Do NOT Hire Unlicensed Contractors – Know Your Risks!
Remodeling your home can be an expensive endeavor. Cutting costs where you can is important in order to stay in budget. If you’ve decided to outsource the labor to a contractor, it can be tempting to find an inexpensive option. While unlicensed contractors understandably charge much less than their licensed counterparts, this is one corner you should not cut. Read on to learn the risks of hiring an unlicensed contractor for your remodeling project.
You’re on the Hook for Injuries
If you hire an unlicensed contractor for your project, your financial liability risks escalate. An unlicensed contractor is actually not a true contractor – they don’t have the license to make them such! This means that instead of being their own independent entity, they become your employee when you hire them for a job. This puts the onus on the homeowner regarding liability for injuries that occur on the job. There’s a lot of work that goes into being an employer – that’s why an unlicensed contractor avoids it. You are responsible for providing a safe working environment and for the cost of any injuries resulting from work you as your employees to do.
Unlicensed contractors can actually take legal action against homeowners that hire them for the costs of any injuries incurred during the project. These costs can include:
- Hospital stays
- Physical therapy
- Lost wages (you must cover wages they lose by being unable to work due to their injury – essentially paid time off for the duration of their recovery)
Obviously these fees can add up quickly, not to mention the legal fees the unlicensed contractor accrues by taking you to court – you’d also likely have to pay for that. The cost can easily exceed what you saved by hiring an unlicensed contractor over an official contractor with their own workers’ compensation insurance.
On the other hand, licensed contractors are like their own company. They are independent to you – you are not considered their employer but rather their client. The contracting company is liable for a safe working environment and will cover the costs of any injuries.
You’re on the Hook for Repairs
Unlicensed contractors can charge lower rates for several reasons. First of all, not having a license and workers’ compensation insurance certainly lowers the overhead costs. Beyond that, unlicensed contractors also do not provide insurance against poor workmanship. While an unlicensed contractor isn’t necessarily going to execute the project poorly, there’s no safety net if they do. Licensed contractors are required to have liability insurance – covering you in the case of unsatisfactory work. True contractors also must work within certain regulations as they are bound to legally enforceable contracts called bonds. The contractor may be forced to remedy any poor workmanship or at least to compensate you financially so you aren’t paying for the same work twice.
Unlicensed Contractors Decrease Property Values
Since unlicensed contractors effectively operate under the radar and without adhering to normal regulations, they are also likely to fail to acquire the proper building permits required for the remodeling project. Depending on your project, the city, state, or county may require you (or your contractor) to file the proper paperwork for a permit. Unlicensed contractors are unable to obtain these permits, and thus will simply fail to do so. If you decide to sell your home, you are required to disclose details relating to work that was done on the home, including providing proof of the required permits. Without these, it shows the changes you made to the home were not properly inspected to ensure they meet the standard code established by your local government. This could lead to lower housing value.
In conclusion, it is a huge risk in many ways to work with an unlicensed contractor. Unfortunately, they usually don’t come right out and advertise as an unlicensed contractor. It’s important to know what to ask for and to verify that their licenses and insurance are adequate. Don’t risk your financial health, the value of your home, and the outcome of the project in question. Be sure to do your research and choose a licensed contractor that can get your remodeling project completed to your absolute satisfaction without you having to worry that it will all fall apart.
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