# Working with an unlicensed contractor?



## salomon (Nov 3, 2018)

1) Can an architect work on a project where the general contractor is not licensed, and the jurisdiction requires all contractors to be licensed? In this case, the owner has a trusted and experienced contractor they would like to use, for a small nonresidential project, but the contractor is not licensed. As I understand it, by hiring an unlicensed GC, the owner automatically assumes the liability that would otherwise be on the contractor. However, is there anything that would implicate the design professional by agreeing to work on a project that will be built by an unlicensed contractor?

2) Other than the legal and liability questions, what are the main practical disadvantages for an architect working with an unlicensed contractor? Obviously the construction documents will describe a code-compliant project no matter who the builder is. But are there aspects of construction, means and methods etc, that an unlicensed contractor would typically not know about, which could result in code violations?

I should also mention that building permits are not required in the given jurisdiction, and the applicable code is IBC 2012.

Thank you!


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## RLGA (Nov 3, 2018)

An architect has no responsibility in regard to who the owner hires to perform construction. An architect can advise an owner on the potential risk issues involved in hiring a non licensed/certified contractor, but since an architect is not a signatory to the owner/contractor agreement, there is no legal basis for someone to make a claim against the architect for a contractor’s performance.

The architect should also warn the owner that by hiring a non licensed/certified contractor to perform the work, the architect could have a claim for additional fees against the owner for additional contract administration services due to a contractor’s poor performance.


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## Mark K (Nov 3, 2018)

I believe that in California an unlicensed contractor cannot sue for unpaid monies.  The owner may even be able to demand the unlicensed contractor pay back any monies already paid.


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## salomon (Nov 4, 2018)

Thank you for the responses. What are some of the areas of work where an unlicensed contractor might perform poorly compared to a licensed one? Obviously a lot depends on experience, but was wondering if there are particular things that contractors learn from the licensing process that they otherwise would not.

Thanks


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## JCraver (Nov 5, 2018)

salomon said:


> Thank you for the responses. What are some of the areas of work where an unlicensed contractor might perform poorly compared to a licensed one? Obviously a lot depends on experience, but was wondering if there are particular things that contractors learn from the licensing process that they otherwise would not.
> 
> Thanks



Since the licensing process varies widely state-to-state, I don't think that's a question that can be answered.  Here in IL there is no statewide licensing for contractors, and we build stuff all the time.  I personally don't think a license calling you a contractor makes you any better able to swing a hammer than the guy across the state line who isn't required to have one...


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## mtlogcabin (Nov 5, 2018)

As an owner your contractor licensed or not should have workers comp and liability insurance as a minimum. If he provides a policy call and make sure it has not been cancelled. No license for general contractors in my state just a registration to provide insurance


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## RLGA (Nov 5, 2018)

salomon said:


> Thank you for the responses. What are some of the areas of work where an unlicensed contractor might perform poorly compared to a licensed one? Obviously a lot depends on experience, but was wondering if there are particular things that contractors learn from the licensing process that they otherwise would not.
> 
> Thanks


I agree with JCraver, there are so many moving parts within a construction project, that a contractor, licensed or not, has many opportunities to screw up, so there are no one or two key performance issues. However, as mtlogcabin states, insurance and bonding are a couple of things that will likely be missing from an unlicensed contractor's cost. In some states, if an owner knowingly hires an unlicensed contractor, the owner cannot use the fact that the contractor is unlicensed as a defense for nonpayment.


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## mark handler (Nov 5, 2018)

Mark K said:


> I believe that in California an unlicensed contractor cannot sue for unpaid monies.  The owner may even be able to demand the unlicensed contractor pay back any monies already paid.


It is illegal for an *unlicensed* person to perform *contracting* work on any project valued at $500 or more in combined labor and material costs. ... This means that if an *unlicensed contractor* tries to *sue* someone who hired him/her for *unpaid* work, no *California* court will enforce payment!


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## RLGA (Nov 5, 2018)

mark handler said:


> It is illegal for an *unlicensed* person to perform *contracting* work on any project valued at $500 or more in combined labor and material costs. ... This means that if an *unlicensed contractor* tries to *sue* someone who hired him/her for *unpaid* work, no *California* court will enforce payment!


Depends on the state--the dollar value varies from state to state. Some states allow a contractor to sue if they substantially complied with the requirements for licensed contractors.


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## Pcinspector1 (Nov 5, 2018)

Wouldn't you also have issues with a non-Master License for the electrician and plumber that works under the GC ?


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## ICE (Nov 5, 2018)

No permits equates to no government oversight.  It has been my experience that possession of a license is not an indication of competency or honesty. It works that way with ICC certifications as well.


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## JBI (Nov 6, 2018)

I'm a little curious as to where the project is located... OP is from 'New York' but does not indicate where in NYS, which could make a big difference.
NYS does not have contractor licensing generally, but many counties and jurisdictions do have various licensing requirements, so knowing where in NYS is important.
Also NYS outside of NYC is currently using the _201*5 *IBC as amended by our 2017 Supplement, _NOT the 2012...


