Unlicensed Contractors: Laws in California and Nevada

Thinking of getting construction work done on your home? Already had construction, but found out your contractor was not licensed? Various states have different rules and regulations when it comes to housing contractors. This specific area of law has a complicated set of rules and regulations, that is why it is important to contact an experienced trial attorney who specializes in California and Nevada housing contractor law. Heidari Law Group has offices in major cities such as Los Angeles and Las Vegas, and can assist you with contractor hiring laws, or potential construction contract lawsuits. If you have found yourself dealing with an unlicensed contractor, contact us today.

Who Should Be Licensed?

The law requires contractors, master developers, and subcontractors to all have their licenses to be able to work on buildings (commercial or residential real estate). A license is granted by the State Contractors Board. However, construction equipment manufacturers and retailers are not required to be licensed. The reason behind this regulation is to make sure that those who perform the work have the necessary background and knowledge. If not, the building could have potential construction defects and cause injury to future residents. If any injury results from the work of an unlicensed contractor, the unlicensed contractor is not liable for any damages.

Many contractors do not file for a license under their state to avoid paying fees such as registration and worker’s compensation insurance. For example, in California, the cost to apply for a contractor’s license would cost around $500, and $300 to renew yearly. Insurance would cost around $15,000. An unlicensed contractor will not be able to obtain permits through the city, and so the building they are working on will be not up to code, decreasing the value of the home or commercial building.

An unlicensed contractor oftentimes will offer their work for a substantially cheaper price when compared to estimates from other licensed contractors. Although the construction cost may be cheap, if an unlicensed contractor were to get hurt while working on your home, they could potentially file a lawsuit against you and collect damages since you are now considered their “employer” for hiring them.

California Unlicensed Contractor

California has a very strict set of laws when dealing with unlicensed contractors. Contractors must be licensed at all times of when the work is being performed. Generally, any homeowner cannot hire a contractor who is not licensed to work on their home. Both the homeowner and contractor could face liability, and potential fines. It is illegal for an unlicensed contractor to work as a “contractor” for labor that amounts to more than $500. Further, if there were any potential disputes between a homeowner and the unlicensed contractor, the unlicensed contractor cannot bring forth a lawsuit in court, and will be unable to collect any unpaid labor costs.

Under California law, any contract that a homeowner and an unlicensed contractor enter into will result in a misdemeanor.

For example, in Los Angeles, unlicensed contractors charged with a misdemeanor will have to go to Los Angeles Superior Court to answer charges. The misdemeanor charges could be 5-6 months in jail and a $5,000 fine.

Nevada Unlicensed Contractor

Many cities, especially Las Vegas, Nevada, have seen a surge in unlicensed contracting on residential housing this past year. Similar to California, Nevada’s State Contractor’s Board requires all contractors to have a license. It is illegal not only to perform a construction job, but Nevada makes it illegal for an unlicensed contractor to even bid on a job. When the construction job is $1,000 or more, the lead contractor must be licensed. An “unlicensed contractor” is defined in NRS 624.700 as one who “engages in the business of a contractor” or one who “submits a bid for a construction job.”

Misdemeanor charges include fines up to $1,000 and 6 months in jail. The Contractor’s Board assists in determining the fine, and fines may range from $1,000 to $50,000. Nevada increases fines and time spent in jail with every offense. To qualify as a licensed contractor in Nevada, one must have four or more years of experience in the construction business.

An exception to this Nevada regulation is when the homeowner is working on constructing the home themselves. The construction must be merely for personal use, and the homeowner will not be selling or leasing the property thereafter.

How Can You Protect Yourself?

Our attorneys at Heidari law group have some tips and tricks to protect yourself from hiring an unlicensed contractor.

1. Before hiring the contractor, request to see proof of their insurance and license.
2. Search their name on the State Licensing Board to see their standing.
3. Ask to see their bonding record. A license bond is a type of liability protection, and ensures financial security if a dispute were to arise between you and the contractor.
4. Avoid paying all cash to prevent any future missed payment allegation disputes.
5. Get multiple estimates and review their credentials before choosing a contractor.
6. For further assistance, consult our experienced attorneys.

Did You Work With an Unlicensed Contractor?

If you have worked with an unlicensed contractor, you may be able to file a lawsuit or a cross-complaint to recover for any payments made for labor and construction. The court will most likely consider the contract void, and you may be discharged for paying any labor fees. Contact our administrative law attorneys to best assist you through this process. If you were fraudulently led to believe that the contractor you were working with was licensed, you may be able to collect restitution damages. Contact our experienced trial lawyers today. To better understand how your case against an unlicensed contractor could advance in court, visit our litigation blog.

Restitution damages may include:

1. Court costs
2. The Nevada State Contractor’s Board investigation costs
3. The contractor’s pecuniary gain

Are You an Unlicensed Contractor?

If you are an unlicensed contractor, we may be able to lessen your fines and penalties. This is a serious offense, and should be handled by experienced attorneys. We could review your case, and see if you qualify for an exception. Our firm specializes in construction law. Learn more about our construction accident attorneys.

If you believe you have worked with an unlicensed contractor, and want to report the contractor, visit the Contractor State Board website to report any unlicensed activity. Both California and Nevada have sites where one could file a report or a complaint. When the report is filed, the Statewide Fraud will then launch an investigation into the activity that occurred. Once that occurs, a notice of correction will be filed.

If you believe you hired an unlicensed contractor, or experienced any problems with an unlicensed contractor, our experienced law firm can assist you. Contact the best personal injury law firm in Los Angeles for a free consultation today.

***Disclaimer: This blog is created by Heidari Law Group for educational purposes. This article provides a general understanding of the law. It does not provide specific advice. By using this site and reading through this blog, there is no attorney-client relationship created between you and any member of Heidari Law. Further, due to the constant change of the law, some parts of the information above may no longer be good law.