You’ve probably heard about ‘a guy’ from a friend who did the renovations on their home and how wonderful and inexpensive he was. You’ve probably also heard about the horror stories of renovations gone horribly wrong and the homeowners left near bankrupt from a bad contractor. While you’re left with the question should I spend more money and hire a licensed contractor or should I try and save by hiring ‘the guy’?
This really shouldn’t even be a question, never work with an unlicensed contractor and here’s why.
Whenever there is an economic downturn the home construction industry is usually the first and hardest hit. During the last recession, there were more than 700,000 home construction workers laid off. All of these construction workers still have families to feed and some marketed themselves as contractors to earn a living. In fairness, most of these guys were probably very hard working and good at their jobs, but regardless of the trade they were in it doesn’t make them qualified to be a contractor. The complaints concerning unlicensed contractors arriving at local Department of Consumer Protection offices reflects that reality.
The Risks You Face as a Homeowner
Contractors are licensed for a reason, to protect the home owner. Most owners know very little about the building process nor do they realise that they alone are solely responsible for what happens on their property. Hiring a licensed contractor takes responsibility for the project being completed and the work being done according to local building codes. They also carry liability insurance that protects you in the event something goes wrong.
Here’s a scenario where an unlicensed contractor can get very expensive very quickly. If your local municipality finds you have an unlicensed contractor working on your property be it a plumber, roofer or what have you, they will initially issue a cease order. This means all work stops immediately. Now you will need to go through the entire permit process, and it will be more time and money for you than the normal process. Now comes the expensive part, you as the homeowner are on the hook for any unpaid bills from the unlicensed contractor, if work is not up to code it will be torn down. Building corrections, penalties or fines and contractor liability are all your responsibility.
Red Flags to Watch For
There are things you can do to protect yourself from being duped by an unlicensed contractor. Here are some things you need to be aware of when hiring someone to complete your renovations.
- No state license number on paperwork, truck or business cards
- Requesting a large upfront deposit to get started
- Handshake agreements instead of a written contract
- Only available to work evenings and weekends
- No proof of insurance or licensing
- Asks you to take care of getting construction permits.
If any of these pop up when you are negotiating with a contractor, it’s time to stop negotiations and look for a properly licensed contractor. Never work with an unlicensed contractor, it doesn’t matter how small or what type of job it is, you need to protect yourself.