Log in


A Licensed Contractor can Protect You... 

What do I need to know when hiring a contractor?

Needless to say there is no shortage of building contractor horror stories relating to both licensed and unlicensed contractors. There are stories of scams, damage, shoddy workmanship and contractors both licensed and unlicensed that disappear in the middle of a project. Licensing is not necessarily a measure of competence, skill, proficiency and ability and one could say that hiring an unlicensed contractor certainly is a hazard. Hiring a licensed contractor does imply that there is a level of experience, competence and that the licensed contractor is committed to his profession, as being licensed does involve financial obligations to maintain a license and the appropriate insurance and bonding requirements.

Many of our local licensed contractors find themselves competing with unlicensed contractors because working outside of the regulation box costs a lot less, therefore unlicensed contractors are able to underbid the jobs because they do not pay taxes, they do not have proper insurance, they possibly work out of their truck, they perform work outside the scope of a qualified licensed contractor. With the recession shedding stress on the economy, and with many people out of work, unlicensed people are running ads advertising as remodelers, painters, drywall repairs, home improvement, handyman, plumbers, landscapers, etc.

With the current economy unlicensed issues has created a larger headache for the construction businesses trying to work honesty and play by the rules. There is a rise in complaints through the Registrar of Contractors pertaining to unlicensed issues and local contractors are having to lay off workers just to stay afloat. The licensed companies are playing by the rules, paying taxes, paying insurance, they are boned and daily they are being underbid by unlicensed contractors from 20% to 35% on projects. These savings come with risks. Such as the “contractor” has taken off with your deposit or you are liable if someone is injured on the job because the “contractor” does not have insurance. And poorly done work or a bad repair can pose life-threatening hazards. There is unscrupulous activity going on.

Using a licensed contractor can protect you from a number of potential problems such as the following:

Unlicensed usually means uninsured. Using uninsured contractors mean the contractor has no way to reimburse you for any property damage. Likewise if the contractor leads to injury or damage to someone else’s property, the problem is likely to become yours. Most homeowner’s policies require that any work done to the property is done by licensed contractors.

Most building projects even minor ones usually require building permits and inspections. Unlicensed contractors are often unfamiliar with the applicable building code and cannot obtain a permit. Many times unlicensed contractors “borrow” someone else’s licensed number. If your project is not permitted or does not comply with building code, you will probably be ordered to either remove the structure or bring it up to code. You will almost certainly have to correct the issue if and when you try to sell your home.

Not all unlicensed contractors do poor quality work, and not all poor quality work is done by unlicensed contractors. If a dispute arises over the project, you are able to file a complaint with the ROC if the contractor is licensed. As the very least, the licensing agency has the authority to suspend or revoke a dishonest contractor’s license. The regulatory authorities cannot take this sort of action against unlicensed contractors. Therefore, homeowners often find that their only recourse is a civil lawsuit.

Even when a license is required, there is no guarantee that every contractor you encounter will actually have a license. While there are certainly honest and competent contractors in our area, the industry is unfortunately plagued with incompetence and con artists and scams. It is essentially up to you to protect yourself. Therefore when evaluating potential contractors, be diligent in your screening process. There a number of red flags to watch for.

Unsolicited phone calls. Although some reputable contractors market their services this way, it is more often than not used by unscrupulous companies. Be wary of bargain prices and contractors claiming they are doing a job in your neighborhood and they have left over materials.

High pressure sales pitches and scare tactics. Do not be forced in a contract by the words “today-only” deals or that your home has a safety issue.

Large down payments. If a contractor asks for too much money up front or insists you pay in cash, it can be a red flag.

No verifiable address or phone number. Be cautious of contracts that have a post office box, no street address or a cell phone.

Unwillingness to give you a price. A reputable contractor will give you a bid before beginning work on your project.

Unwillingness to sign a contract. Always get terms and conditions in writing, a description of materials used, labor break down, completion date, names of subcontractors and verify that all subs have insurance coverage and are licensed.
Ask for copies of workers comp and liability insurance coverage certificates.

We ask that you familiarize yourself with these issues to better your chances of being satisfied with a contractor’s work. Ask YCCA your locally recognized construction industry association to be your resource. Even after you hire a contractor, your work is not complete. You will need to remain in close contact with the contractor to ensure the work proceeds on schedule and according to contract. You may encounter complications or disagreements that need to be ironed our as the project continues. However, if you select your contractor carefully in the beginning, you are less likely to have problems later. While screening contractors may seem more work than the project itself, the effort can save enormously in money, annoyance and time.

Don’t be a victim – follow these quick easy steps for protection:
  • Seek referrals from someone you know who is happy with the contractor’s work
  • Make sure the contractor is licensed
  • Solicit bids from a minimum of three contractors
  • Be wary or proposals that are much lower than other bids
  • Insist on a written contract
  • Obtain a list of all subs working on the project and verify license status
  • Obtain all building permits before starting project
  • Withhold final payment until you are satisfied with the work performed
    Obtain a contractor’s affidavit that all subcontractors and suppliers have been paid before making final payment
  • Confirm all subs working on your project have workers comp insurance
  • Never pay in cash

Also, we would love to hear from you – What are you doing to go green? Are you using fluorescent bulbs, did you get an energy audit? Have you replaced your toilets? What “going green” measures have you taken and are these changes saving you money and making a difference? We want to share your experiences with our readers. How are you saving the planet?

Phone: (928) 778-0040


810 E. Sheldon Street, Prescott, AZ 86301

Powered by Wild Apricot Membership Software