Monday, October 31, 2016

Guest Blog: Protect Yourself from a Lawsuit by an Unlicensed Contractor

By Richard Lansing

          Every home owner in the country wants to get as much as they can for as little as possible. That is reasonable, but it can lead people down some risky paths. One of those paths, which is quite commonly utilized by first time buyers especially, is the hiring of an unlicensed contractor.

          Some needed home repairs and a simple web search leads a homeowner to get measurements from a gentleman who shows up at your door. He is dressed reasonably nice for a contractor (jeans and a polo), and all his construction equipment looks right. He takes measurements, provides a quote that is almost too good to be true (1/3rd less than the first contractor you called) and the next week he and his crew are ripping out your kitchen sink or replacing the master bathtub.

          What happens when Mr. Contractor gets injured? It might seem “fair” that he’d have to pay his own medical costs. Businesses should carry insurance, after all. Except that without a license, your contractor cannot apply for a business license. According to construction consultant Lyle Charles, “the reality is that home owners often end up carrying that burden when the contractor is uninsured. It is one of the dirty secrets of low-cost home renovations.”

          In order to become a licensed contractor, there are a few things a person must demonstrate to the state a number of items, and usually take a competency exam. Contractors must pass a contractor’s exam in order to acquire a contractor’s license. A contractor must also carry insurance when you register as an LLC, or other business entity. That insurance protects employees and the job site.  To protect the public, Florida actively pursues unlicensed contractors by performing sting operations in conjunction with local police.

          As you can imagine, all this licensing and exam work takes time and costs money. Contractors who charge more for their work have earned the right to do so through state licensure. They carry liability insurance that protects you, the homeowner, from the consequences of their on-the-job injuries.

          Before you hire that unlicensed contractor, stop and think about the potential hazards:

          Natural Disaster: If your home was recently damaged by a natural disaster, the unlicensed contractor may not be able to perform the work legally. That could limit your insurance settlement.

          Property Value: Someone unlicensed who performs major work, such as adding a room to your home, could reduce the property value because the addition will not have the proper permits or be built to the building code. Plus, homeowners are required to disclose unlicensed/unpermitted work when selling their home.

          Protection from Injury: Not just of the contractor, but the surrounding area. If the contractor drops a heavy tool on a car, for instance, whatever dent or scratch is left behind might end up costing you for the repair. The same goes for personal injury claims if that contractor hurts a neighbor. 

          Damages: If an unlicensed contractor fails to complete the work, does it in a poor manner or causes damage, the unlicensed contractor might disappear entirely, and often cannot be found if you need to sue.

          There is both good news and bad news. Before we continue, it’s best to speak directly with an attorney, as they will provide recommendations more directly related to local laws you must comply with regarding permits and association requirements for repairs. That said, there are some general guidelines you can keep in mind when you’re looking for a contractor and considering going with someone who is unlicensed.   

          You can file a lawsuit against an unlicensed contractor if there are damages to your property, or if he causes injury somehow (either to himself or someone else). Being unlicensed is, in some ways, actually a bigger risk than whatever risks come from the job itself. As a homeowner dissatisfied with a job, you can also stop payment to the contractor or refuse payment altogether. Most unlicensed contractors also do not write up agreements, so there is no contract that details their responsibility. Prices change, homeowners refuse payment, and accidents happen.

          Generally, if you try and sue an unlicensed contractor you will probably have to show the two of you attempted to work out a solution between yourselves. It should not cost you much more than a few thousand dollars in attorney’s fees to get some representation on your side if you need it for a default (if the contractor doesn’t show). You’ll have to wait a few years to collect, but once that default is renewed you can send the bill to collections and hope for your money to arrive.

          If you decide to file a lawsuit, consult an attorney familiar in construction law over someone who is general practice. That expertise will come in handy, as the intricacies of construction law require someone well versed.


          Going with an unlicensed contractor might sound great because you will save on the upfront costs, but it can cost you in the long run. There is simply too much risk with injury lawsuits, property damage and a lack of dispute resolution, to chance hiring a contractor who does not carry a license. 

11 comments:

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  2. 1/17/17

    I bought a home in October of 2015. The seller comes from a family who is experienced dealing with real estate in Florida and YEARS of history buying and selling (aka flipping) homes in Florida. The seller bought the home from another individual (who purchased the home in 2010) and rented in for a while before buying it in 2012.

    The seller, who is unlicensed, bought the home in 2012 and did extensive renovations to the home that were without permits, never inspected, and NOT to code. The seller's agent, who was a friend of and had worked with the seller's family before, recommended the inspector, termite inspector, who were useless. The seller and his family (his father handled the negotiations for him) even picked the title company they wanted to use.

    From the moment I moved in I have had nothing but trouble. Amomng MANY other things, I had to have the plumbing snaked within two weeks of moving in,a wood deck build by the seller started collapsing within two months, I discovered I had termites, and, among other things, fell through my bedroom floor in the middle of night. When I had the floor patched I discovered that the foundation (supporting beams, even sub-floors) had to be replaced. And I discovered evidence of recent work under the home and I can prove (through at least 1 witness) that the seller knew that the foundation was rotting and not only failed to disclose it, he tried to conceal it. In fact I can PROVE that the seller lied on seller points on the disclosure.

    I have written letters and sent pictures and called everyone that I can think of. From the Department of Business and Professional Regulation to Pam Bondi's Office. So far nothing. No one cares that I got scammed. The most I am told is that it is a civil matter. I am a Special Education Teacher and I cannot afford a private Real Estate Attorney at @$300/hour. Is there ANYTHING I can do? The seller bought the house for $55,000 and sold it to me for $145,000, doing the renovations himself with leftover materials he picked up from his own jobs that did not really cost him anything. He made a HUGE profit and I get left with a nightmare and thousands of dollars in repairs and no one cares.

    I admit there were things I could have done better. I was a naïve first time home buyer and I think that these people took advantage of that.

    I thought about filing suits myself, but I would need help to do that and I need help.

    Erin Carrigan
    erincarrigan@hotmail.com
    (941) 321-1267

    ReplyDelete
  3. Hi admin

    I really like it, I have also a blog which is related with you, which is about selling real estate.
    Selling real estate is always a topic of interest for any home owner.
    There is a lot of money, memories and family history involved with selling a home.
    selling real estate

    Regards,
    fahiam mahomed

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