Unlicensed contractor bad idea?

Question

Hello,

I have a friend that is a unlicensed contractor. I trust him, but is there anything I should not let him work on? I know the majority of people say to only higher licensed, but I feel that he would do a good job. What insurances would you recommend? I flip houses, not sure if that impacts anything.

Jeff Kao · Answer

@Sean S.

Thanks for asking that question. Here's a thread I found:

https://www.biggerpockets.com/forums/67/topics/207159-non-licensed-contractor

Lynnette E. · Answer

unlicensed contractor=handyman.  Use him when you would normally use a handyman.

Kevyn Miyata · Answer

As Bob mentioned, yes it is your responsibility. You should be able to verify the validity of a contractor's license on your State Contractor License Board's website. And yes, you should ask for a certificate of insurance that shows you are listed as additional insured. It shouldn't cost anything extra for that. I'd want a waiver of subrogation, which may cost as much as a few hundred dollars.

Bob Okenwa · Answer

@Sean S.

Yes it is your job to verify. It is your money and your property on the line. I would never take someone on their word with something like this when there is that much money and liability on the line. Cutting corners usually ends up with worse results in the long run.

Sean S. · Answer

@Kevyn Miyata

If a contractor tells me they are licensed is it my job to verify? Or can I assume they have told me the truth?

Kevyn Miyata · Answer

A licensed contractor would typically have liability insurance, where an unlicensed one would not. You should be named additional insured on their insurance certificates - general liability, auto, and workers comp. Their insurance company/companies should be licensed in the state the work is in. In CA, contractors need a bond for their license, which you could go after to recover damages. The threat of losing their license is a good tool to ensure your work is completed and done so to the area's industry standards.The last thing you would want is for your friend to hire someone, who proceeds to get hurt and causes a fire. The worker could sue your friend and you. Without insurance(which he couldn't get or the work wouldn't fall under the policy and would negate said policy) you'd be liable for the worker's injuries and the damages to your flip. If you have a contract with your friend, you might get back whatever the max is in small claims court. Otherwise you're likely SOL. You have no recourse with an unlicensed contractor. (assuming your flip isn't just a maintenance job)I am not a lawyer. This is my opinion based on my experience managing construction projects and contracts.

Unlicensed contractor bad idea?

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