Using an unlicensed contractor?
August 30, 2017 2:24 AM   Subscribe

How bad is it to use an unlicensed contractor, in terms of homeowner liability or legalities?

This is in California. We are homeowners who have supervised a lot of work. One of the most competent, reliable people we've worked with and known over about five years now is a journey-level carpenter. During this time, we've worked with a few other licensed outfits, and none compare to him in reliability: he does good work with zero drama and zero flakiness.

Now we need a deck and stairs rebuilt. We have engineered plans drawn up. We've talked to a bunch of licensed people. We think the job should cost X, based on a very similar project at our neighbor's house. Place A bid 1.1X, great. Another bid 5X, lol. Another never sent us the bid despite follow up. Another revealed that they have never done a project this big; they've only done those decks that are 3' off the ground. We resolved to go with Place A. But, I guess in the intervening 6 weeks, something happened to Place A, as we just get a busy signal or "voice mail is full and cannot accept new messages." Our emails have gone unanswered. We've tried maybe 20 times over another 4-6 weeks. So they're off the map, and over three months have passed in the process of soliciting all these bids.

Meanwhile, this super-reliable person would be willing to do it with a co-worker of his. We've seen his work on comparable stuff and believe he can do it. He'd do it for time + materials capped at 1.2X; that sounds fair. We would like to get this project done. (So, so much. We can't move until it's done, so I'm commuting over an hour each way.)

Are there legal or liability ramifications of working with him to get this built? We'll be renting out our place after we move out.
posted by anonymous to Work & Money (16 answers total) 2 users marked this as a favorite
If something totally unrelated to his work ethic ends up wrecking that deck and injuring your tenants, the fact that you used an unlicensed builder will very likely come back to bite you very hard.
posted by Etrigan at 3:55 AM on August 30, 2017 [1 favorite]

There is a difference between doing unlicensed work and doing unpermitted work. If you are pulling permits, and you are confident that the engineered plans will be followed- maybe pay the engineer to come out and do an inspection- then you should be fine. The nice thing about decks is that nothing can be hidden behind drywall.
posted by rockindata at 4:17 AM on August 30, 2017 [8 favorites]

This is a classic risk management exercise. It will only come back and bite you on the bum if something goes wrong. What is the job - how badly wrong could it go? How badly would people (adults, children, old people, disabled people ...) be hurt if it went wrong? Is it on the ground, or significantly elevated? Can you supervise construction to ensure the structures are built properly and will be safe? Is this more difficult/complicated/bigger than the prior work he did? Does it require skills he has not demonstrated for you?

It seems you have had good experiences with this contractor, but that is in the past, and it does not guarantee he will be competent this time.
posted by GeeEmm at 4:18 AM on August 30, 2017

This is not a direct answer to your question, but since you've agreed on everything, can this super reliable guy bring the entire project to a licensed contractor and ask if they can 'ask as General Contractor' for the entire project for a fee. Your contractor will execute the project and your total cost would be 1.2x + additional fee and you've solved the risk/problem of the unlicensed contractor (for a fee)?
posted by jazh at 4:45 AM on August 30, 2017 [1 favorite]

Also, I would recommend not running after a contractor who doesn't respond to you. It is extremely useful information that they can't or won't make a professional impression while bidding for your work. It might not be indicative of how the contractor will execute the job, but why take the risk?
posted by jazh at 4:50 AM on August 30, 2017

I don't mean to say anything about this person personally, but hard capping it at 1.2X when you can't seem to find anyone else who will offer to do it for anything close to that? I don't know. I've seen previously-reliable people struggle when they promised to do work with a hard price limit when they find they're no longer actually being paid to finish the job, and it does seem like you have a shortage of anybody else who thinks 1X looked like a reasonable number to start with. If he was offering 1.2X when everybody else was saying 1.5X, that'd be different, but it looks like your only actual other possibly-viable bid is more than four times as much, and... hoo, boy is that a difference.

In general, I'd be concerned that this project is starting to lean hard on the "fast" and "cheap" sides of the triangle, and that's precisely the wrong time to be taking on more liability. I'm no kind of expert in this stuff; it's just enough that it would make me personally uneasy.
posted by Sequence at 5:06 AM on August 30, 2017 [6 favorites]

Based on my experience in California, this could be a moot question. If the deck and stairs need to be permitted, and I can't think of a reason why they wouldn't be, you need a licensed contractor to pull the permit, end of story.
posted by LionIndex at 5:15 AM on August 30, 2017 [3 favorites]

In my jurisdiction, unlicensed contractors can't pull permits.

The guy you're working with might have a way around it, like maybe his friend is licensed or paying somebody else $150 to apply for the permit in his name, but that's a WHOLE OTHER BUCKET.
posted by joyceanmachine at 6:11 AM on August 30, 2017

Actually, I take that back - for smaller residential stuff, you can sometimes do projects as an owner-builder, which gets you around the licensed contractor requirement, but brings up a bunch of other issues. It's easier to just get a licensed contractor.
posted by LionIndex at 6:54 AM on August 30, 2017 [2 favorites]

In Oakland at least, homeowners can pull permits, so you could get a permit that way. I think the form that homeowners sign in the process includes some info on what kind of liability you'd be taking on, so you could see if your city has something similar or look online for Oakland's form.
posted by slidell at 6:54 AM on August 30, 2017 [1 favorite]

Are there legal or liability ramifications of working with him to get this built?

