An unlicensed contractor is someone who works on clients’ homes without having the appropriate licenses to do so in their state of operation. Penalties for performing unlicensed work as a contractor can vary depending on the state in which the work is being performed. The penalties may be as severe as a felony charge and up to five years in prison in some states. Other states may only impose misdemeanor charges and fines.
Most states require that contractors be licensed in order to perform work on behalf of a client. The requirements for obtaining a license can vary from state to state but usually involve passing an examination and proving that the contractor has a certain amount of experience in the field. You can check out the contracting licensing requirements for your state on our website.
Contractors who are caught performing work without a license may be subject to civil penalties, such as fines or injunctions. In some cases, they may also be criminally liable and could face fraud or theft charges. Unlicensed contractors cannot charge as much as their licensed counterparts because they avoid the expense of obtaining proper licensing and general liability insurance. This can make them miss out on money and leave homeowners without recourse if something goes wrong on their property.
Some states impose civil penalties in addition to criminal, charging the unlicensed worker up to $500 for each day they worked. Homeowners are not required to pay if the contract is invalid, so contractors can lose money that way, too.
Unlicensed contractors may also find it difficult to obtain insurance or bonding, which can protect both the contractor and the client in the event of a problem with the work performed. This can make it extremely risky for homeowners to hire an unlicensed contractor, as they may not be able to obtain compensation if something goes wrong.
Judgements against unlicensed contractors will follow them for years afterward, so even if they get licensed, this information can come up even when they operate legally and they can potentially lose clients.
Overall, it is best to be a licensed contractor whenever possible. Not only will this help you avoid significant penalties, but it can also protect the homeowner from potential problems.