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Avoiding The Problems of Hiring an Unlicensed Construction Contractor in Washington

On Behalf of | May 12, 2011 | Uncategorized

After 30 years working for the same company in Seattle, Washington, Joe and Jane Smith just retired and happily decided to move back to their childhood hometown, Vancouver, in Southwest Washington. Instead of selling their Seattle home, they decided to have some repairs and remodeling done and rent the home in order to earn some extra money during their lean retirement years. Joe and Jane thought they knew a qualified contractor in Washington to perform the work on their home. They had recently seen a construction contractor’s truck parked across the street a few months ago, and had seen the contractor repair their neighbor’s home. The contractor must be qualified, Joe and Jane thought, since the truck advertised in big letters that the contractor was “Licensed * Bonded * Insured.” They hadn’t heard any complaints from their neighbors, although, admittedly, the neighbors were also renters who weren’t around much. Everything sounded good enough, right?

Wrong! What Joe and Jane didn’t know is that the contactor, even with his truck advertising that he was licensed, bonded, and insured, was actually none of those things. In fact, even though construction contractors are required by Washington law to be registered (licensed), bonded, and insured (see RCW 18.27, et. seq.), Joe and Jane’s contractor had previously made the decision to make his money “under the table” and to not register with any Washington state agency.

Unfortunately, Joe and Jane trusted what they saw advertised on the contractor’s truck, and what he verbally told them later about his qualifications and contractor licensing, bond, and insurance status. The contractor was a real salesman and the type of person anyone would like to have over for dinner. Placing their trust in the contractor, Joe and Jane signed a contract with him for about $40,000 for repairs and remodeling to the exterior of their home, and they gave him a $10,000 down payment.

Work began the next day and seemed to be moving along just fine, so Jane and Joe paid the contractor an additional interim payment of $15,000, leaving the remainder due upon completion. With the construction work about two-third’s finished, a long three-day holiday weekend came. The contractor stopped work for the weekend and was to resume the following Tuesday. He never did. Instead, the contractor simply vanished, leaving the repairs and remodel only partially complete and, in some cases, completed but riddled with shoddy work and construction defects.

After having the home inspected by a real, bona-fide contractor, Joe and Jane discovered that the $25,000 they had already paid the contractor was only about one-half of what it would now cost them to complete the unfinished work and make repairs to the defective construction already completed by the unlicensed contractor. The $40,000 good deal had turned into a $75,000 disaster.

Jane and Joe immediately contacted a Washington construction law attorney and were quickly alerted, for the first time, that the contractor they hired was not licensed. As a result, they had few options to get their money back from him. They could have filed a lawsuit for breach of contract against the contractor, but he had vanished and likely had few assets to collect against. Normally they would have been able to file a lawsuit to collect up to $12,000 against his contractor’s bond, but in this case, he had no bond. Likewise, a lawsuit against the contactor would normally trigger the contractor’s insurance carrier to come in and defend the contractor and potentially pay Jane and Joe for the contractor’s faulty work. Of course, in this case there was no contactor’s insurance policy, either, and Jane and Joe’s home owner’s insurance policy did not cover defective construction work. Now faced with having to come up with an additional $50,000, Joe and Jane are forced to deplete their savings scarce resources and most likely will have to go back to work.

This scenario, however, could have been avoided. Although even a license, bond, and insurance won’t guarantee that the contractor will perform his or her work perfectly, Joe and Jane would have had more remedies available to them if they would have hired a licensed contractor from the get-go.

The moral of the story? Do your homework before allowing any contractor to perform work on your property. What seems like a quick fix, or a deal that’s too easy, or too good to be true, probably is just that.

The following are a few easy steps you can take to protect yourself and hopefully avoid the same troubles as Joe and Jane:

1. Ask the contractor to see his or her licensing information. Don’t stop here, however, since the contractor could simply forge, faslify, or make up fake documents.

2. Contact the Washington Department of Labor & Industries (L & I) to verify the licensing status of the contractor. L & I will be able to tell you whether the contractor is registered/licensed, bonded and insured. L & I will also be able to inform you whether there are any current or past lawsuits against the contractor (that it was informed about). You may call L & I at 1-800-647-0982 or access L & I’s easy to use web page for looking up a contractor and his licensing, bond and insurance status.

3. Obtain and check references. This includes checking with people that have had work performed by the contractor and also those who may have worked for the contractor, for example, subcontractors and laborers.

4. Contact a construction law attorney to check licensing status and/or to assist you in drafting or making recommended changes to the construction contract between you and the contractor (assuming the contractor is licensed – if not, a good construction attorney will quickly discover this and inform you before it’s too late).