The Pitfalls of Hiring Cheap and Unlicensed Commercial Contractor

08 March 2022

Wow! A contractor offers services that are so much cheaper than everyone else’s bid. Beware! A cheaper quote could mean it comes from an unlicensed contractor, which brings a massive amount of risk to you as the homeowner.

Even if an unlicensed contractor offers the best price and the cheapest service, you may not want to consider them for home improvement projects. Unlicensed contractors can be enticing simply because they offer a lower price, but this could lead to various problems. As a homeowner, you may be held responsible for some potentially expensive damages and even liable for injuries that could occur in your home.

Why Do Some Homeowners Hire Unlicensed Commercial Contractors?

Maintaining a home is expensive, and those needed repairs and updates can quickly add up, so the price will always be a factor when completing home improvements. Regardless of the cost, it is vital to choose a combined value of price and quality when hiring a contractor.

Your small budget might draw you to the price setup of an unlicensed contractor. In some cases, you may even decide to go with someone who is unlicensed because you know him. Regardless of why or how you hire him, you should know that these workers offer you a lower rate because they operate without a license, which could mean trouble for you.

The work may begin smoothly and look exactly as you imagined. Then something unexpected happens. After that, another unexpected event occurs. Suddenly, you are in a lot of hot water and have no idea what to do. The truth is this. If you hire an unlicensed contractor, you may be held liable for damages injury to workers and may even need to repair the damage that occurs from the renovation. In the end, this could cost more than if you had hired a licensed contractor in the first place.

Unlicensed Contractors Cannot Offer Guarantee of Work Quality

Getting a license to operate as a contractor is expensive. In addition, it costs them to maintain that license every year. This cost affects their profit margin and is why their quotes often come in slightly higher than unlicensed contractors.

The problem is that when you hire an unlicensed contractor, he doesn’t carry liability insurance to protect his work, a requirement by the licensing agency. This means the cheap contractor cannot offer a guarantee of his work. In turn, this means the liability of fixing shoddy work is going to fall on your shoulders.

Unlicensed Contractors Don’t Carry Workmens Comp Insurance

Liability is the biggest concern when hiring unlicensed contractors.Unlicensed contractors are not contractors at all – they are your employees. Therefore, it is your responsibility to provide them with a safe working environment and to make sure they are covered by insurance in case they are injured. If they sustain an injury while working on your project, an unlicensed contractor can sue you for damages, and you could be on the hook for thousands of dollars in medical bills, legal fees, and losses in wages for as long as they are out of work.

Things to Keep in Mind

Some home renovation projects require building permits, and licensed contractors will always take care of this for you. When you use an unlicensed contractor, though, you may not have gotten these permits, which can affect your property value down the road. When you sell a home, you need to disclose information, and it won’t be available because you did not get the required permits and meet regulations at the proper time.

So the bottom line here is that it is much better to hire a properly licensed contractor over a non-licensed one, as the initial savings you make will be overrun with expenses down the road.

Reference:

https://www.legalmatch.com/law-library/article/unlicensed-contractors.html