How unlicensed contractors can cost you

It's down to two. You've vetted a long list of contractors. Wheat has emerged from chaff. Now the final decision gets tough. Each appeals to you for different reasons. They're almost identically qualified, with one difference: one's licensed, the other isn't.

Questions float through your head: What does it really mean to be licensed? Why are some contractors licensed and others not? And the ultimate question: Does it matter?

You're not alone in your confusion. Contractors feel it, too. Licensing rules vary state to state. Most states require a license for at least a few home-improvement trades, some don't. Some cities and counties require additional licenses, some don't. Some states and municipalities strictly enforce their licensing laws, most don't.

Once contractors think they've got the rules figured out for where they work, another unhappy epiphany dawns: not everyone — homeowners or contractors — knows the rules. And not everyone plays by the rules. Contractors pay a tidy sum to play by the rules, which makes it hard for them to compete against those who don't. Homeowners can pay the price when they fail to distinguish between the two.

What follows are several stories about homeowners and contractors across the country negotiating the complicated world of trade licensing. In each you'll see the complexities and frustrations encountered in a system that can be called many things, but definitely cannot be called simple.

Check a license: Search your state and city to find out the licensing requirements for any profession

Portland painter falls hard for licensing

Fifteen years ago, one of Eric Hernanz' employees fell off a ladder. The fall resulted in a broken elbow and a sky-high medical bill — about $18,000. Hernanz, owner of Hernanz Painting in Tigard, was young and "borderline destitute" at the time, but he had his Oregon contractor's license, which requires workers' compensation insurance. And his insurance paid the bill.

But what if he wasn't licensed and didn't have insurance? "My employee very well could have sued the homeowner for medical bills and lost wages since it happened on his property," Hernanz says. "Unlicensed contractors put their own clients at risk if someone's injured on the job."

The incident illustrates why Hernanz still cares — really cares — about contractors being licensed. "Choosing to go with an unlicensed contractor is like a drug user choosing to perpetuate the drug dealing system," he says. "I feel very strongly that there are moral and ethical implications, as well as tangible reasons, for being licensed."

According to research compiled by Angie's List Magazine, contractors must demonstrate proof of insurance as part of obtaining a trade license or registering in 39 states. Claire Wilkinson, vice president of global issues for the Insurance Information Institute, says the first thing a homeowner should do before hiring is ask for proof of a license and insurance.

Liability insurance covers property damage and bodily injury caused by that contractor's work. Homeowners should also make certain the contractor's insurance policy includes workers' compensation, which covers injuries the contractor's employees may suffer while on the job, says Dean Herriges, vice president of the National Association of the Remodeling Industry. If a contractor doesn't have these types of insurance, consumers could end up paying out of their own pocket if their homeowner's policy is insufficient to cover the bills, Herriges says.

Bonding is also important, which is why many licensing and some registration boards require it as well. Bonds protect homeowners if the company performs shoddy work, doesn't finish the project, or fails to pay subcontractors and suppliers.

The economy makes these assurances all the more important. There's been a surge in unlicensed painters in the Portland area, Hernanz says, as contractors take financial shortcuts by not paying licensing and insurance fees. And he says the penalty if caught working without a license deters no one. "The fines are a slap on the wrist," he says.

Oregon Construction Contractors Board Enforcement Manager Rich Blank responds that unlicensed contractors face increased fines for repeat offenses, and that the board will ultimately seek criminal charges if the first few sanctions don't work.

In June alone, Hernanz bid four jobs against competitors he believes to be unlicensed. "A telltale sign is a too-good-to-be-true price," he says. In those cases, Hernanz e-mails the customers, explaining the increased costs of being licensed. He encourages them to check with the state board to make sure the companies are properly licensed, bonded and insured. "I think it's important they know the risks," he says.

And he believes homeowners should be held criminally liable for knowingly hiring unlicensed contractors. "They're contributing to fraud and cutting into the business of legitimate companies," he says.

He knows it's unlikely that punishing homeowners will fly politically. But it doesn't dampen his resolve. "This isn't how I want it to be," he says.

Cincinnati electrician plays by the rules, but takes a hit

In June, a plumber friend of Charlie Fischer's was found in the basement of a house where he was working in Cincinnati. He lay on the floor, unconscious. Blood spilled out his mouth. He had bit almost entirely through his tongue. The man had been nearly electrocuted after bumping against an ungrounded fluorescent light fixture while holding a copper pipe.

"It went right through him," Fischer says of the 110 volts of electricity.

Fortunately, he was found and resuscitated, but he was taken to the hospital and lost the next week of work. And it happened because of shoddy electrical work — which Fischer says was done by an unlicensed electrician. To him, it was a sobering, 110-volt reminder about the importance of licensing.

"That's what licensing does," says Kay Fischer, Charlie's wife and business partner in Craftsman Electric Inc., a Super Service Award winner in Cincinnati. "It proves you have the knowledge and you really do know your trade."

The couple points to the extensive training and testing required of each of their electricians in order to stay licensed. The ongoing education, they say, ensures quality work that will keep clients safe from fire and electrical accidents such as the one that felled their friend. "We want things done right," Charlie says. "But that comes at a cost."

The company operates in municipalities across southwestern Ohio and northern Kentucky. It requires navigating a complex array of licensing requirements of both states and the various cities and counties within.

"It's very confusing, and it goes on and on," Kay says. The company prides itself on meeting every licensing requirement, which they estimate tacks an extra $30,000 a year onto their operating costs.

In Kentucky, the diligence pays off, they say. Every job requires pulling a permit, and contractors must show proof of licensing to get the permit. "All licensing is done through the state," Charlie says, "then local inspectors enforce it."

And the system, he says, works. Across the Ohio River, it's a different world.

"If you put your name on the side of a pickup truck, you can do all the electrical work you want in Cincinnati," Charlie says. "Nobody's going to stop you."

Electrical companies are required to be licensed through the state of Ohio, but there's little enforcement, he says. The state's licensing board has two enforcement agents statewide, says Matt Mullins, spokesman for the Ohio Department of Commerce, which appoints the 17-member licensing board.

Further, unlicensed contractors must be caught by agents in the act of performing jobs. That practice is fairly common in states that require contractors to be licensed, says Ginenne Lanese, program coordinator for the National Association of State Contractor Licensing Agencies.

