Unlicensed contractors have lower bids but higher risks
There's no shortage of building contractor horror stories - tales of scams, damage, shoddy workmanship and contractors who disappear in the middle of a project.
Many of our local licensed contractors find themselves competing with unlicensed contractors because working outside of the regulation box costs a lot less. Unlicensed people are running ads touting themselves as remodelers, painters, drywall repairmen, home improvement specialists, handymen, plumbers, landscapers, etc. The licensed and bonded companies are playing by the rules, paying taxes, paying insurance - and daily they are being underbid by unlicensed contractors because they do not pay taxes, they do not have proper insurance, they possibly work out of their truck, or they perform work outside the scope of a qualified licensed contractor.
These savings come with risks - such as the "contractor" taking off with your deposit, or your being liable if someone is injured on the job because the "contractor" does not have insurance. And poorly done work or a bad repair can pose life-threatening hazards.
Unlicensed usually means uninsured. Using uninsured contractors means the contractor has no way to reimburse you for any property damage. Likewise, if the contractor's employees sustain injuries or cause damage to someone else's property, the problem is likely to become yours. Most homeowners' policies require that any work done to the property is done by licensed contractors.
Most building projects, even minor ones, usually require building permits and inspections. Unlicensed contractors are often unfamiliar with the applicable building code and cannot obtain a permit. Many times, unlicensed contractors "borrow" someone else's licensed number. If your project is not permitted or does not comply with building code, you will probably be ordered to either remove the structure or bring it up to code. You will almost certainly have to correct the issue if and when you try to sell your home.
Not all unlicensed contractors do poor-quality work, and not all poor-quality work is done by unlicensed contractors. But, if a dispute arises over the project, you are able to file a complaint with the ROC if the contractor is licensed. At the very least, the licensing agency has the authority to suspend or revoke a dishonest contractor's license. The regulatory authorities cannot take this sort of action against unlicensed contractors. Therefore, homeowners often find that their only recourse is a civil lawsuit.
Even when a license is required, there is no guarantee that every contractor you encounter will actually have a license. While there are certainly honest and competent contractors in our area, the industry is unfortunately plagued with con artists and scams. It is essentially up to you to protect yourself. Therefore, when evaluating potential contractors, be diligent in your screening process. There a number of red flags to watch for:
Unsolicited phone calls. Although some reputable contractors market their services this way, it is more often than not used by unscrupulous companies. Be wary of bargain prices and contractors claiming they are doing a job in your neighborhood and they have leftover materials.
High-pressure sales pitches and scare tactics. Do not be forced into a contract by "today-only deals" or warnings that your home has a safety issue.
Large downpayments. If a contractor asks for too much money up front or insists you pay in cash, it can be a red flag.
No verifiable address or phone number. Be cautious of contracts that have a post office box, no street address, or a cell phone number instead of a company phone number.
Unwillingness to give you a price. A reputable contractor will give you a bid before beginning work on your project.
Unwillingness to sign a contract. Always get terms and conditions in writing, a description of materials used, labor breakdown, completion date, and names of subcontractors, and verify that all subs have insurance coverage and are licensed. Ask for copies of workers comp and liability insurance coverage certificates.
Familiarize yourself with these issues to better your chances of being satisfied with a contractor's work. Be sure to consult YCCA, your local construction industry association resource.
Even after you hire a contractor, your work is not complete. You will need to remain in close contact with the contractor to ensure the work proceeds on schedule and according to contract. You may encounter complications or disagreements that need to be ironed our as the project continues. However, if you select your contractor carefully in the beginning, you are less likely to have problems later.
While screening contractors may seem more work than the project itself, the effort can save enormously in money and time, and help you minimize stress.
Yavapai County Contractors Association (YCCA) is a professional association representing licensed, bonded and insured contractors, suppliers, distributors and business entities. Call YCCA for information on hiring a contractor at 778-0040. Submit questions and concerns to firstname.lastname@example.org or through www.ycca.org and watch for your answer in the Friday real estate section of the Daily Courier.