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## linnrg (Nov 6, 2018)

Agree with ICE on this one.
Having had a general contractors license in the past in a state which did not require any form of a test, only the workmen's comp insurance, unemployment account and a federal Tax Number was proof that there was no system for competency.
Here where I am at it is still the same for the Commercial General Contractor except you have to have a bond.  Contractors holding residential endorsements have to take certain classes, and a test and needs continuing education.  Electrical and Mechanical have many more requirements.


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## salomon (Nov 11, 2018)

ICE said:


> No permits equates to no government oversight.  It has been my experience that possession of a license is not an indication of competency or honesty. It works that way with ICC certifications as well.



Thanks all. The project is located in rural Alabama. ICE, could you please elaborate on the point about ICC certifications?


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## ICE (Nov 11, 2018)

no


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## MtnArch (Nov 11, 2018)

I think what ICE is alluding to is that just because you may have ICC certifications does not translate into being truly knowledgeable about what you're supposedly certified to inspect.  This is true in any profession.

I was privileged to have been a California Architects Board Supplemental Examination Commissioner (until the state decided to make it another computerized test instead of a face-to-face oral examination) and it was very apparent during our interviews/examinations who knew their sh-tuff and who was just really good at taking tests.  It was amazing just how many candidates were able to pass the ARE but had no real clue about real life architectural issues - like zoning, fire ratings, ADA/CBC, exiting, etc.


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## ADAguy (Nov 13, 2018)

Mtn. I too was a SEC and agree with your accessment. Book learning is only part of any licensing requirement, it is by experience that we acquire the good/bad habits of our industry.
MH, in CA an unlicensed contractor can still be paid for improvements made without a license as the property owner cannot derive a value enhancement from an illegal contract he has entered into. unfortunately 
As usual, it is buyer beware.


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## conarb (Nov 13, 2018)

ADAguy said:


> MH, in CA an unlicensed contractor can still be paid for improvements made without a license as the property owner cannot derive a value enhancement from an illegal contract he has entered into. unfortunately
> As usual, it is buyer beware.



Do you have a link to that?  In the past it said right in the license law that a contractor had to allege a valid license as part of his cause of action, maybe there has been some case law to the contrary that I haven't seen? BTW, it wouldn't surprise me as the value enhancement makes legal sense, I've used the license requirement to summary bad contractors out of court immediately but it's been a few years.


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## mark handler (Nov 13, 2018)

ADAguy said:


> Mtn. I too was a SEC and agree with your accessment. Book learning is only part of any licensing requirement, it is by experience that we acquire the good/bad habits of our industry.
> MH, in CA an unlicensed contractor can still be paid for improvements made without a license as the property owner cannot derive a value enhancement from an illegal contract he has entered into. unfortunately
> As usual, it is buyer beware.



"... Section 7031 of the California Business & Professions Code precludes an unlicensed contractor from maintaining a lawsuit to recover compensation for its work. Section 7031(a) states, in relevant part:
[N]o person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action, or recover in law or equity in any action, in any court of this state for the collection of compensation for the performance of any act or contract where a license is required by this chapter without alleging that he or she was a duly licensed contractor at all times during the performance of that act or contract, regardless of the merits of the cause of action brought by the person . . .
Finally, perhaps the most onerous penalty of all is that an* unlicensed contractor may be required to disgorge any compensation it has previously been paid for performing work requiring a license.* Cal. Bus. & Prof. Code § 7031(b). Under section 7031(b), *"[a] person who utilizes the services of an unlicensed contractor may bring an action . . . to recover all compensation paid to the unlicensed contractor for performance of any act or contract." There is little case law interpreting the so-called “disgorgement” penalty since its addition to Section 7031 is relatively recent *(added by amendment in 2001)...."
https://www.constructionandinfrastr...gorgement-penalty-for-unlicensed-contractors/


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## ADAguy (Nov 13, 2018)

As you can see, owners can take advantage of contractors without licenses even if the quality of their work is good, unlicensed contractors don't have a legal/lien leg to stand on and take their chances.

Case in point, manfacturer/installer  of outdoor (fixed in place) kitchens (some with high walls behind) claims no license needed as the owner is responsible for pad and utility install . Demands 50% down and full payment prior to install.
Buyer bewary!


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## advshopfront (Feb 23, 2019)

Take my suggestion and never work with a unlicensed Contractor.


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## ADAguy (Feb 25, 2019)

So true but also beware those who are using/operating under another's license (RME).


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## VillageInspector (Mar 20, 2019)

JBI said:


> I'm a little curious as to where the project is located... OP is from 'New York' but does not indicate where in NYS, which could make a big difference.
> NYS does not have contractor licensing generally, but many counties and jurisdictions do have various licensing requirements, so knowing where in NYS is important.
> Also NYS outside of NYC is currently using the _201*5 *IBC as amended by our 2017 Supplement, _NOT the 2012...


Being from NYS myself you are absolutely correct. There is no state wide law but each county and a lot of municipalities have their own local laws with seemingly no rhythm or reason so I would tread lightly on this and examine the precise language of the relevant laws if any.


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## TZJR (Mar 22, 2019)

Here is the question I have not seen asked, I could be wrong, but are they unlicensed in the location of the project, but hold one or more licenses in other locations within the state or country?  

Also, what are the reasons for not applying for a licenses for the location of the work, to small a project, to much red tape?

If its a large enough project why not?


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