In Cincinnati, a law passed in January 2008 mandates permits for all construction work within the city limits be issued only to registered contractors. But Kay says she's never had to show proof of registration when pulling a permit in the city.

The unlicensed contractors have a financial advantage without the overhead costs of getting employees licensed. "There's no way we can compete with them," Charlie says, even though he continues to offer residential services despite the higher costs. "If you play by the rules you get penalized."

Los Angeles contractor is unlicensed and proud of it

"He understands doors to a greater degree than I would have guessed was possible ... He works fast and the quality is excellent."

These quotes, from two recent reviews of Los Angeles area contractor Patrick K. Stone and his Door Dr. business, sum up Angie's List members' experience with him. In 32 reports, he has earned an A for his work 32 times. Thirteen members have nominated him for Pages of Happiness. He was a Super Service Award winner in 2008. Clearly, he's a professional and a fair dealer.

But he's also something else: illegally unlicensed. And he's not about to apologize for it.

"It's a joke," he says of California licensing laws. "If you had to be good at your job, that would be one thing. But anyone can pay a fee and get a license."

Stone is hardly the only contractor with such views. In interviews across the country, similar themes repeated themselves: I do quality work, have insurance and don't need to pay for a piece of paper.

Others might not be openly proud of being unlicensed, but simply fly under the radar. Kevin Darosa, owner of highly rated Kevin Darosa Home Improvements in the Boston area, has operated without the state-mandated registration — required for jobs worth more than $500 — on and off again for roughly 10 years.

"You're the first person who's ever asked me about [it]," Darosa told Angie's List Magazine. However, he says he's considering getting registered for tax purposes.

Relo Interior Services, a highly rated Angie's List SSA winner based in Tampa, Fla., holds no contracting license.

"I don't need a license, because all the work is done by my subcontractors, who are licensed, insured and carry workers' comp," says Relo president Tony Hough, who interprets the law differently than state and county regulators who say he's considered a contractor and doing unlicensed work under Florida law if he accepts money or negotiates contracts for a job.

Hough later told his Angie's List advertising account manager his attorney is checking into the laws and any discrepancies would be corrected.

Stone and Darosa say their customers rarely ask about licensing. "I could count on one hand how many times I've been asked for a license," Stone says. "I think most people just want someone who will do a good job."

But homeowners should care, says Rick Lopes, public affairs officer for the Contractors State License Board in California. "Consumers can suffer serious financial consequences," he says.

Stone says he works alone, so any injuries he suffers would be paid for by his own medical insurance. He adds that he's careful not to take jobs that appear dangerous. "I'm very cautious," he says.

And he's not nervous about getting caught. Currently, state law fines up to $1,000 for working without a license, a misdemeanor offense. Stone says such a wrist-slap isn't likely to deter him or others, although a bill making it through the state legislature would increase the maximum penalty to $5,000.

"I think it's ludicrous," Stone says of the higher fine. "The state's got to make any revenue they can. They just want to take my money."

Lopes says the CSLB is self-funded, so the fines don't benefit the state. Further, Lopes admits that enforcement agents don't typically target small-scale offenders. "We just don't have the resources," he says. "We're trying to find the worst of the worst and work our way down."

Other contractors in the LA area have mixed views about their unlicensed peers. "If everybody was licensed, we'd all have the same overhead costs," says Dan Eyre of Dan's Landscape and Maintenance, a licensed 2008 SSA winner. "How can licensed contractors compete?"

But Stephen Hume of Hi- Performance Plumbing, another licensed 2008 SSA winner, points out an unexpected benefit. "I've been called in to fix their plumbing, so I'm making money off unlicensed contractors," he says. "Some customers are looking for a deal, and they get what they pay for."

Philadelphia homeowner goes after unlicensed inspector

Her friend, a general contractor, told Allison Sacks that Safe Haven Home Inspections was trustworthy. Owner Michael McKinney was licensed in both New Jersey and Philadelphia, according to his business card.

With those assurances, she hired McKinney to inspect her first home last April. He did the inspection and pointed out major and minor defects that helped her negotiate a lower purchase price when she closed in May.

However, when she started having things fixed prior to moving into the house, the surprises started — obvious problems Sacks says McKinney hadn't noticed. The brick facade had a 2-inch bulge that required having massive metal "starbolts" drilled through joists between the first and second floors, according to Sacks. In addition, she says two windows had been screwed shut to apparently hide the fact they were falling out of the frames.

"I had no idea about these problems and it was a week and a half before I moved in," she says.

Sacks says she got an estimate to fix the problems: $4,550. She contacted McKinney via e-mail: "The two issues ... are located in readily accessible and visually observable areas of the structure and should have been noted during the home inspection," she wrote.

She asked for compensation for the cost of the repairs and says he offered only to reimburse the cost of the inspection: $450. She then took her case to licensing boards in Philadelphia and New Jersey, where his business card claims he's licensed, and got another unwelcome surprise.

The Philadelphia license number was bogus — it didn't match the license number he once held, which had expired in 2006, according to city spokeswoman Maura Kennedy. And his New Jersey license? Records showed it had expired more than a year earlier.

"He's not accountable to anyone," Sacks says. "He just laughed at me." Worse, she filed a complaint with the city's business compliance department, which informed her that he must be caught in the act of doing an inspection without a license in order to prosecute. Kennedy confirmed the policy. "We don't have unlimited resources," she says.

With no option for reimbursement through licensing boards, Sacks filed suit in Philadelphia municipal court. A year later, in June, the court sided with her, ordering McKinney to pay her $4,605. But because the business is registered in New Jersey, the case must be transferred there.

McKinney, who has an F rating on Angie's List due to Sacks' review, didn't return phone messages seeking comment. Sacks, who became a member because of her nightmare experience, says she has no expectation of collecting the money.

But the experience taught Sacks an important lesson: check license numbers with licensing boards. Just because contractors claim to be licensed doesn't mean they are. "It was an expensive learning experience," she says. "He taught me how to be a better consumer."

