If A Sub-Contractor Isn’t Licensed, Do They Have To Tell You?

The process of finding, vetting, and hiring subcontractors to work on your construction project can be absolutely brutal. As general contractors, project managers, construction managers, or just another contractor looking for someone to do another part of your job, you have a ton on your plate – and finding and vetting contractors is a long, arduous process, so many people may want to skip it entirely.

Finding the right person to do your construction job is difficult and stressful – how do you know you’re not hiring some schmoe without the experience to do the job properly? If they even do the job at all after your deposit hits their bank account!

That’s where contractor’s licenses come in. These legal requirements establish a benchmark for construction work; a contractor’s license says “This person can do construction work up to a level that is safe.” Finally, contractor licenses also offer protections for those hiring them – as it ensures swift and harsh punishment to those who would fall afoul.

But even with these safeguards, what’s stopping someone from fraudulently pretending to be licensed? Do they even have to tell you if they’re licensed?

In this article, we’ll take a brief look at the responsibilities of contractors, and what information they have to disclose to their clients.

What Does It Mean to Be a “Licensed” Contractor?

Being a “licensed” contractor means that an individual or business has met the required qualifications set by governmental authorities to perform construction work in accordance with their training and experience.

While licenses are not required in every state, they are required in most states to take on construction work. In order to be a licensed contractor you must receive a contractor’s license. Contractor’s licenses are often acquired by meeting qualifications that often include being 18 years of age, passing exams, having a certain level of experience, and carrying insurance and bonding.

Do You Need to Be a Licensed Contractor to Do Construction?

The requirement for a contractor to be licensed depends on the state and the scope of the work. Usually, there is a monetary threshold that will immediately signal the need for a contractor license.

In California, for example, something called the Minor Work Exemption stipulates that all construction jobs over $500 in materials and labor require a contractor’s license. These numbers can change constantly – a recent change in North Carolina law allows unlicensed contractors to take jobs up to $40,000, up from the previous threshold of $30,000.

While you don’t technically need a license for all construction jobs, most quality contractors will have a license, so in reality, you should look for one who has a license.

Is It Illegal to Hire an Unlicensed Contractor?

Hiring an unlicensed contractor is not illegal in all cases, but it can pose significant risks. The legality depends on local laws and the type of work being performed, so it’s on you to make sure that you’re staying compliant.

While some minor repairs or projects may not require a licensed contractor, major renovations or construction often do. Ignorance of these requirements can result in penalties, fines, and issues with insurance claims. Again, this is on you as the hiring party.

What Happens If You Hire a Contractor That Is Not Licensed?

In many circumstances, nothing. But in the circumstances where something does go wrong, hiring an unlicensed contractor leaves you with absolutely no recourse.

Hiring an unlicensed contractor can lead to several problems, including poor quality work, legal and financial liabilities, and difficulties in resolving disputes, but that’s just the beginning of the issues.

If something goes wrong, homeowners, general contractors, or project managers can’t really do anything but eat the costs of the issues, as, without a contractor license, there is no automatic legal system in place to make you whole as the hiring party.

Basically, hiring unlicensed leaves you completely out in the cold should something go wrong.

Do Contractors Have To Tell Clients If They’re Unlicensed?

Contractors are generally required to display their license number in advertising and on business cards. They should also provide their license information upon request.

If a contractor is unlicensed for a job that requires licensing, they must inform the client upfront, whether that’s just another contractor or the one who owns the property. Failure to do so can result in legal penalties and loss of business.

How to Check a Contractor’s License

  • Visit the state or local licensing board’s website: Most jurisdictions have online databases where you can search for a contractor’s license status by name or license number.
  • Request proof of license: Ask the contractor for their license number and verify it with the appropriate regulatory body.
  • Check for complaints or disciplinary actions: Some licensing boards also provide information on any complaints or disciplinary actions taken against a contractor.

What to Look Out for When Hiring a Contractor

  • License classification: Check to make sure the contractor is licensed to perform the work required.
  • License status: Ensure the contractor’s license is current and up-to-date. An expired license is no license at all.
  • Insurance and bonding: Verify that the contractor carries insurance and a surety or contractor’s bond. This will ensure you have legal leverage in the case of nonpayment or damages.
  • References and past work: Ask for and check references, and if possible, view previous projects.
  • Written contracts: Always get a detailed written contract outlining the scope of work, materials, timelines, and payment terms. In many states, this is a legal requirement.
  • Avoid large upfront payments: Pay in phases as work is completed, and avoid paying a significant portion of the cost upfront.
  • Permits and approvals: Make sure the contractor is responsible for obtaining all necessary permits and inspections.

Hiring a licensed contractor provides a level of assurance and protection for both the homeowner and the contractor. Licenses are designed to create trust and protection for both parties and in reality, they do that very effectively.

While it may be tempting to save money by hiring an unlicensed contractor for smaller jobs, the risks involved can outweigh the initial savings. Stuff like quick paint jobs or patchwork is fine for unlicensed work, but anything beyond that, you’re better off getting someone who knows what they’re doing.

When hiring a contractor, checking their license is one of the first things you should do. It presents a quick way to cut the contractor’s wheat from the chaff – guaranteeing the person is able and trustworthy to do your construction job.

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About CSLS

Contractors State License Service (CSLS) is the largest school in California devoted to the Construction professional. For over 23 years, CSLS has helped its students pass the exam to become licensed contractors in the State of California, licensing more students than any other school. From our main offices in Southern California, CSLS operates over 25 locations with full-service support and classrooms. We have grown to this extent by providing quality, professional services. In comparison, this provides 7 times the number of convenient locations than the second largest contractor school. Contractors State License Services is one of the only contractor schools in the state that is run by educators, not lawyers or people mostly interested in the bonding and insurance business. Contractors State License Services formerly operated under the oversight of the State of California's Bureau for Private Post Secondary and Vocational Education. As of January 1 2010, the new Bureau for Private Postsecondary Education (BPPE) came into existence replacing the BPPVE. CSLS now operates under the provisions of the California Private Postsecondary Education Act of 2009 (CPPEA), Article 4 Section 94874(f). Our Mission is simple; We can help you pass your California Contractors License Exam. Celebrating our 25th year, CSLS has helped over 120,000 students pass the California contractor licensing exam to become licensed contractors in the State of California. Additionally, we offer complete home study and online contractor’s license programs to help you pass your California contractors license exam. CSLS offers licensing classes for all types of contractor licenses, including General Engineering Contractor, General Building Contractor, Specialty Contractor, Insulation and Acoustical Contractor, Framing and Rough Carpentry Contractor, Cabinet, Millwork and Finish Carpentry Contractor, Concrete Contractor, Drywall Contractor, Electrical Contractor, Elevator Contractor, Landscaping Contractor, Warm-Air Heating, Ventilating and Air-Conditioning Contractor, and many others. For a complete list of contractor licenses, visit www.MakeMeAContractor.com and tuned for more informative posts.