Speaking as an attorney (not licensed in CA) who has worked for homeowners insurance companies defending against claims from both third parties (your mailman, your visiting cousin, etc) and homeowners themselves (you), I can offer that I've worked on cases where I've pointedly researched whether construction was permitted, whether it was done to code, and whether it was done by licensed folks.

Based on that experience, I personally would consider the benefits of having all my ducks in a row versus the expense, sure, but also versus the fact that I don't tend to have a lot of guests, deliveries don't come to my back deck, and I don't spend much time there. That's not advice for you, merely some of what I'd consider in my own circumstance. As someone said above, I'd measure the risks.
posted by cribcage at 7:32 AM on August 30, 2017 [1 favorite]

I used to work for a GC, albeit in Massachusetts.

The "capped time & materials" aspect of this bothers me more than the unlicensed contractor aspect. My old company never hired a sub-contractor on those terms. What typicaly happens with small-time contractors (who are usually the ones making capped T&M bids) is that they are bad at estimating (estimating is really hard) but want to give someone a fair deal, and a capped T&M feels like a good way to do that. Everything is usually fine for a while, until the contractor realizes that they fucked up the estimate and they're going to lose money on the job. Since they are small-time, losing money on even one job may be disastrous for them—so all of a sudden they hate working on your job. They begin to drag their feet, flake out, cut corners, and sometimes even just abandon the project completely. This can happen even if they went into it with the absolute best of intentions; small contractors live from job to job, and if they lose money even once it can wreck their ability to do stuff like buy supplies for the next one. It's not a good sign when someone wants to do anything that's going to take more than a day or two on a T&M basis, and capped T&Ms are a recipe for disaster all around.

As to the unlicensed aspect, I wouldn't necessarily care too much given that you know this person pretty well. You will definitely be losing some legal protection; it will pretty much be as if you had done the work yourself. You won't have access to your town's guarantee fund, and you'll be on the hook if someone gets hurt during the job or later on if something goes wrong with the deck. My old company never used unlicensed contractors, but that's because it was illegal for them to do so—their subs had to be licensed and insured, and keeping track of that was actually kind of a big thing. You have more freedom as a homeowner, but there are still risks. If it were my own home though, I wouldn't necessarily care. I would care a lot if I were renting the place out, however. If there are tenants, you would me taking a huge risk using an unlicensed contractor for this. People manage to screw up decks all the time, and your building inspector won't necessarily catch everything. They do their best, but they do miss things. If this is a place you are renting out, I personally would be uncomfortable using someone who didn't have their own license and insurance. Too big a risk.
posted by Anticipation Of A New Lover's Arrival, The at 8:58 AM on August 30, 2017 [5 favorites]

Assuming you are pulling permits, what I'd do is go to your reliable guy and say, "Hey, I appreciate your bid but because we are planning to rent this place out, I feel like I need the liability protection of a licensed contractor to oversee the job and handle the permits and inspections – do you have a friend you could work with or someone you could recommend that might sub out to you?"

I second pretty much everything Anticipation said above. The thing is, it's hard to know where the risks and liability are in this project until you face them. The reason why decks over a certain height require engineering and inspections is because they are dangerous! As a former tenant, part of what was annoying about having a landlord is assuming their level of risk for your safety and health while living in their property. If I had a party and 20 of my friends out on the deck and it collapsed and I found out it was unpermitted and uninspected (or unmaintained in a safe manner), you can bet I'd go after that landlord and so would every one of my guests!

Having a licensed contractor doesn't get you in the clear for all of life's risks but in this case, I'd want to start on the right foot. Hopefully somewhere between 1.5x and 5x, you'll find a good fit. Might have to reduce the scope of the work if you just can't get the price right.
posted by amanda at 9:13 AM on August 30, 2017

Yeah, I can't stress enough the difference between doing this as an owner-occupant vs. a landlord. It's the difference between having no-one to sue if something goes wrong, and being sued if something goes wrong, basically.
posted by Anticipation Of A New Lover's Arrival, The at 9:26 AM on August 30, 2017 [2 favorites]

I'm a Californian homeowner who pulls all of my own permits and does much of my own work, but occasionally hires other people to do sub-jobs. Recently (as outlined below), those have been licensed contractors.

And I hate working with contractors, because (in my experience) they do the absolute minimum necessary to pass inspection (and writing up contracts to actually get quality work means I have to know enough about the project that I may as well just do it myself), and because it's a PITA to get them to call me back (two projects recently where I'm not going with the lowest bidder, I'm just going with the person who called back).

From that perspective, down-sides: As the property-owner, when you pull the permit you'll be asked to sign something that says that you'll be responsible for workman's comp insurance for anyone doing work on your property. This, to me, seems like the big one. Some years ago we hired some day laborers to help us move, had a situation, one of those guys jumped in and completely saved the day, but if things had been just slightly worse holy shit that would have been the end of the world, and I'm grateful that he averted disaster, but now am totally worried about what happens when someone goes to be the hero, fails, and ends up maiming themselves.

The lesser issue: When the inspector comes by, you'll also be representing that you did the work, so you'd better know how everything was done, and why.

But in general I'm a firm believer that you're going to get way better work out of your super-reliable person.
posted by straw at 1:43 PM on August 30, 2017 [3 favorites]

We had a problem with a contractor and it was useful when we called the contractor's board. (Okay, it WOULD have been useful if we'd called within the 12 months' window they have.) They don't pursue bad contractors who aren't licensed.

As an aside, check to see if whoever you hire has insurance because their workers probably don't. If someone injures themselves and you're on the hook, your homeowner's insurance is going to try its best to get out of paying for it if it's expensive.
posted by small_ruminant at 1:57 PM on August 30, 2017

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