— additional reporting by Staci Giordullo, Mason King, Diana Lamirand, Robin Mohr, Jackie Norris, Joshua Palmer, Paul F.P. Pogue and Kristen Rojowski

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Unlicensed contractors flourish in Tampa area


Owner of Integrity Finishes of Tampa Bay, Aaron Wallace says unlicensed contractors often undercut legitimate companies. (Photo courtesy of Aaron Wallace)
Owner of Integrity Finishes of Tampa Bay, Aaron Wallace says unlicensed contractors often undercut legitimate companies. (Photo courtesy of Aaron Wallace)

Tampa homeowners frequently turn to unlicensed contractors, who can charge lower rates since they don't have to pay for insurance or licensing fees.


The huge problem is with the LICENSED contractors who are not paying their workman's compensation insurance. And guess what? If they aren't paying workman's comp, they can't run a legitimate payroll because the payroll reports require you to explain what your employees are doing. If you are not running a payroll they you are paying your people cash "under-the-table" and claiming you are the only person in the company to the authorities (which avoids workman's comp). If you are not paying and therefore reporting a real payroll, then you can't deduct those costs from your business taxes. Therefore, you could not report your actual income because your net income (missing payroll expenses because of the above) would make it look like you were making a killing and therefore have a huge tax liability. Therefore, you are not reporting your actual business income or expenses. In short, THE WHOLE DARNED THING is a sham! And this is being done by "experienced professionals" that have been working for many years, have a wife & kids, lots of good references, go to church, etc. THIS RAMPANT problem is supported by homeowners who don't care if they are completely legit - they just want a better price. For honest contractors like me, our days are numbered. While we are under bid by dishonest (but licensed) contractors, our employees are leaving to go get paid cash so they don't have to pay taxes either. The problem has always existed but went into hyperdrive during the recession and now it seems to be rocketing off while they all get richer and richer and the honest guys are run out of business. The state regulators ought to jail the homeowners who don't prove they actually checked on who they hired. If the market for dirty business dried up, there would be no need to supply it. Its sort of like river dumping: everything seems fine at first but eventually everything dies. Homeowners will get their comeuppance one of these days. Meanwhile, we're screwed.

Its good to have the license if you dont mind paying for it. But yes you dont need it if you have the references to prove you do good work. I worked for over 30 years without a license, built many 100's of homes and apts, medical centers, doctors offices all over southern and northern california, never had a complaint. Always had insurance coverage and treated my clients homeowners with respect, in fact most of work for the past 15 years have been with repeat clients. Guess what though, I did recently pass the state General contractors(B) Licensed, just for fun

Licensing is a joke. I've read it over and over in the above articles and comments and I've recently experienced it first hand. The "licensed" contractor I hired, a family "friend," proceeded to do a major bathroom remodel without benefit of permits. He never even brought up the subject of permits. Then he wanted to remodel the kitchen. We agreed on a price and he asked if I wanted to get permits. I asked him, "Do I need a permit for this work?" He said "No, since we are not moving a bearing wall." Well, the work is done, it looks great but closer inspection reveals some flaws. Worst of all, it not only doesn't meet code, permits are required for the work already done. What now? Is the city going to make us tear out the work, get permits, and start over? The really sad part is the contractor STILL doesn't believe that his and his sub's work doesn't meet code. Having a license is no guarantee that the work will be done right the first time, or even that it will ever be done right.

I doubt he was licensed and if he was, he probably was not licensed appropriately for the work he was doing. I run across this frequently. We are appropriately licensed for the work we do (Class A BLD), carry the appropriate insurance, pull permits, use licensed specialty trade contractors, and pay our employees competitive wages as well as pay all the taxes we are required to pay. I am frequently underbid by improperly licensed, unlicensed, and those who present fake licenses to uninformed homeowners. Those of us who are legit do not have much variance in cost when competing against each other. In most cases on large projects it is a couple hundred dollars one way or the other. These hacks will offer prices of half what it costs legitimate companies to do them. Often they do not want to deal with inspectors, mostly because when caught working out of the proper license class and type they will stop the job and report them to the appropriate authorities. The homeowner can be held responsible as well in some situations. Homeowners need to be diligent about researching the laws, regulations, and liabilities they face when hiring these people. If they where then these guys would go out of business (not that they run legitimately anyway). If you have questions you can call your state licensing authority and your homeowners insurance company.

For those who think licensing is stealing and a tax, I say youre delusional. Do you really want someone blundering with your wiring or plumbing? It's your first line of protection. Ever notice how builldings in Mexico pancake from earthquakes? Corrupt building practices is the reason. Shortcuts, etc. You can get a licensed contractor and still find bargains too. Conversely, you can pay a high price to a hack.

True. But hiring a licensed contractor is no guarantee that the work will be done to code. In my case, the licensed contractor didn't even bother to check the code changes OR get permits. I'm now stuck with an expensive kitchen and bath remodel that was not permitted, not inspected, and doesn't meet code. Even I can read the building rules and regulations and realized, too late, that the electrical and plumbing absolutely required permits and inspections.

It is nothing more than a tax. We have a license, have for 17 years, but it is no guarantee of anything and unfortunately, it is sold as and perceived by many people as some sort of consumer protection or job oversights "service" provided by government. It is not. It is nothing more than a tax and taxes are just legitimized theft. Start calling it what it is; licensing is stealing.

I am a licensed contractor in the HVAC field. But I love it when people talk about the unlicensed contractor situation. First of all Having a licensed contractor do your work, does not mean you're going to get a good job, it does not mean that they're going to be honest, it does not mean that they are competent. I will give you an example. In Texas, there a HVAC service companies, that are owned by people who have not even actually work in the field. But somehow were able to take the exam. Granted You definitely want somebody who is insured, but some of these guys moonlight, that the licensed companies call hacks, work during the day, for these companies, who are calling them hacks. So I guess that when a licensed contractor, who a lot of times since someone else to do the work, is sending that same unlicensed hack to come work on your équipement. Kind of weird aint. Like in this post, where the woman said an unlicensed inspector missed something during inspection, I guess they're saying that a licensed contractor wo it by no means, it insures you're going to get what you can foruld never miss anything. I think that a lot of these industries Need to do a better job of pleasing the Unethical Business practices By the sometimes licensed contractors. Again like I said I carry my license and insurance And have put my time and sweat into the field. And no like I said I do agree with the licensing & insurance,

I see a lot of people hear agreeing that ultimately your references and attention of detail is the best measure and a license is a piece of paid paper. Fine. Why don't you now band together and protest for your right to transact business voluntarily with those who wish to transact with you absent government intervention. You won't protest, though because it takes too much work.

