How can I protect myself from hiring an unlicensed contractor?
Homeowners beware! It is the time of year when unlicensed, unreputable, and shady contractors (and handymen) prey upon homeowners eager to renovate their home. They know that homeowners have just received their tax returns and are ready to spend money sprucing up their homes before the warm weather rolls in. Now, more than ever, homeowners need to be educated on how to select a licensed and insured contractor or service provider before it’s too late.
The risks of hiring an unlicensed contractor run deep. Utilizing an unlicensed contractor can leave you and your family exposed to fraud, inadequate workmanship and potential harm. An unlicensed contractor is not required to have General Liability or Workers Compensation insurance, since no one is checking their business. This can leave you liable for any damages to your home made by the contractor or their employees. Furthermore, if they or one of their employee get hurt in your home, it becomes your liability. This can affect your insurance premiums in the future.
Finding a reputable contractor to work in your home may take some effort and a little investigative work, but it is worth all the effort in the end. If you are planning a home improvement project, a home repair service or a home remodel, and the projected cost is more than $200, you should ONLY use a local, licensed and insured firm. This will ensure that you, your family and your home are protected.
Contractors that require a license include general contractors, heating and conditioning contractors, home improvement contractors, window and siding contractors, roofers, hardwood flooring installers and anyone that alters the interior or exterior of your home structurally, including penetrating walls and floors, or installing hardscape on the outside of your home. Typically painters that are only providing painting services, businesses that provide carpet or linoleum installations or that install or replace window coverings do not need a Home Improvement Contractors License. However, make sure they are insured since they will be providing work inside your home.
Identifying the right licensed and insured contractor is pivotal for the success of your home remodeling project. Make sure you are working with a contractor that is familiar with the products being installed in your home. Make sure you receive a comprehensive contract with a sensible payment schedule, proof of license and insurance, a construction and communication plan, and a point of contact, should there be an urgent matter that arises. These key components can provide homeowners the tools needed to ensure a successful home remodeling project.
Licensed contractors are registered with the NYC Department of Consumer Affairs (DCA). This means the contractor has a valid and identifiable business and home address, maintains Worker’s Compensation insurance, has been fingerprinted, has provided a roster of employees, and has taken a test to ensure they are knowledgeable about their contractual obligations to the consumer.
One of the biggest benefits of using a DCA licensed contractor is that homeowners are protected by the agencies Trust Fund which provides up to $25,000 in relief to a consumer that may have paid for, but not received, the goods and services they were promised, or to make retribution for any damages that resulted from the actions of their contractor. Licensed contractors hold a valid Home Improvement Contractors License and a Home Improvement Salespersons License, both of which should be checked with the DCA prior to considering them to do work in your home. The DCA can be reached by calling 311, or you may visit their website at www.nyc.gov/dca.
An unlicensed contractor may offer a less expensive job than a licensed contractor, but more often than not, the costs associated with repairing their mistakes will offset the initial low price. here is a reason why a contractor is not licensed. Whether it be they are doing it "on the side", they lost their license in the past or they cannot have a business in their name, none of the reasons are good. Hiring an unlicensed contractor that is not qualified to do the type of work included in your project, or that cannot provide sufficient or qualified labor to complete the work, can be catastrophic.
Furthermore, an unlicensed contractor CANNOT pull work permits for your project, as they are not registered with the NYC Department of Buildings. This may be one of the reasons their contract is less expensive, but one that could plague you in the years to come and potentially halt your project. Renovations that include adding a kitchen or bathroom in the basement, adding onto your home, adding a deck, or sunroom must be filed and permitted. Failure to do so can lead to penalties and fines, and may stop the sale of your home.
To get a head start on your search for a reputable contractor, ask a trusted friend or relative for a referral. They may have done all the homework that is needed in identifying a licensed, insured, trusted, and reputable company. It is also easy to check with the Better Business Bureau (BBB) to ensure no complaints have been placed against the contractor you are considering. In addition, utilize the internet to seek reviews about the business. You may also search websites like Houzz, Angiest List and Yelp to see what others have to say about the business you are considering.
Most of all, you should ask any contractor that you are planning to hire to provide references or addresses for the current jobs they are working on. This will provide you with some insight into the type of work they have provided for other customers.
If you are comparing licensed contractors to licensed contractors, and you have thoroughly checked all of the businesses in the running, it may be okay to choose the contractor that is less costly than another. However, if you are comparing estimates between unlicensed and licensed contractors, you must beware. The money saved by hiring an unlicensed contractor may cost you double by the end of your project, or more.