Do I have to hire a licensed contractor?
Most landlords probably use unlicensed contractors more often than they use licensed contractors, primarily because they’re usually cheaper, at least when getting bids.
You should understand the licensing requirements of your state to give you some idea of the value to put on the license and, of course, to know if you are required by law to use a licensed contractor for the particular work being considered.
There is probably nothing inherently wrong with using unlicensed vendors for many routine non-critical tasks that do not require a license by law or a license in order to pull a required permit as long as you are aware of the risks and take the necessary precautions to protect yourself.
Many states both define which tasks must be performed by licensed contractors and set maximum dollar limits for which a license is not required no matter what the type of work.
Certain advantages of using licensed contractors often outweigh the usual disadvantage of cost. Furthermore, an initially perceived lower cost with an unlicensed vendor sometimes turns out to not be lower after all because the unlicensed vendor may be less qualified to do good work, or even safe work.
Although not every item applies in every state, the advantages of using licensed contractors usually include the following:
- Procedures for filing complaints, with penalties of license suspension when the licensee is found in violation of laws and regulations,
- Assistance to consumers in resolving conflicts with the licensed contractor,
- Access to a state Recovery Fund in the event of poor work done by the licensed contractor,
- Allowing litigation against the licensed contractor, while a consumer’s right to sue an unlicensed vendor is restricted in some jurisdictions,
- Licensees are often required by the state to be bonded,
- Licensees are required to carry liability insurance,
- Licensees are required to obtain necessary permits.
- Licensees are required to carry workers’ compensation insurance for employees and for sub-contractors that don’t have they it for their employees,
- Licensees are required to obtain applicable permits (unlicensed venders will not be able to even pull a permit in many jurisdictions), and/or
- Licensees are required to do the work per building codes.
In many states, a contractor cannot file a mechanic’s lien against your property, or, in some states, even sue you if he performed work that requires a license unless properly licensed. Other than this unique circumstance and the fact that unlicensed work is often cheaper than licensed work, a licensed contractor should usually be preferred over an unlicensed vendor.