I have been doing this almost 20 years as I started into Missouri(no license required for contractor) Moved to Maryland in 2008(license required) I do not have my license as its just bs! I know what I’m doing and done it for 15 years in Missouri without one problem. I been here going on 4 years working dc, VA, and Md and not one problem just continuous positive reviews. I have soldered copper pipe(I use commonsense by misting area with water, laying flame retardant cloth behind it and carry an extinguisher beside me) and never had a problem. I had a few people ask about license and I tell them basically what Ellis and John says that a license is nothing but a piece of paper you pay for and has nothing to do with your skill level. The test is about how to pay your taxes and where to pay them, THATS ALL THEY CARE ABOUT. This straight from people I worked with that actually taken and passed the test. And they tell me all the time about how it’s hard to compete because they have to pass that cost on and the quality of work is no different than mine. I work for real-estate agents, companies, residential and some commercial work with no license and I don’t feel a damn bit guilty about it. I'll gladly sign an injury waiver, I guarantee all warranty work in writing, and I have my insurance(and yes it covers anything I do regardless what you say(i had people challenge it, but I verified straight from my insurance company and they know the whole story) So bottom line people.....just use commonsense and check them out. I always tell every job prospect to Google me then Google their other bids. You can find me everywhere with no bad reviews, that’s the only piece of mind you need. I got the book and looked it over and its open book test, It’s got to be freakin easy to pass but just the principal of matter I really don’t want to. Got to get bonded, got to pay registration fee to the testing company, I got to pay Maryland’s license fee, I have to submit a credit report(REALLY!! A credit report?? Your telling me I’m a bad person if I have bad credit?) I will be getting my license eventually.. But only because of psychological reasons, some people feel "safer/confident" with it. It’s just like the BBB, ANYONE can pay to become a member, but dumbfounded people still abide by it. I’ll just up the price for the same warranty/same work. But to still service those who want to save money, I’ll have subs/people that will take care of them and still make money. No different do you want the iPhone or android, does the same thing except you’re paying for the iPhone hype. Ellis said it best and sounds soooo much like all the arguments I had with contractors over the years about this issue. Only Licensed contractors will argue these points because they want the business. There should be no reason why I cannot pull a permit(pay for it and mind you the lost revenue of jobs I do that I don’t pull a permit) and still be ok why.. because whether your licensed OR NOT!!! IT HAS TO BE INSPECTED!!! So it comes down to the inspector not wanting to be responsible for his job(another overpaid government worker) Got a simple solution, Don’t charge for test, don’t charge all these reoccurring fees(and initial fees themselves) and although I still would think it would be pointless, I would apply for the license resulting in increased revenue and safety measures via permits. But they won’t because they want that yearly revenue, it has nothing to do with safety as I mentioned if it did they would make it where its easy to inspect all work, whether homeowner/licensed/or unlicensed. Oh yeh Ironically I have been nominated/reviewed and recommended by customers to Angies List several times

I agree that licensing is very often used just for revenue raising in counties. I am a graphic designer, and yes I have a license, but I absolutely did not have to prove that I knew anything about my profession. The county where I operate just wants a percentage of my business gross as a tax, plain and simple. Here in Georgia, someone who cuts your hair is required to have thousands of hours work experience, and has to take a test to get a license, but anyone can be a contractor or sub-contractor. As far as I know, no one has died from a bad haircut, but if an electrician has a license, but not the knowledge of experience to go with it, someone can get hurt or worse. While I am all for free enterprise and reducing the barriers to someone getting into business, it seems that the concept of licensing is terribly inconsistent. Do I want my profession licensed in a way that professionals have to take a test and/or prove they know what they are doing? Why not . . . it would keep a lot of unprofessional designers out the business potentially. Would this mean more government and higher taxes to pay for it? Probably. Will licensing prevent people from mis-representing themselves and what they can and can not do? No. As I tell all my potential clients . . . check my references and talk to the people who have worked with me.

That is a first for me...I have never heard of a professional license being required for a Graphic Designer. Professions such as Contractors, Architects, Interior designers, Painters, Electricians, Plumbers, yes...but NEVER for a Graphic Designer! I know you are working in Georgia, but how on earth can it be so different there that they require a license to be a Graphic Designer??? Can I just assume that you are referring to the requirement for getting a Business License from your city allowing you to do business in that city? If so, that is a Business License, and not a professional license, and you are correct that you don't need to prove any knowledge of your profession before acquiring a Business License.

Horror stories abound. I hired a licensed contractor to build carports. He hired people hanging around a Walmart parking lot. One of the workers was a friend so we hired the contractor. He reduced the size of the carports then I hear he had all kinds of complaints about him. I didn't check because he was a friend. Bad news. if they dont have property damage insurance you dont want them. but being licensed is not a guarantee. I know retired contractors who do great work and save us money. Always have the materials billed to you not the contractor. Then you know they are paid. Plus make sure the workers are paid before you pay the contractor.

ellis, You are exactly right and full of sh#@ all at the same time. While there are tons of licensed contractors around that do garbage work, and yes, the homeowner can act as a contractor - who's paying the taxes? Show me one homeowner who filled out their 941 federal tax withholding on their un-licensed subs. Did they file state taxes? How about FICA? If the homeowner had more than three guys at any one time or employed someone for more than thirteen weeks they are required to pay workmans' comp too. What about the liability? Did you inform your homeowner that if you fall from YOUR ladder that you can and will sue them, (you have a c5 fracture and can only scratch your shoulders with a straw in your mouth) did the homeowner have a ladder safety program in force? How about the paint thinner you are using? Is the homeowner responsible for the MSDS's and fines if the state inspector shows up? Your editorial about being a pro just proves to the real pro's how amature you really are. And don't get me started about the homeownerss that will whine on angies list and give out just a fraction of the story so the reader says " oh you poor dear..." w/o the benefit of the other side of the story. I have been a GC since 92 here in MI (yes the state of MI doesn't do crap about un-licensed contractors - just want your money) and have just about had my fill of the crabby get-out-of-bed-at-noon retirees that come home after little ceasars messed up their order and you are the first person they can blast.

