What are the risks of going with an unlicensed contractor?

This article looks at when contractors need to be licensed in California and what the risks of an unlicensed one are.

In California, most contracting jobs require the contractor to have a license that is currently valid with the Contractors State Licensing Board (CSLB). Generally speaking, any contracting job that costs at least $500 in labor and materials requires the contractor to be licensed. Furthermore, the contractor must provide their license number on any construction contract. Although unlicensed contractors are numerous in California, homeowners and property owners need to be aware of what the risks are of hiring a contractor that does not have a valid license.

Why people go with unlicensed contractors

As CBS Los Angeles reports, there are an estimated 60,000 to 70,000 unlicensed contractors in California. That's a worryingly large amount, especially given that working on large projects without a license is illegal and can pose financial and liability risks for consumers.

The main reason people go with unlicensed contractors is simply because of money. An unlicensed contractor can typically offer a much lower bid than a licensed contractor can offer. However, while such a low bid may sound enticing, it comes with risks, as many people have learned the hard way. Having a license - and, if needed, a specialty license - should be the very minimum requirement that a contractor meets. Consumers can check a prospective contractor's license number online through the CSLB.

Risks of going with an unlicensed contractor

The main risk concerning unlicensed contractors is one of liability. A contractor that hires employees is required to carry workers' compensation insurance for those employees. All contractors that are licensed in California and have employees will have workers compensation. Generally speaking, if an employee of the contractor is injured while working on a project, that employee cannot sue the property owner on which the accident took place.

However, if the contractor is unlicensed then an injury that happens on private property could be the liability of that property owner. That means that in such situations the injured worker would be able to sue the property owner for compensation, including for costly medical and treatment bills as well as compensation for lost income. Furthermore, most home insurance policies will not cover a lawsuit resulting from an accident involving an unlicensed contractor.

Construction and real estate law

To be sure, getting a licensed contractor is only the bare minimum when hiring someone to perform significant construction work on one's property. A real estate and construction law attorney can help property owners deal with other issues that may arise related to contractors and construction. With the help of an experienced attorney, homeowners can have greater confidence and peace of mind in the work that is being performed for them.