If you are considering hiring a contractor to work on your property – whether it is to perform minor repairs or major remodeling – there are several things you need to consider beforehand.
- Is the contractor licensed, bonded and insured?
Generally speaking, if you hire someone to do work which “adds or subtracts to real estate,” the work must be performed by a contractor who is registered with the State. (Certain trades are exempt from this requirement, including lawn mowing, gutter cleaning, and window washers). Unfortunately, there are no special competency examinations or requirements for the majority of trades (two exceptions being electricians and plumbers), so it is important to recognize that simply because a contractor is registered does not mean that he/she has sufficient knowledge and/or skills to perform the work. Thus, it is critical for you to check references, and personally inspect other work that the contractor has performed. That being said, it is illegal for an unlicensed contractor to perform work on your property. If you hire a contractor who is not licensed with the State and something goes wrong with the project, you will not be afforded the protections available under State law. Further, a contractor who is not properly licensed at the time he/she performed the work on your property cannot sue you for breach of contract (i.e., for failing to pay for work performed).
Contractors who advertise or submit bids are required to be bonded and to carry general liability insurance. General contractors are required to maintain a $12,000 bond; specialty contractors (such as roofers or carpenters) must maintain a $6,000 bond, and electricians are required to maintain a $4,000 bond. All contractors except for electricians must maintain general liability insurance in the amount of $250,000 per combined single limit. If the contractor fails to perform the work properly, you may be able to pursue a lawsuit against them, and seek recovery out of the bond and insurance proceeds.
- Does the contractor have employees?
If the contractor has employees, they must have worker’s compensation insurance. If your contractor fails to maintain worker’s compensation insurance, you may be exposing yourself to additional liability under certain circumstances.
- Is the value of your residential project greater than $1,000?
If your project will cost more than $1,000, the contractor must provide you with a written disclosure form entitled “Notice to Customer,” which advises you of your potential rights should a claim arise, including disclosures on bonds and lien rights.
- Put it in writing!
It is critical to have a written contract for the work that is to be performed. At a minimum, the contract should include a detailed description of all work that is to be performed, the cost, payment terms, permit fees, taxes, estimated start and completion dates, how changes in the work will be addressed, materials to be used, and how disputes will be resolved. The contract should also specify procedures for final inspection and punchlist completion, and when final payment is due. You should require copies of all lien releases before making the final payment on the project to ensure that all suppliers and second-tier contractors have been paid.
- Verify that the Contractor is currently registered with L&I through L&I’s website: contractors.lni.wa.gov.
The contractor may have been registered at one time, but that registration may have expired or the expiration date may be prior to the anticipated start-date of your project. It is critical that you verify the current status of the contractor’s registration.
- Consider hiring an attorney.
It may be worth retaining an attorney to review larger contracts before you enter into them to ensure you are properly protected. And be sure to consult with an attorney if you encounter problems with your contractor’s work during the project, or after the project has concluded.
Woodinville Law offers the information in this article as a resource for general information that relates to our areas of practice. This article is not intended, and should not be considered, to be a source of legal advice. You should not rely on this information and always should seek competent legal advice from an attorney licensed in your jurisdiction.
The information contained in this article is not an invitation to create an attorney-client relationship, and transmission and receipt of the information does not constitute an attorney-client relationship. While we make every reasonable effort to provide accurate information, the information is not guaranteed to be complete or to reflect the most current legal developments at the time of publication.