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Hiring a Licensed Contractor Makes Good Sense

“Not a licensed contractor.” You may have seen or heard these words at the end of ads for contracting services. Why would someone add this statement? Because it’s the law. A.R.S. 32-1121A-14(c) requires that the advertising party, if not properly licensed as a contractor, disclose that fact on any form of advertising to the public by including those specific words. Licensed contractors will add the letters “ROC” and their license number.

The Arizona Registrar of Contractors strictly governs the licensing of those who perform any type of construction. Violations of the state’s contracting requirements are punishable by up to six months in jail and a $2,500 fine plus surcharges.

But what does that mean in practical terms for the customer seeking building services? In one word: PROTECTION. In the current economic climate, everyone wants and deserves the most value for their money. While unlicensed contractors may be able to offer services for a lower price, the disadvantages of hiring an unlicensed contractor far outweigh any perceived financial benefit.

In order to obtain a contractor’s license, the applicant must prove they have the necessary experience (four years for most categories) and must pass a business management test. They may also be subjected to a criminal history background check and must not have any unresolved contracting complaints outstanding. They must also have the financial resources to obtain a contractors bond.

Licensed contractors are also required to pay into a Residential Recovery Fund, whereby a “person injured” as defined by statute can recover losses incurred due to poor workmanship or non-performance by a licensed residential contractor. An unlicensed contractor can simply walk off the job with no repercussions.

There is also the issue of liability. Licensed contractors are required to carry two types of insurance, general liability and worker’s compensation. It is the customer’s right to ask for proof (certificates of insurance).

General liability insurance protects both the customer and the contractor in several ways. During the project, it covers contracting damage or accidents that may occur on the premises. It also insures that products and workmanship will be covered after the project is completed. An unlicensed, uninsured contractor has no obligation to warranty their work.

Worker’s compensation insurance covers 100 percent of any injuries to workers on the job. For example, if an unlicensed contractor or their worker falls off a roof or is otherwise injured on the premises, the homeowner will likely be personally liable, because the accident happened on the homeowner’s property. Obviously, this could have serious financial consequences!

But some may ask, “I just want to do a small project, why can’t I just hire an unlicensed handyman?” Under Arizona contracting laws, there is an exemption for a handyman for minor repairs or installations, but it is well defined as:

1. Work that does not need a building permit, and 2. The entire project or scope for work cannot exceed $1,000, including labor, materials and all other items.

Because the unlicensed contractor doesn’t have to pay for the cost of licensing, bonding, paying into the recovery fund and carrying liability and worker’s compensation insurance, they often are able to underbid a licensed contractor. The customer may be tempted to save money, but when any perceived financial advantages are weighed against the potential risks, it makes sense to go with a licensed contractor.

The Arizona Registrar of Contractors website (www.azroc.gov) offers a vast amount of information, including a contractor search that can tell you if a contractor is licensed, the status of that license and the history of any complaints against that contractor.

But making the decision to hire a licensed, bonded, insured contractor is only the first step. The second important step is to research the contractor’s references and experience with your type of project. In upcoming articles, we will discuss numerous aspects of the construction process, from initial concept and budgeting, through the finished product. FBN

(Kevin Baltzell is the owner of Harmony Builders, Inc., a full service general contractor celebrating 20 years in business in Flagstaff. Kevin can be reached at 928-779-2347 or visit Harmony’s website: www.harmonybuildersinc.com.)


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