Hiring Contractors For Home Remodeling – Should You Use Unlicensed Contractors?

Contractors can make the process of completing a home remodeling project quite pleasant…or a total nightmare. So choose carefully. And if you choose to hire unlicensed contractors, be sure to know the applicable laws in your state…as well as the potential risks and liabilities you are assuming.

Even if you prefer to do it yourself (DIY), there will be times when you need the services of outside contractors. One way to save money is to act as your own general contractor and deal with the subcontractors and skilled labor directly — although you should be prepared to handle lots of associated headaches. You can try beating the bushes for reasonably-priced, high-quality workers on your own. It has worked well for me. For example, I learned that our hard-working maintenance gardeners were also competent at simple fencing, plumbing, irrigation, grading, and brickwork. Ask around through your network of friends and neighbors. Also, I’ve met good workers by chatting up the crowd on my trips to the local home improvement store (be sure to ask for references, though!).

However, I wouldn’t suggest doing it this way on large renovations or new construction — it’s just too much for an amateur to handle. But it has worked for me on the smaller updating, upgrading and enhancement projects that I focus on (although I’ve had my share of bad experiences).

Beware that if the workers you hire are not licensed, bonded and insured or if they are not legal residents, you might run the risk of getting entangled in legal or liability issues — not to mention ethical questions. If you hire unlicensed workers, be sure to check out the laws in your state. For example, in California, any contractor who is paid more than $500 for a job technically must be licensed by the state board. Also, unlicensed contractors are not covered by state worker’s compensation. The California Contractors State License Board (cslb.ca.gov) recommends that homeowners get at least three bids, ask to see their license, and be wary of door-to-door solicitors.

You can certainly save a lot of money by acting as your own general contractor and hiring your own specialty subcontractors — licensed or unlicensed. However, when you use unlicensed workers, you might end up spending a lot more if you have to bring in people later to fix problems. So make sure you have confidence in who you hire — particularly for plumbing and electrical, in which the consequences of shoddy work can be catastrophic, and likely leave the liability squarely on your shoulders.

Let me leave you with one more tip. Try to avoid paying any contractor in advance — for construction materials or anything else. There is nothing worse than having a contractor start the demolition stage, but then leave your project idle for days at a time because another (ostensibly more important) client needs him to do a new project or repair an older one. You won’t be in a position to fire him and bring in someone else if you’ve already paid him a chunk of money upfront — and all the while your house remains a shambles from the demo. In other words, don’t give away all the leverage!

Seek simplicity, comfort and value!