Some of that goes on here too. Unlicensed "contractors" definitely have an advantage when it comes to dealing with city hall. Unless some of the illegal actions become a felony that will remain as is. I'm not suggesting that's a good idea.

I agreed with you until I found out they (at least the State of Michigan) don't enforce the laws that they make :(

I disagree that licensing is just another revenue source for the government. We have many unincorporated areas around my town and the wiring I find there is beyond belief. It's bad enough in town but in the sticks it's a joke. Licensing and inspecting serves an important purpose which is public safety. The laws include insurance requirements and bonding, very important protections for the consumer. That the system is imperfect is a problem but the wiring is better in town than in the sticks.

Ellis, After a very hard and expensive lesson, I agree with you and Kelly that it depends on who you are dealing with and that having a license doesn't really prove that they are qualified. I was informed by my lawyer (for a civil suit) that the prosecutors rarely will go after someone who isn't licensed, so having a license is just another way for the states to take in money. My neighbor, who is not licensed, has been doing many of the repairs needed to my house from work done by my "fraudulent" licensed contractor. I would have been in good shape if I would have hired him in the first place....unlicensed and all!! So many of you have such good advice...alas..I had not heard of Angie's List too late.

It boils down to the integrity of who you are dealing with. That is the ultimate determinate. You are more likely to get what you need with a licensed tradesman. He's more likely to have the required experience and know how. A licensed tradesman will be governed by law than the unlicensed person is but it boils down to who the person is. I was unlicensed when I started out in my hometown but I did good work, adhered to code, and backed up what I did. This is generally not the case with unlicensed people here and is no guarantee with licensed people either

Dear Steve, Thank you for providing a perfect example of what I was talking about in my first post: a licensed contractor spreading wrong information. What I wrote is not "misinformation" I made it clear in my first post that I was speaking about Texas and California, and I stand by what I said. You don't have to take my word for it, you can take Texas and California's own word for it: From the California State Licensing Board website: "What is an owner/builder? An owner/builder is what the term indicates. The person owns the property and acts as their own general contractor on the job and either does the work themselves or has employees (or subcontractors) working on the project." For Texas, go to the "Statutes" page on the Texas Residential Construction Commision (TRCC) website, and read the same basic thing as for California. There is absolutely no requirement in either Texas of California that the owner do a single bit of work themselves. They can act as the general contractor (which means they show up for 15 minutes every few days, walk around with cup of coffee in hand, and then leave. -ha-ha!) By the way, the TRCC has just been dissolved in Texas because of a huge corruption scandal. Evidently the TRCC was being influenced by *licensed builders* who were doing really horrible work. When homeowners sought recourse for the bad work through the TRCC, the TRCC kept siding with the builders. This forced the homeowners (those who could afford a lawyer anyway) to bring a lawsuit against the builders to get justice. This happened to thousands of people, and is yet another proof that "licensed builder" does NOT automatically equal "good work". It also shows that Licensing boards are susceptible to corruption and influence by the very industry they are supposed to regulate. Good luck to all...

Steve, The states may have these requirements but they actually don't enforce them. In the case where I was just screwed over by a man "pretending" to be licensed, he told me that I needed to have the permit in my name so that my father, who is a retired electrician of 40+ years, could do the wiring. I believed him and signed the permit, but the so-called contractor went to my village hall and pulled the permit in my name himself and wrote the check for it with his business check. I got the prosecutor to arrest him but because the permit was in my name, they dropped the charges to minimal and basically this man walked away. My point is, many states may require it, but small towns may not follow the law. See article:

Ellis, In response to your statement regarding the homeowner being able to pull their own permits? I don't know where you got your info but according to the ICC homeowners must sign an affidavit stating they are doing, --- "actually doing" 60% of the work. They could hire you to be their helper though... Those States both have dollar limitations and a "handyman clause" in the State laws allowing a handyman to do 1200 dollars worth of work (Labor + Materials = Work)without being licensed. I would really be careful about passing out misinformation, you might start to believe it yourself.

Because a tradesman is licensed does not insure he is any good, especially in my city, but I see a huge number of "tradesmen" working who could never pass their test. An advantage to licensing is the tradesman must purchase a bond to pay for his unfinished or sub-standard repairs. But this only applies if a permit is pulled.

Some of the contractors will want the money before the job is complete. They will come and do a little then you have to hunt them down.they dont get a building premit it brings the city in toit.

After 41 years as a carpenter, builder, and contractor I and having held licenses in various states and complying with state laws where I worked, I have come to the conclusion that a license is mostly about control by the state or local governments to raise revenue and create work at the expense of the contractor and customer. I have hired many licensed subcontractors but only after I have checked references and seen the work they do. I have hired more non licensed tradesman who have passed the same test of work performed. A good trades man is not made by a license. They are made by learning thier skill not passing open book tests. Please, if you are customer, get references, review thier work and the get to know a little about thier ideas of quality and performance, make sure they have insurance.

Du it ur self.

