Special offer

Beware of Hiring Unlicensed Contractors - 7 Reasons Not to Do it!

By
Real Estate Agent with Rodeo Realty ~ Fine Estates Westlake Village DRE #01744774

CarpenterHeadline 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)

 

 

Janine Bell
Stage It Atlanta - Atlanta, GA
Home Stager - Atlanta Georgia Home Stager

Great post.  Taking precautions with unlicensed and uninsured contractors is risky business.

Sep 09, 2010 08:40 AM
Kathy Smiley
Rodeo Realty ~ Fine Estates Westlake Village - Newbury Park, CA
"Real Estate results that make YOU smile!"

Thanks - yes, I think we've all seen some questionable work out there. Better safe than sorry!

Sep 09, 2010 08:47 AM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Kathy - Love this post!  Going to reblog.  Kind of goes hand in hand with most professionals.  Want to buy or sell real estate - hire a licensed Realtor.  Need a home loan - hire a licensed MLO.  :)

Sep 10, 2010 05:03 AM
Kathy Smiley
Rodeo Realty ~ Fine Estates Westlake Village - Newbury Park, CA
"Real Estate results that make YOU smile!"

Hi Donna - Would love for you to reblog! Thank you. We all have scary stories regarding unskilled people being hired to do the Request for Repairs list. I have a friend who hired someone to fix a fire-pit. The thing ended up practically exploding when the owners tried it out! YIKES!

Sep 10, 2010 05:28 AM
Susan Laxson CRS
Palm Properties - La Quinta, CA
Realtor in San Diego, CA & Naples, FL

Kathy, good tips and I am going to reblog for my clients also!  ~ Susan

Sep 12, 2010 11:30 AM
Debbie Gartner
The Flooring Girl - White Plains, NY
The Flooring Girl & Blog Stylist -Dynamo Marketers

This is great.  I'm going to reblog as it's very relevant to my industry.  In my state, we are required to place our license #'s on our biz cards, so if there's no license # there, that's a red flag (as well as a violation of the license).  But, the important thing is that they have the license and the workman's comp (not all states have the workman's comp as a requirement for license). 

Oh, and I'll give you another important reason...to avoid MAJOR fines.  This doesn't apply to me, but for painters and/or contractors dealing w/ paint/the walls, etc. for houses before 1978, there is no lead paint certification and testing.  If this isn't done properly or contractor is licensed both the contractor AND the HOMEOWNER can be fined $37,500 per DAY. Yes per day.

A great place to find licensed and reliable contractors is Angieslist.com.  And, always ask for references.

Sep 12, 2010 01:07 PM
Kathy Smiley
Rodeo Realty ~ Fine Estates Westlake Village - Newbury Park, CA
"Real Estate results that make YOU smile!"

Thanks Susan - I appreciate the reblog! :)

Debbie - I love to meet a female contractor! You are in a tough industry. Thanks for the reminder about pre-1978 lead paint, too. Most homeowners don't know that they can be fined! Thanks for reblogging! :)

Sep 13, 2010 09:49 AM