General Contractor license

10 Replies

Does anyone usually verify that the general contractor they are hiring are licensed and insured? How does one verify this information?

In Florida, the Department of Business and Professional Regulation provides oversight for the construction industry.  I would assume Texas has an agency that does the same.  You should be able to search an individual or a company on their website and figure out if they are licensed or not.

License, online with the state/county licensing division.

Insurance, Only by an insurance certificate (Accord form) directly to you from the insurance agent.

@Ben M. . There is NO Texas requirement for a License to act as a General Contractor. Matter of fact, there is no Licensing Agency for building contractors in Texas. Number of years ago, the Legislature instituted a requirement to Register if you were acting as a Contractor. Requirement went away a couple years later.  

You may want to ask about the contractor's Insurance, but no requirement to be licensed in Texas. 

@Jim Cummings

Jim is 100% right.

I would also call the insurance agency to make sure their insurance is still valid. Many contractors pay for the initial payment, get the binder and then stop making payments. 

Originally posted by @Ben M. :

Does anyone usually verify that the general contractor they are hiring are licensed and insured? How does one verify this information?

Most cities require a "license" to do business in that city. It basically amounts to paying an annual fee and having a set bond on file. Usually like a 5k bond or something. Check with your local code enforcement to see what they require. If they do require one they can't pull a permit without it. 

Many cities even require a credit check or a back ground check. Some don't want anything. San Augustine Texas had a code enforcement office but no inspector. I waited a week for a slab Inspection until they finally told me they don't have one. But they sure wanted that permit money. New Braunfels wanted everything I could give them. I asked if they wanted my DNA too. (Don't recommend that one though as they didn't take it very well). 

I have never pulled a permit in Houston yet but I am sure they require something. 

Originally posted by @Ben M. :

Does anyone usually verify that the general contractor they are hiring are licensed and insured? How does one verify this information?

 I don’t. I’m a pretty simple guy. I look for someone to do X job for $y. If they can do it they do it and I pay them

I don’t give a crap if they have the governments paper blessing. 

@Ben M. Like previously mentioned in most cities in the State of Texas, all a general contractor has to do to pull permits is register with the city, which may include providing proof of insurance, possibly references, and in some cases authorizing a background check. What wasn't mentioned is there are several cities in the state like San Marcos which requires a general contractor to pass the national ICC's contractor exam which can be taken at numerous testing facilities and is similar to the licensing requirement in a lot of other states. I know initially there would be lots of screaming and gnashing of teeth if this was a state requirement, but I don't see how someone can justify why my barber needs a license, but the person responsible for building my home doesn't. Full disclaimer, I have taken and passed this exam so I don't have a problem with the requirement. As far as insurance goes, you can ask to be named as a certificate holder for proof of current insurance or just call the number on the policy. I've worked in the industrial field for years, and it's not worth it to me to allow people to work without insurance. The extra cost is minor compared to the cost of one accident that you could personally be held liable for.

@Ben M.

http://www.houstontx.gov/obo/solutionscenter/guide...

page 2

"PRIME AND/OR GENERAL CONTRACTORS ARE NOT PROFESSIONALLY LICENSED IN HOUSTON OR BY THE STATE OF TEXAS. THERE IS NO “GENERAL CONTRACTOR LICENSE”."

basically Houston doesn't believe in general licenses. 

how to hire one

https://www.biggerpockets.com/renewsblog/2015/03/1...

as stated above try to find a bonded/insured contractor.

managing your contractors

https://www.biggerpockets.com/renewsblog/2010/04/1...

additional tip

https://www.biggerpockets.com/renewsblog/2015/05/1...

paperwork to help make sure you don't get screwed

https://www.biggerpockets.com/renewsblog/2010/04/0...

Thoughts?

B

I have written about this topic a lot, because its an often confusing and tiring conversation for most.

The facts are easy thought;

If you want to be hands on and very involved (i.e. reviewing paperwork, interviewing trades, selecting materials, etc) then you shouldn't hire a GC.
You are the GC. If you are concerned about someone overseeing the project (super) or making sure your pricing is right (estimator) then you can hire those things out; like a GC does.

Its never advisable to hire a contractor and just walk away hoping things get done. Visit regularly, or hire someone who will. You can hire inspectors (like the ones who look before you buy) who will do "phased inspections" at certain parts of the project. (before inspections of dirt work i.e. ground cover inspection, rough plumbing/electrical, framing/structural, HVAC, and so on. To not only make sure that it will pass, but to insure that you get better than a basic city/county inspection. Just remember that being an investor doesn't mean "cheap".

Individuals, REIT's, PM companies, and even local governments have hired me as a consultant to provide fact-based info on projects for years. I can tell you that its not easy to find pro's to work with. I will also tell you that proclaiming "Im an investor" when you are early in the game will only chase away the real pros, or leave you jumping through way more hoops than need be.

Not everyone likes to pay people to do things like I do, and I totally get that. I can paint a house and install tile (started as a Handy Man 20+yrs ago) but I still hire that out, and pay well for it. I know that hiring the guy/girl who does something day in and day out is way better than me at it, and can save me time/money/frustrations. I just figure into ever project I do as an investor what it will cost to have me do nothing. Again, hiring someone to do everything including the inspections. The reason is simple. I can do everything, but I am an investor; not a handy man or contractor or superintendent. Sure, I do my own inspections, but what if something happens and I can't. Then I don't get "extra" money, I am losing my profits.

Note- Broke my wrist once and had to hire out all the little stuff I was going to do to make the project a deal. I wound up making 4k and paid out 12k in the "little stuff" I was going to do. Made me realize, my numbers were emotional and incomplete when I did them for myself. Since then I don't assume anything other than the project will need someone else to do everything. Plus..it allows me to one day step out completely and pay someone to do the few things I still do.

Good money = Good work = Good project = Good profits.