When it comes to construction projects, homeowners have a lot of considerations to make when choosing a contractor. Sometimes, the allure of ‘lower costs’ can lead homeowners to make a critical mistake – hiring an unlicensed contractor. In this article, we aim to educate homeowners about the risks they take on by doing so.

  1. No Accountability: Unlicensed contractors usually operate without a registered business entity, making them challenging to locate and hold accountable in case of problems. Since they fly “under the radar” they tend to get away with problems or poor customer service because they don’t have to worry about online reviews or anyone to hold them accountable.
    Conversely, licensed contractors in California are true businesses. Customers can leave reviews on their services, file complaints with the Contractor State License Board (CSLB), and serve lawsuits to their Registered Agent. In contrast, if you are financially injured by a an unlicensed individual, there are almost no remedies available.
  2. No Permits, No Oversight: Unlicensed contractors can’t pull permits for their work. Only licensed contractors can pull permits to work on someone’s property. As part of the permit process, a local building inspector will inspect the construction and ensure it is “up to code” and safe. When you choose an unlicensed contractor, you are having unpermitted construction done on your home. This can put you in conflict with code enforcement at the local building department. Also, if you ever choose to sell your home, you are obligated to disclose if you have had any unpermitted construction done. Unpermitted work can be a turnoff to buyers because there is no guarantee the work was done properly. Plus, it is a sign that corners have been cut.  See our other articles about Permits for more information.
  3. Pricing Misconceptions: Contrary to popular belief, unlicensed contractors often charge prices similar to licensed contractors, capitalizing on the misconception that they offer cheaper services. Just because someone is unlicensed doesn’t automatically mean you are getting the best deal. Unlicensed individuals are typically assumed to be the cheapest even if they aren’t and most homeowners don’t shop around to make sure.
    Check out this article about local contractors in Ridgecrest, CA to learn more.
  4. No Insurance: Unlicensed contractors typically lack essential insurance coverage, such as workers’ compensation insurance, liability insurance, and bonds. In the event of accidents or property damage, homeowners may be held liable for the expenses. For example, if the unlicensed individual or any of their workers were injured on the job, they can suit you for their injuries.
    Licensed contractors, however, are required to carry the necessary insurance and bonds, providing homeowners with financial protection and peace of mind.
  5. At Their Leisure: Many unlicensed contractors do their work on the “side” and work around their regular 9 to 5 job. This can mean that your project plays back seat to their other responsibilities and life. You might find that your project drags on and on with an unlicensed person who might only work weekends and evenings on your project. Also, this can be disruptive to your life since you probably will be home during these times as well. The bummer is, you might not know this upfront. There’s no reviews to check, there’s no secretary to call. You are 100% at the mercy of the contractor and there’s no one to hold them accountable.
In conclusion, when you hire an unlicensed individual to do construction on your home, you take on all the risk and they take on all the reward. We hope you carefully consider these risks and liabilities that come with hiring an unlicensed individual before you jump into hiring one. When in doubt, reach out to the friendly staff here at our company or at any of the other great contractors in our community.

In addition, here are two important steps to take as part of your due diligence when hiring someone to work on your home.

  1. Check the License Number: Before hiring a contractor, check their license number on the Contractors State License Board (CSLB) website. You can view their current licensing status, history, and any complaints filed against them. https://www.cslb.ca.gov/onlineservices/checklicenseII/checklicense.aspx
  2. Confirm Association with License Holder: Sometimes unlicensed people claim to be working under another company’s license. You need to verify this by contacting the license holder directly. Verify that their insurance will cover all the construction done by the person you are working with and their employees.