First of all I would like to say it is a common misconception (promoted especially by licensed contractors and your local licensing board) that it is illegal for an unlicensed contractor to work on a home. This is not true (at least in Texas and California). It is illegal for an unlicensed contractor to sign a contract or to obtain a city permit to perform construction work. However, a home-owner can always act as their own contractor and pull their own permit from the city, and hire whoever they choose as their "sub-contractor." This is one of the basic freedoms our country grants homeowners. It's you're property and you get to choose who works on it. Many unlicensed contractors have built beautiful houses this way, entirely legally. In fact, I am writing this from inside the most beautifully crafted house you'd ever hope to see, built perfectly legally by an unlicensed contractor. I've read a bunch of messages here from licensed contractors trying to convince us that unlicensed contractors are unscrupulous criminals who do shoddy work, will rip you off, burn your house down, or worse... Simultaneously they present licensed contractors as saints who always do an excellent job. I've heard this all before, and I think we all know that the truth is not so black and white. If the real situation were that black and white there wouldn't even be an argument about it. In fact, this web page wouldn't even exist because everybody would have already learned never to hire these "dreadful" unlicensed contractors. The reason this internet article exists is because it is not so black and white, as I will continue to show below. I was an unlicensed contractor for 10 years, and I knew the limits of my abilities, never ripped off a customer, poured my heart into each project and generally did excellent work. I grew and developed as a craftsman the whole time, made excellent relationships with clients, and grew my business by word of mouth. I am also familiar with a number of unlicensed contractors (actually the term "craftsman" fits better) who do things exactly the same as me. They take great pride in their work, and are friendly, honest, hard-working people. I've also known plenty of licensed contractors who are honest, hard-working and dedicated craftsman. HOWEVER, I've met just as many who aren't. I've seen HORRIBLE work done by licensed contractors. I've even been hired to repair or clean up some of it. I've seen tons of licensed contractors who only cared about the money, not the job and not the customer. I've seen licensed contractors who would cut corners every chance they got, and did really lousy work. Last but not least, I don't think I've ever met a licensed contractor who wasn't willing on occasion to break the rules and do a job without pulling a city permit, if they thought they could get away from it. So all the talk from licensed contractors about "following the rules" sounds really hollow to me. Truth be told, licensed contractors slam unlicensed contractors because they want your business. They don't want you to save money hiring an unlicensed contractor, because then they don't get the work themselves. They want you to hire them so they can make money. Anyone slamming ALL unlicensed contractors is just out to make money, they don't care about you or the truth... Yes, heavy words, but as someone who worked in that field for years and did an excellent job, I feel I need to defend those folks still out there doing an excellent job. So to summarize: Some licensed contractors do excellent work, and some do horrible work, AND this same statement is also true of unlicensed contractors... So what is a home-owner to do? How are they to choose? It's really simple. Whether you are hiring licensed or unlicensed people, you should start off with the attitude that you are not just hiring a worker to perform a single task at your house. You should approach this as someone who is going to build a long-term relationship with a craftsperson who they can rely on over the years to do good work on their home. With this attitude, start asking around. Who do your friends hire to work on their homes? Recommendations from friends is the best route. If you don't find someone that way, then look in your local community through the usual channels. Nowadays Craigslist is popular for tradesmen and craftspeople to advertise in. Once you find somebody who looks good, ask them over to look at your job so you can check them out. If you feel good about them, then ask for references, follow up on the references and find out what others say about them. Aside from recommendations from friends, references are the ONLY reliable way to really know if the person does good work or not. When you've found someone you think might be good, give them a small job on your property and see how it goes. If they did a good job, and were respectful of you and your property, then give them a bigger job. See how it goes. After you've found them to be trustworthy and you've got a good working relationship going, give them the biggest jobs you've got. Finding a craftsman is not like ordering fast food. It's more like dating; you don't marry someone on the first date, no matter if they are "licensed" or not. You get to know them and establish trust before you commit! Good luck!

The ONLY thing a license does is it makes it so the CONSUMER has a way to get back money legally if fraud happens. It has NOTHING to do with quality of work, even though we may take a test on our trade, it has no way of the quality of craftsmanship ..none... I have seen jobs unlicensed masons have done. I bid to fix one once at over 125 grand. She already paid 50 grand to the unlicensed mason.She could not finish the job. They took out 3 corners of her house with a track hoe installed patio HIGHER than the back door, installed walls that were the wrong finish,, footings to nowhere. Concrete dried on the asphalt driveway, BBQ that was a nightmare. And she paid 25 grand for trees to be removed from the neighbors...and no way to get here money back ..the guy moved BACK to his home country...true story..i got more. as for credit checks..I had bad credit a long time ago ..I have contracted in california and oregon for many years..check me out ..i have NOTHING on my checks are just another way to increase fees....although i have excellent credit never made me a bad contractor ...

To Randy, Thank You for the clarity. Those were my thoughts exactly. My homeowners insurance won't pay a dime if I hired someone without a license. My neighbor decided to enclose her garage and turn it into a room, they people she hired did an excellent job, but when mother nature destroyed it by no fault of the contractors work, the home insurance did not cover any of her damages because the contractor was not licensed. I'm sure to a lot of people, licenses are just a way to make them pay fees, but to people like me, I want to hire a honest person that will play by the rules if only to make sure that I'm not the one who is going to be loosing.

Alison Sacks thinks the contractor should pay for anything he missed. I would not want her as a customer. Can you imagine what kind of fee he would have to charge to cover that risk?

if one does not like a law or regulation, do your best to change it. Do not ignore it .

Any contractor that refuses to get a licence is a contractor that more than like won't get proper building permits when doing work for you--and that's somebody I wouldn't want within a mile of my house. You can claim years and years of experience in some trade, but that experience means nothing if you refuse to get a licence so you can be held accountable for the work you do--and it also means nothing if that years and years of experience you have involves doing work that's not up to current code.

In the state of Florida it is a felony to sign a contract without a license.There is no license for a handyman. Why would you hire someone who is breaking the law. If the do shoddy work or rip off some valuables, don't call the law ,you invited them in knowing they were illegal.

i think that having a license is all part of doing business and doing it right we run across a ton of unlicensed guy's in Florida and it get's pretty bad they come in cheap do the job and most times do it wrong.I beleive that it will always be a problem people should always trust a fully licensed guy but if you doubt them call anouther ask questions if it comes down to right or wrong a good guy will give you a free second opinion and help you in any way they can

I agree with ellis on this post. Find someone by talking to those you trust, whether friends, family members or co-workers. Word of mouth reference is a great way to find the best. I do strongly encourage checking out online reviews as well. When you find a possible good contractor, consider these factors: 1. How was their phone representative? 2. Were they upfront about any service/travel charges/fees? 3. Are the technicians courteous, uniformed and clean? 4. Do they offer a guarantee IN WRITING of your 100% satisfaction or your money back with no fine print? 5. Do they respect the condition of your home by wearing shoe covers, placing drop cloths, etc? 6. Do they offer a straight forward price IN WRITING with no hidden fees or costs BEFORE they perform any service work? 7. If so, will they not require payment until the technician has completely gone over the repair work done and made sure the homeowner was 100% satisfied before requiring payment? 8. Do they have a customer referral rewards program in place? Most companies that adhere to standards such as these are customer-oriented, professional contractors who have the customers best interest in mind. While they probably won't be the cheapest, it is a safe assumption that these companies have drug-free, background checked, educated and professional technicians who have undergone months, if not years of training, passed a thorough examination process before being hired, and are truly an elite group of service professionals. Most of these companies thrive on repeat business of customers, and may even have a membership program that homeowners can sign up at a monthly or annual rate that will give them front of the line service and discounts on future service calls. And yes, companies with these standards will have all the proper licensing, insurance and bonding required by their local jurisdictions. Last but not least, to refer to ellis's post, finding that contractor with these high standards and customer service, you will be able to build that relationship that put you at ease knowing that not only is the work being performed per code, but you have a partner that truly cares about the safety and welfare of you, the homeowner. "....get to know them and establish trust before you commit!" Great advice! Btw, if you are concerned about "who" will be in your home, look up to see if you have any companies in your area that are participating in the "Technician Safety Seal" program. Contractors bearing the "Technician Safety Seal" have drug free, background checked (felon and criminal free) techs that bear a name tag and a Safety Seal patch on their uniform, as well as being able to furnish proof of their cleanliness. Check for yourself at

