Many people use unlicensed contractors to take care of jobs around the house in order to save some money, but, is this wise? Both the owner and contractor actually have great risk in doing so. Is it worth the risk?
- When you hire an unlicensed contractor, there is no guarantee or insurance for the work that he does. Additionally, he is considered an employee of you as the property owner and if he were to get injured on your property while doing the work, you would be liable for all injuries. Imagine if he is trimming a tree on your property and falls off, breaking his back, his neck and can never walk or work again. You could suddenly be a million dollars lighter.
- On the other hand, did you know that the courts give almost no protection to unlicensed contractors? Let’s say you hire an unlicensed contractor and spend $50,000 for labor and materials. The unlicensed contractor does the work, top notch, you are extremely happy and you saved a few thousand dollars. A couple months later, you are at a party and you meet Mr. Rawsuit, real estate attorney.
- Mr. Rawsuit: Hey, did you know you could sue the contractor and get all your money back?
- You:”Really? But Mr. Rawsuit, he disclosed to me that he was an unlicensed contractor and I was very happy with the work he did.”
- Mr. Rawsuit: But we can go to court and you can keep all that work that was done… AND get your money back?
- You: Wow, OK Let’s do it
- You take the unlicensed contractor to court and
- You: Your honor, it was disclosed to me that this contractor was not licensed and I was very satisfied with all the work that he did. I would like to sue him because he is unlicensed and get my money back.
- Unlicensed Contractor: Your honor, I disclosed I was unlicensed and I did a great job, he even said he was happy with the job done.
- Result? The contractor will be forced to return the $50,000 back to the owner for the labor and materials because he was unlicensed at the time the work started. Poor Mr. Unlicensed Contractor
Note: In California, if a project’s value is under $600, then you can get a handyman to do the job and it would not apply to this scenario. However, all jobs above $600 require a licensed contractor to do the work.