Using contractor without license

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Scroll down for more categories. X Most Common Issues:. We drove to the building supply store that he supposedly ordered our supplies from, only to discover that they had no record of his order. They were sure. When we finally got ahold of him over the phone and confronted him about his lies, he admitted that, indeed, our money was gone. He had spent it.

By doing a simple search online, you can discover all kinds of information about your contractor, including if they are licensed, bonded, and insured; if they are active and not suspended ; if they have any infractions; and if they have any lawsuits against their bond.

You can also verify that your tradesperson such as your electrician or plumber is certified. Furthermore, if he was licensed, it would have been harder for him to swallow stealing that much money, knowing he would lose his license, and hence his livelihood, when we complained. Finally, we should never have paid such a large down payment to a contractor with whom we had never done business. Looking back, it would have been much smarter to order the materials ourselves and simply pay him for his labor at certain benchmarks.

But alas, our money and a piece of our faith in humanity! Just last week we talked with a contractor about doing some work for us on a rental property, and he swore up and down he was licensed, bonded, and insured. A complete fraud.

He seemed like such a nice guy, too. If a contractor is licensed, it means that they have a legitimate claim to be a professional in their industry. They are making a legitimate career out of this profession, and are not simply making a quick cash grab. If a contractor holds a license for construction work , it proves that they have met certain industry standards to acquire the license and that they also maintain those standards when working a contract to uphold their license.

Acquiring a license is a costly endeavor for the contractor to achieve and then maintain, which shows their commitment to being certified and legal and ability to obey construction law. On the other hand, an unlicensed contractor cannot give you the same assurance.

In fact, because they are an unlicensed individual , they have to cut corners to get the job done. For instance, an unlicensed contractor will not be able to attain any building permit or other permit that is required on a given job. This might not seem like a big deal — after all, the contractor will be the only one taking on any risk, right?

Unfortunately not. You, the property owner who hires the unlicensed contractor whether a specialty contractor or not to perform contracting work , will assume some risk as well, both in the quality of the work and for legal and financial consequences. If the work is not up to the proper local building codes and your unlicensed contractor did not acquire the proper permits to comply with the statutes in your area, then your property value could even be negatively impacted. This might make you wonder why then would anyone consider an unlicensed contractor in the first place.

Well, like so many other things in life, it typically boils down to money. Unlicensed contractors are able to give much lower quotes for projects, which makes them an enticing option. However, consider how an unlicensed contractor is able to offer that lower rate.

Because workers compensation wasn't there, the homeowner has to cover the costs personally. Failing to hire an insured, licensed, and street-legal contractor could potentially cost you everything you own.

If the worst happens, you could be sued into bankruptcy, and most state laws only allow you to keep a very limited amount of wealth or property once you declare bankruptcy. Most homeowners insurance policies specifically exclude damages arising from the work of unlicensed contractors, so they will not protect you.

You may be able to isolate investment properties from your own personal holdings via the skillful use of entities. But you could still lose the property in a bankruptcy proceeding if you don't have the liquidity to pay a judgment.

Using an unlicensed contractor to save a few dollars may be tempting in the short run, but the potential risks far outweigh the benefits. Jason Van Steenwyk. Consequences for Landlords Landlords should be very wary of property management companies that make use of unlicensed or uninsured contractors. The Danger of Hiring Friends as Contractors Hiring friends as contractors doesn't make the liability and risk issues go away.

Summary: The Risks of Hiring Unlicensed Contractors Failing to hire an insured, licensed, and street-legal contractor could potentially cost you everything you own.

He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate. And for owners Allison Rebecca Penn.