has no jurisdiction in this matter, there are no records concerning municipalities that have established licensure or certification requirements.
This information can only be obtained by contacting the municipality where the construction work will occur.
Should I Contact a Lawyer About my Problem with an Unlicensed Contractor?
Because the law varies depending on your locale, it may be helpful to contact a real estate lawyer to determine your rights and remedies. A lawyer can defend you if an unlicensed contractor sues you for payment, and a lawyer can also help you sue an unlicensed contractor if they breached your agreement.
Show me your license and insurance verification.
So, now you’re convinced of the importance of these documents. Here are some tips that will come in handy:
- Don’t take a contractor’s word for it that he is licensed and insured. Ask for his license number and check with the issuing authority to make sure it’s valid and up to date. Same with proof of insurance.
- Try to get at least three referrals or recommendations for a contracting professional, either from family and friends or online review sources. “Do you have any friends or relatives that have had work done on their homes lately? Were they happy with the work? Your friends and family are going to be your best resource for collecting the names of a few good contractors.
- Contact the Better Business Bureau to see if it has received complaints against a particular contractor.
- Ask the contractor how long he or she has been in business and where and ask for a Pennsylvania business address other than a post office box. Also, obtain a local phone number where the contractor can be reached during business hours.
- Read reviews on social media sites and spend time perusing a contractor’s website. Write down the company’s license number so that you can check the validity of the license online.
- An unlicensed contractor will either neglect to pull construction permits, or they ask you to do it for them. If you do, you are assuming liability for the project, including the contractor’s mistakes.
- Don’t be fooled by “occupancy permits” or business licenses. These pieces of paper are worthless to you. Any business owner can get one. When we say licensed contractor, we’re talking about a person who has proved his/her skill in the field and been awarded a specialty license just for contractors. Hint: Ask the contractor if he/she had to take a test for their license. They should have.
- The most significant warning sign of contractor fraud is if they demand all the money up front. While a contractor may ask for a down payment equal to 20 or 30 percent of the total quote, you should never pay upfront for the full amount of the project. You should also never pay for the project materials or any of the work until you sign a contract that works as your legal recourse. Otherwise, the contractor can take your money and only do some or none of the work, leaving you without a way to get any of the money back.
Let’s face it. We’re all looking for a bargain. Hopefully, after reading our blog, that doesn’t include hiring an unlicensed contractor. For further help from credible, reliable and licensed contractors, contact J&A South Park.