I am laughing at all of this ! A (my license ) is a joke!! I own a landscape company here in denver Colo I am getting killed by all the flybyes. Having my business license doesn't do anything but cost me more money!! I can not operate at the lower cost that the illegals and what we call flybyes are charging the people are broke and when wanting something done they can't afford to hire (us) legal companies! Unfortunately in these days there are consumers (customers) that are trying to get somthing for free I can't count all the customers I have been ripped off by none payment and bounced checks I do not support the BBB another bill to pay for and it's not always the contractor in the wrong please be aware that people will come onto sites like this to trash a co or worker out of revenge basically everything is a f}#%^+ mess w no way to fix it do the dam job rite the first time!! or don't do it...

Wow. It never fails to amaze me the endless list of excuses that unlicensed contractors try to use to justify being illegal. There are certain trades that require licensing and if you hire someone who isnt licensed, you are basically hiring someone who doesnt follow through. I say that because, if you cant be bothered to go take your licensing test, and follow the licensing rules i doubt you can be bothered to pick up your phone when your customer calls with a problem. Consumers, dont be fooled by unlicensed people trying to do work that requires a license. Theres a reason why they dont have a license and none of those reasons are going to be to your benefit. For my particular trade, the state license required 4000 hours of apprenticeship in a very specific discipline of plumbing. It could take as much as 10,000 hours of apprenticeship time if the persons experience is in areas that arent directly related to code compliant design and installations of plumbing systems (for example, plumbing repairs, drain cleaning etc.) One word of advice for consumers, most anything you do in your house requires a permit and a code inspection. these things are in place for your protection, and you should take advantage of them. an unlicensed contractor will avoid pulling permits or get you to do it yourself. This is a big red flag, and you need to pay attention. Also, never ever give money up front. If the contractor wants you to pay for materials before they do the job then perhaps you can pay when the materials are delivered to your jobsite, that way, at least you have something in exchange for your money. In my state, an unlicensed contractor cant get liability insurance either, so when they flood your house its going to be your problem. Think of it this way, the insurance company knows that someone without a license isnt qualified. Is that who you want working on your home? And FYI, an unlicensed contractor CANT do a thing against you to get paid for work they have done. So technically, if your state requires the plumber to be licensed, and you hire someone who is not, you dont have to pay them and theres nothing they can do. Personally Id like to see more unlicensed folks get stuck by homeowners who are aware of the rules! Remember, most states have a website where you can check on the licensing status of the folks you want to hire. Check into it. Any licensed professional is proud of that certification and works very hard to follow the rules in order to keep that license squeaky clean. Most licensed contractors have to be recertified every year and have a great many hoops to jump through to keep that license and to stay legal. Its your home, or your investment property, or your business... Why would you put these things at risk to a guy who can only letter a truck, but cant seem to run a legal business? To angies list, this comment box on your website is obnoxious. perhaps you might open it up a little so a person could put together a reasonable paragraph without wearing out the up and down arrows on the keyboard?... If my comments dont make sense, this itty bitty box has alot to do with it. Just a thought

I was called to a house to inspect the wiring of a dryer because the homeowner was killed trying to hook up his dryer. There were two problems, one the homeowner wired up the dryer himself and two, the so called electrician installed the receptacle with no ground. The real problem was the receptacle because had it been installed with a ground as soon as the homeowner plugged in the dryer the circuit breaker would have tripped thus saving his life. Of course doing his own wiring was foolhardy.

The way I see it, there are many sides to this story. On one side are the contractors. There are the shoddy unlicensed contractors and repairmen who take advantage of uninterested or unconcerned homeowners. They take their good fortune, squeeze every penny they can out of the job and then walk away without worrying about how good the work is. They are only in it to make as much money as they can and don’t care about repeat business. Then there are the decent unlicensed contractors that care about the craftsmanship of their work. They take the time to make sure the job is done correctly the first time. These types are likely to have repeat customers. On the other side of the contractor coin are the licensed ones. But even in this group the members are diverse. Some take advantage of loopholes in the law to get away with doing subpar work and others go above the call and do more than required. On the other side are the homeowners. The first time is akin to Ebenezer Scrooge, pinching every penny in a effort save money. They may look at licensing but are more interested in the bottom line. They are happy when the contractor does a great job but also seem very surprised when the job becomes too expensive or the work is inferior. On the other end of the spectrum are the Richie Rich types who spare no expense, do their homework by checking to ensure the contractor can live up to his/her word. They are more likely to hire a licensed contractor but if they are satisfied with the craftsmanship an unlicensed one will do just as well. Somewhere in the middle is the average homeowner. Good, bad, or indifferent their only goal is that the work is done on time, on budget, and on the level. They don’t WANT to worry about licenses but if it ensures a proper job they will. The average homeowner is more worried about the budget than anything else. They will pull the plug as soon as it becomes too expensive, no matter the quality of work. They are also the first to complain if work doesn’t meet expectations, even if expectations are out of hand. No matter the contractor, licensed or unlicensed, and no matter the homeowner, Scrooge or Richie Rich, there are pitfalls to any job. Due diligence is the name of the game and the consumer must remember that they get what they pay for. I completely believe that it is up to the homeowner to choose the right contractor and has very little room to complain they do little more than look at the surface.

