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Tue, Jan. 21

Ask the Contractor: It’s important: Hire licensed contractors

Each year, the Registrar of Contractors investigates thousands of complaints from consumers against unlicensed entities attempting to perform contracting work.

Those complaints too often involve a consumer paying a large amount of money in exchange for little to no work or for work not meeting minimum industry standards.

Contracting by unlicensed entities occurs every day, and all too often the consumer loses hundreds or even thousands of dollars. What’s worse, you, as the property owner, have no recourse through AZ ROC if you hire an unlicensed entity.

We are hearing more and more complaints about unlicensed entities performing bad work, taking money, not finishing jobs and doing work in which they are not even proficient. With the construction industry booming, and with homeowners not wanting to wait, they are hiring unlicensed entities, and problems are the result.

An unlicensed entity in the State of Arizona must say “not a licensed contactor” in their advertising and on their business cards. And an unlicensed entity can only perform work for $999.99 or less; this amount is based on the overall price for the proejct.

There have been several calls as well that the person the homeowner is negotiating with has turned out not be an authorized representative of the licensed contractor. These people are using contractor’s license numbers.

To protect yourself, obtain written estimates from at least three contractors

Make sure a detailed list/description of the project, including the price, the responsibility to obtain building permits, and any other relevant terms, are spelled out in the estimate.

Only sign a contract agreement with a properly licensed contracting professional. And keep in mind, an estimate is not a contract unless the estimate is converted to a contract.

Be specific about the responsibilities of all parties involved, and spell these responsibilities out in the contract document, such as the following:

Permits are the responsibility of the property owner. However, many contractors include the cost of obtaining and any fees in the contract, and this should be a separate line item.

Homeowner Association notification and approvals:

A property owner is responsible for notifying the contractor of CCR restrictions, requirements and construction policies before the signing of a contract.

Who is responsible for temporary power and water, trash and debris removal, sanitary facility details?

Determine a payment/draw schedule.

Make sure you understand the process for ensuring a properly executed change order:

How does it increase/decrease your total project cost?

How does it affect your project completion timeline?

Change Orders MUST BE SIGNED by both parties.


Never pay in cash.

Make checks payable to the name of the company/contractor listed in your signed contract.

Never make a check payable to individuals or companies not listed in your contract.

Do not allow payments to get ahead of the work.

Just because the Ad does not say “not a licensed contractor” does not mean they are licensed. An unlicensed entity may be a company or individual. To be a contractor in Arizona, an entity must be licensed. To be licensed, an entity must possess a bond; among other requirements. With the exception of workman’s compensation insurance, the ROC does not require an entity to possess insurance to be licensed. That is your responsibility to ask for proof of insurance.

Many complaints about unlicensed entities are received where the home or business owner believed they had contracted with a Licensed, Bonded and Insured contractor, but they had not. The ads that appear in the yellow pages or on-line sites are not regulated by the publisher, and should be considered accurate only about the name of the company or individual and the phone number to call. The only sure way of knowing that the contractor is licensed is to call YCCA.

With the technology available today, the local phone number you think you are calling may be being answered by a telemarketer in some other state. Such operations may not even be licensed in Arizona, and you might be paying thousands of dollars down on work that will never be performed or completed.

Nothing in the law prevents a property owner from building or making improvements to structures or appurtenances on his or her own property, and do the work themselves, or with their own employees or with a duly licensed contractor as long as certain conditions are met:

The work is intended for occupancy solely by the owner and is not intended for occupancy by the public, by employees or business visitors.


The structure or appurtenances are not intended for sale or rent for a period of at least one year from the date of completion or issuance of a certificate of occupancy.

Hiring a licensed contracting professional offers many additional protections to the property owner, especially regarding residential property. First, a contractor cannot obtain a license without possessing a minimum amount of experience and must pass a business management test. The applicant is also subjected to a criminal history background check, may be required to take a trade examination, and must not have any unresolved contracting complaints outstanding.

Should you experience problems with a licensed contractor, you as a residential property owner have significant protections not available to persons utilizing an unlicensed entity. Among them, is the ability to file a complaint against the contractor’s license within a two-year period from the date of occupancy or date the last work was performed. This is the Agency’s jurisdiction period should the workmanship be below standard or in violation of existing codes.

Under certain conditions, you may also be eligible to apply to the Registrar’s Residential Contractors’ Recovery Fund and depending on the cost of damages receive up to $30,000 to have the work corrected or completed. Each residential contracting license is covered for up to $200,000.00 to a maximum of $30,000.00 per residential property owner, on a pro rata basis upon filing a complete claim.

On another educational level, the ROC offers a Building Confidence Program. This program provides an avenue for resolving questions early on that the property owner or contractors may have about residential construction workmanship. As part of this process, the ROC always encourages the property owner to first contact their contractor to resolve questions or potential problems. However, if discussions between the property owner and contractor are not successful, a Building Confidence visit can be requested.

Property owners or contractors may request a visit and an ROC construction investigator will meet with the property owner to discuss his or her questions. The investigator will review the issues of concern, provided the work was completed within the past two years. Following the Building Confidence visit, further investigation may be required by the investigator, but after making determinations, the investigator will notify both parties whether any items fail to meet minimum construction standards.

Resolution of any potential workmanship issues found with the visit rests with the property owner and the contractor unless a formal complaint is filed with the Registrar of Contractors.

Did you hire a licensed contractor to do work on your home and think there might be a problem with the job? Or are you a contractor who would like to give your customer the extra peace of mind that the job meets workmanship standards? Then possibly requesting a Building Confidence visit could be the right move.

Tune in to YCCA’s “Hammer Time,” played twice each weekend, Saturday and Sunday mornings at 7 on KQNA 1130 AM, 99.9 FM and 95.5 FM or the web Sandy and Mike talk about the construction industry and your local community partners and contractors.

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