Headline today's Thousand Oaks Acorn:UNLICENSED CONTRACTORS TO BE TRIED. Eleven local non-licensed handymen are charged with bidding for contracting jobs over $500 without a contractors license. The men will appear in Superior Court and could face stiff fines and punishment.
There are a number of good reasons for REALTOR's to recommend only Licensed Contractors and for homeowners to be AWARE of who is doing the work:
1. Hiring unlicensed contractors can result in Property damage by unknowlable, unskilled workers (I had a friend whose "new" back retaining wall crumbled in a heavy rain, pouring a muddy landslide onto the back of her home, damaging the stucco and shifting the entire foundation. They hired non-licensed contractors, who installed the ribar going in the wrong direction, because they were cheaper. By the way, their insurance would not cover the damage.)
2. Unlicensed work can totally blow a transaction right out of escrow (when the buyers asks for repair receipts, the first thing the buyer's agent should check for is the contractor's license number and contact info on the receipt.)
3. Financial exposure when work is not completed or a worker will not come back (I have personally paid for new vinyl flooring in a laundry room to get the deal to close for my buyer when the handyman the seller hired couldn't be found.) A Licensed Contractor is more likely to follow up on problems and try to satisfy the customer.
4. No worker's compensation insurance for unlicensed contractors can lead to the homeowner being liable for injury to workers (HUGE exposure for sellers!) (Can a worker sue the homeowner if they are injured? YES!)
5. Possible criminal background of worker puts client and their belongings in danger (I don't even want to think about this possibility!) Here are some tips to finding a good contractor.
6. Clients being asked for excessive down payment ($1000 or 10% of price is legal)
7. Permits not being pulled or signed off on. (I can't count the number of times I have had to schedule the City to do a final inspection and sign off for the project. The home will not close escrow until the city report is clear!)
REMEMBER too, real estate agents are not authorized to act as contractors, as per Business and Professions Code, section 7044. Does that mean we can't touch up a few nail holes and hang a curtain rod? Of course not. It means that a licensed contractor is required for all repairs or improvements above $500. You can verify a contractor's license at http://www.cslb.ca.gov/
(For more information on the pitfalls for Realtor's suggesting unlicensed contractors, see: Department of Real Estate Bulletin, Fall, 2009, page 3)
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