I emphathize with Allison Sacks' experience with the home inspector. We had a licensed inspector and even then, we found far too many overlooked items that has cost us tens of thousands of dollars. The inspector failed to notice water damage in the basement, an old roof that was leaking, and missing cover for the place where the wall meets the side of the house - and as a result, water would pour into the walls, becoming moldy. But Ms. Sacks was smart to take action. All I did was submit a complaint with the BBB and grumbled as I paid contractors to repair all of these problems. So even a licensed home inspector may not be reliable - we suspect the former owner of the house tipped him off in order to make the sale.

I have over 100 pictures of shoddy workmanship (that is a polite way of saying it) on my facebook web page. Look it up!

My so-called "licensed' contractor is being prosecuted for residential building without a license. Hopefully, they will order restitution for my thousands of dollars in repairs to work. I am going to continue to pursue civil court if criminal court doesn't pan out.

Contractors, licensed or not, can join the BBB (Better Business Bureau). This is not a consumer watch dog group to complain to when any contractor or handyman doesn't meet your expectations. It does in fact provide information about their subscribers to the public about any problems that arose with the contractor and what the disposition of any problems are. Such as did they correct the problem to the homeowners satisfaction or is there now a lawsuit pending This is clearly a useful and cost free tool for homeowners and others to utilize.

I'm an unlicensed Handyman in Oregon. I have 20+ years of experience in the construction trades, and I used to be licensed back when I did this full time. I have EXCELLENT references. Almost all of my business comes from referrals and I've never had a problem with ANY customer not being completely satisfied with my work. I always take care of my customers! While I do agree that some trades should require a license (namely structural, and serious plumbing and electric work) I think it's ridiculous to require someone to be a licensed contractor to mow your lawn or to install a screen door!! Make no mistake, licensing is all about being a revenue stream for the State and insurance and bonding companies (who lobby hard for rules favorable to their businesses) and other trade associations and contractor's boards who charge annual fees to contractors (like the one who posted above this message) and has very little to do with protecting consumers. Homeowners get ripped-off all the time by licensed contractors--a license is no guarantee against shoddy work or unscrupulous business practices!!! And, if the State actually cracks down on licensed contractors who are ripping-off consumers, all these folks have to do is re-register under another name, pay the state their fees, and they're off and running again! Licensing is about fees/money--it's not about consumer protection!! Handymen and others who perform basic homeowner services should NOT be required to be licensed! Doing so does nothing to protect homeowners and only costs them more money as the costs of licensing, bonding, and insuring gets passed on to them. Where do we draw the line with these silly laws? Should your paper boy be licensed, bonded, and insured to deliver your newspaper to your home? I mean he could slip and fall on your deck and sue, right? Common sense folk... Two years ago, if you were a homeowner in Oregon and you needed a screen door installed, had a leaking faucet, and a broken light switch, it was next to impossible to find a licensed contractor to fix these things for you as the economy was booming and most people in the trades had all the work they could handle and couldn’t be bothered with small jobs. And if you could find someone to do the smaller jobs, they'd bill out at $50-$75 an hour, and then send over some kid they were paying $9 an hour to do the job--and then the contractor would pocket the rest of the money--and they'd still make you wait 3-4 weeks for the privilege!! It wasn't about helping customers at a reasonable cost--it was about squeezing every last cent out of people. Now that the building industry is in a free-fall and contractors are desperate, everyone is running around and pointing fingers and trying to run off the Handymen who do a great job for less money not because we don't know what we're doing, but because we can do the job cheaper and we'll get to you faster!! The truth is that's what licensing is all about--money! The State wants the money from licensing fees and as a way to track revenue streams for tax purposes, the contractors want to keep billing out at $50-$75 and hour, and the insurance and bonding companies want mandatory insurance and bonding for all trades to increase their profits. Add to that Contractor’s and Trade associations who want to charge people annual membership fees…….it’s really all about money, and YOU, the homeowner are paying for it! In Oregon at least there is NO proficiency requirement in getting a contractor's license--it's an open-book exam that focuses primarily upon contract law. Anyone can take the test, pay the fees, and then be a "licensed contractor," and still not know a thing about how to do good work!!! I always tell my customers and friends and family that a license means NOTHING relative to the quality of someone's work. CHECK REFERENCES!!! Don't just ask for 3 references (anyone can find three people to say good things about them....) check their last 3-6 references! I really think that in order to strike a balance between protecting the homeowner and enriching the State and insurance companies with scare-tactics, that there needs to be some common sense applied here.

Your stories on contractors is a must-read. Thank you!

Your articles contain good advice, but checking with state or local agencies for the details that you mention may not be enough. I’ve had two experiences where, despite a clean licensing/complaint record before hiring, the contractors allowed licensing to lapse or had a license suspended before my work was finished. In both cases, the jobs had to be completed by other licensed contractors to meet state or local code requirements. Periodic checking of license status during the work may help prevent a later surprise.

I read Allison Sack’s home inspector story with a pit in my stomach. We relied on our licensed buyers agent in Northern Virginia to recommend a home inspector. Our inspector also had a card stating [he was] licensed, insured and certified. He was none of the above. He missed very obvious signs of serious foundation problems (current estimates total more than $80,000) and a very obvious plumbing code violation that could lead to pipes bursting in the walls if it gets cold enough (they have frozen once already). He did return the amount of the inspection and has since filed bankruptcy.

We recently had work done by a licensed contractor in Georgia who was referred to us by our Realtor. The contractor completed the work and we paid, but about a month later we got a visit from that contractor’s supplier stating the contractor hadn’t paid him for the materials used on our house (more than $10,000 worth). The supplier said he had to put a lien on our house as the only recourse to try to get the money. I do understand it’s lawful for the supplier to do this, but what recourse do we have?

Thanks for including tips for verifying contractor licensing. This is very helpful. Recently, a few of my real estate clients have been having problems with contractors who don’t finish on time. Can you direct me towards any resources that might outline the important elements of a contractor contract?

I read the article about Allison Sacks from Philadelphia being taken by the unlicensed contractor. I’m in the same boat right now. [A contractor] put a 24 by 22 foot addition on my home. I had to keep paying him to get the work done, and he took me for thousands of dollars. It turned out, he wasn’t even licensed. It was my job to check into his license, but I was trusting. I, too, have become a much better consumer.


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