Sharon asked a reasonable question in a comment on a previous post:
I am in the planning stage of adding on a master suite addition to my house. With that said, I am having a very hard time with the laws of licensing subcontractors. I as the owner/contractor of this job according to my city clerk’s office must have all the subs I hire to be licensed with the city. That in itself is no problem. My dilemna is the person I trust the most with the building of it that has about 30 years experience is not a state licensed contractor or builder.. my question is what in simple terms that I can understand… WHY does he need that when I am taking all the risks..
This is my response, and I’d like to hear from others:
Even though most licensing efforts by cities, counties and even states are primarily moneymaking enterprises for the government, there is some merit in the licensing requirements. When I say they are moneymaking enterprises, it’s because they want the money for the license, but they won’t always police the licensee and make sure they operate like legitimate business and prosecute those that don’t.
Many states are now requiring a certain number of hours of education before a new or renewed construction related license is issued. While this is hardly a perfect method of policing this industry, it does help to keep most of the contractors accountable for learning something about this business beyond hammering and banging. Whether they use that new knowledge is another topic for discussion altogether.
There are a few questions that your question raises. Why would you choose someone that has chosen to work without a business license for 30 years? Why would he not get a license? There has to be a reason for this, and I would dig until I found it. If you aren’t willing to ask that question, are you letting personal feelings get in the way of good business decisions?
Then, you said . . . “the person I trust the most with the building of it” . . . I have to assume here that this person is going to oversee the whole job? If that is the case, then why are you claiming to be the general contractor? The city/county/state wants anyone (other than the home or building owner) that is going to be working on a job to be licensed. That way they know that he/she is also going to have the insurance and bonding to cover the costs of mistakes that happen.
Here is an example. Suppose you hire this guy to work on your job. He also gets the plans drawn. You, acting as your own GC, send the plans in, permits are issued and the job gets going. At the framing inspection the inspector red tags the job. You have put an archway between the existing part of your home and the addition. Oops, somebody forgot to get the opening engineered and the plans examiner missed it. Many jurisdictions are now requiring a licensed engineer to sign off on any opening over 8 feet wide. So, who pays for the new plans, the engineering, the delays to how many different people and subs and suppliers, the tear out and the reframing, the materials that are essentially ruined and must be replaced? You point fingers at him, he points right back. The fight is on. If you think this isn’t a common occurrence, then you are not knowledgeable enough to be acting as your own G.C.
That is just one example. Suppose he comes to you and recommends a friend of his who is an electrician. You, acting as GC, hire this guy, he does the work and 3 months after move into the new addition, you have an electrical problem. Somebody drove a sheetrock nail or screw through the 220V line to the new whirlpool bath. Because of faulty work, you have a fire and up goes your home in smoke. OK, again, where do you think this will all go? In most states I know of, if you have an unlicensed person or “contractor” on the job, you do not have the right to file any legal claim against that person or company. Likewise, they can’t file a claim against you. So what do you do now? You can’t sue the guy you hired to help build your job. In a normal situation, the contractor’s insurance should cover this type of problem, but your unlicensed “contractor” doesn’t have insurance or bonding. Do you sue the electrician? He will get a half dozen of his buddies to come in and testify that the job was done correctly. In a word, you will pay for the repairs and or rebuilding out of your pocket.
These are just two quick examples that I can think of, and these are mild compared to many that I have run into over the years.
Proceed as you wish, but I would not let anyone set foot on any project unless they were licensed, insured and bonded.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations.
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