Randal - you are correct, yet again! Unlicensed contractors get bounced out of court and if they are unpaid by a customer, too bad so sad. Your other points are well made too - it does not pay to try to evade the rules, which after all, are intended for everyone's benefit, contractors and customers alike. Excellent article!
Unlicensed Contractors Cannot Sue For Payment And May Lose More Than Expected
Some well-educated homeowners, landlords and developers are getting unlicensed contractors to provide labor and material for FREE! Unlicensed contractors beware your customers are finding ways to survive and if that means throwing you contractor under the bus they will!
They Search For Unlicensed Contractors- Have them submit a bid, get them excited to start as soon as possible, give the contractor as little money as possible, stall whenever the contractor asks for more money and when the contractor finally stops work and threatens to sue them they say laugh at them and say "Go Ahead" knowing the odds are the licensed contractor will not likely collect a penny. Then they simply hire another unlicensed contractor to complete the work.
Not All Situations Involve - Crooked behavior, sometimes the relationship between the homeowner and the contractor starts out right and after a while it turns ugly and the unlicensed contractor is punished severely. Download the PDF file below for an example.
The Biggest Source Of Contractor Misinformation - Is The Contractors Business Round Table. The little round table at the neighborhood bar with a pitcher of beer and several contractors where stories are told about how much money can be saved by not being licensed, bonded, insured and hiring all employees as 1099 contractors. This is where contractors learn the true meaning of the phrase "Opinions From Experts Costs Money" and "Free Advice Is Not Free Because It Has Hidden Costs"
Do Yourself A Favor - Seek the advice of a qualified construction attorney because it will be the cheapest way to avoid massive financial pain. We recommend Susan Fuller, J.D. http://biznik.com/members/susan-fuller-jd. I know her, like her and trust her.
Contractors With Experience - With lawsuits involving a customer who refused to pay even with Iron-Clad contracts and signatures everywhere know that without a current license, bond and insurance their case usually gets thrown out of court faster than a mouse riding wild bronco at a rodeo. We are not attorneys and do not give legal advice so check with your attorney.
Other Drawbacks Of Not Being Licensed:
Possible arrest, free ride in a police car and jail time where you could meet some remarkable people.
Washington State Department of Labor And Industries has a fraud hotline http://www.lni.wa.gov/Main/Fraud/ and encourages everyone to participate.
Lots of contractors playing by the rules take pleasure in turning in unlicensed contractors to Labor And Industries because unlicensed contractors have an unfair price advantage in competitive bid situations.
Labor And Industries has staff who read ads for construction work in Washington State and when they find unlicensed contractors the investigate them and if found not in compliance it gets real expensive real fast. The fines alone could run into tens of thousands of dollars.
Unlicensed contractors who have been caught by Labor And Industries once are easy targets as repeat offenders so they stay on L&I watch list for a very long time.
Think about how much in new sales it takes with low profit unlicensed contractor to pay the previous fines while putting themselves at risk for new more costly repeat offender fines. It puts the unlicensed contractor in an accelerated downhill vicious cycle.
Cannot get building, mechanical or plumbing permits.
Most lead generation services like Service Magic stop giving leads.
They get a reputation as a low-price leader.
If they have employees and one of them gets hurt on job it could bankrupt the contractor and in some cases make them criminally liable.
More states are putting together sting operations to catch unlicensed contractors.
Wants help to cheat the system don't contact us, ever!
Is an unlicensed contractor and wants to get legitimate contact us because we can help!
Needs help with Employment Security, Labor And Industries or Payroll 941 Quarterly Reports contact us we can help!
Learn more about the author, Randal DeHart, PMP, QPA.
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Posted by Susan Fuller, J.D., Seattle, Washington |
Jul 31, 2012
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Updated May 29, 2014
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