As a homeowner, you may get excited over the possibility of making major improvements to your home. Whether it’s putting an addition, remodeling your kitchen or adding outdoor space with an amazing brick paver patio, the possibilities are endless.
While you might be able to handle some of these projects on your own, there also might come a time when you simply can’t handle the work yourself. In these cases, you’ll need to hire a contractor who’s experienced in whatever project you want to undertake.
When you go this route, you’ll want to make sure that you do your research and vet prospective contractors before deciding who you want to hire. While you may be tempted to go with an unlicensed contractor because they are less expensive, there are major risks of doing so.
We’ll describe some of the risks of hiring an unlicensed contractor below.
Importance of a Contractor License
Contractors who perform certain types of work in the state of Michigan need to have a license. While the rules and regulations may exempt certain “handy-man” contractors, most if not all large companies that work on bigger projects will require one.
Contractor licenses are essential, as they ensure not only accountability but also recourse in case they perform poor-quality work or create safety hazards on the job. Not only that, but a license verifies that the contractor has sufficient knowledge and experience in their field of work.
The Department of Licensing and Regulatory Affairs, known as LARA, is the agency responsible for issuing and regulating contractor licenses in Michigan. They not only set the standards for different licenses, but handle the application and approval processes, as well as ongoing maintenance needed.
Types of Licenses: Residential Builders License and Alterations Contractor License
There are two main types of contractor’s licenses in Michigan. Both require that the person applying for it complete a 60-hour pre-licensure course and pass a formal examination.
The two main licenses are …
- Residential Builders: The residential builders license allows contractors to work on residential construction projects in the state of Michigan.
- Alterations Contractor: The alterations contractor license allows contractors to work on alteration and maintenance projects.
There are also other types of licenses available in the state, such as the general contractor license and the electrical contractor license. All will have their own specific criteria for obtaining and keeping them.
Risks of Hiring an Unlicensed Contractor
There are many major risks you take by hiring an unlicensed contractor.
First, you won’t have any true accountability or recourse if you hire a contractor who doesn’t have a license. They might not have the necessary bonding or insurance to protect you in case they perform poor-quality work or if an accident happens at the job site.
Unlicensed contractors are much more likely to not have these protections in place than licensed ones, since the license requires them to carry certain levels of insurance and bonding.
If you ever have an issue or dispute with your contractor, your options for recourse will also be limited if you hired an unlicensed contractor.
In addition, there’s a higher possibility that you may receive poor work quality or be presented with safety hazards if you hire a contractor who doesn’t have a license.
Since unlicensed contractors aren’t forced to go through the necessary courses and training, they might not have the experience or knowledge necessary to perform the work correctly and in a safe manner.
In the near term, this could result in safety hazards while the job is going on, which could result in people getting injured. In the long term, it could result in poor work quality, which could result in costly repairs down the line.
Consequences of Unlicensed Contracting
When you hire an unlicensed contractor, you are also taking on a direct financial liability.
Contractors themselves can face fines and penalties that range between $500 and $5,000 if they’re caught performing a job for which they don’t have a license. They could also face other legal consequences, including the possibility of time in jail.
One potential consequence is the contractor might have to pay the homeowners restitution if their work caused any losses or damage.
The repercussions aren’t limited to just the contractors, though. Homeowners also could face legal consequences and fines if they knowingly hire an unlicensed contractor.
Verifying a Contractor’s Credentials
So, how can you verify whether a contractor has the proper licenses and credentials to do your job?
First, check with the state licensing board to verify their contractor’s license. In this case, it will be the Michigan Department of Licensing and Regulatory Affairs, or LARA, which can be found online here.
There are also other online resources available, including licensing databases where you can search for an active contractor’s license by their name.
These are important steps for any homeowner to take before hiring a contractor.
Insurance and Bonding Requirements
Some of the requirements of obtaining and keeping a contractor’s license in Michigan is to have insurance and bonding with certain minimums.
These are both essential tools that protect homeowners in case of poor work quality of accidents on the job. They also ensure that the contractors have the necessary financial resources to complete the projects they take on.
Some of the bonding and insurance that’s required of contractors in Michigan include …
- Liability insurance: This general insurance protects homeowners and others on the property in case there is an accident or an injury that occurs.
- Workers’ compensation: This insurance policy protects the employees of the company in case they suffer a work-related injury while at the job site at your house.
- Surety bonds: These bonds ensure that contractors have the necessary financial resources to complete the projects they’re working on.
Specializations and Trade Exams
In Michigan, trade exams will test a contractor’s knowledge and skills in their particular field. Some of the specializations that are available in the state include mechanical, plumbing and electrical contracting.
Each of these specializations have slightly different requirements, which are laid out here …
- Mechanical: Contractors have to pass a trade exam and have at least three years of experience in the field.
- Plumbing: Contractors have to pass a trade exam and have at least 4,000 hours of experience in the field.
- Electrical: Contractors must pass a trade exam and have at least 12,000 hours of experience in the field.
Alteration Contractor License: What You Need to Know
Alteration contractors also must obtain specialized licenses in Michigan. There are different requirements, costs and timelines for applying for and obtaining this license.
All in, the alteration contractor license will cost about $500 — $195 for the application fee, $117 for the examination fee and $185 for the license fee.
Application processing typically takes between two to four weeks. Examination scheduling usually takes one to two weeks, and license approval usually takes another two to four weeks.
License Renewal and Continuing Education
Contractors licenses aren’t a one-and-done situation in Michigan. They must be renewed according to a set timeline, and there are continuing education requirements as well to ensure everyone is up on current rules and regulations.
Contractors must complete three hours of continuing education every two years and pay a renewal fee of $185.
What continuing education does is ensure that contractors stay up-to-date with all technologies and standards of the industry, as these things can change dramatically over time. It also helps to improve contractors’ knowledge and skills in their field, which ensures top-notch work and standards.
Hiring a Licensed Contractor: Best Practices
If you’re looking to find a reputable contractor, there are a few tips you should follow.
Check all online reviews and ratings to see what other people say about the contractor. You can also ask for referrals from friends, family members and trusted colleagues.
No matter where you find the contractor, make sure to verify their license and insurance.
Some possible red flags are if the contractor has poor online ratings or reviews. If they are unwilling to provide you with proof of insurance or references, then it also could be a bad sign.
Trust All Brick for Your Next Masonry Project
Getting a home improvement project done can be very exciting. If you hire an unlicensed contractor, though, it can result in disaster rather than fulfilling your dreams.
That’s why it’s important to properly vet all prospective contractors to ensure you are hiring one with all the proper licenses, insurance and bonding.
At All Brick, we have been perfecting the art of masonry for the last 10 years, serving clients all throughout Southeast Michigan. We are a company that you can trust for your next masonry project.For more information or what we do, or to get a free quote, please contact us today.
