Orlando Construction Inc. Blog

Why Should You Hire a Licensed Contractor

October 15th, 2009

By: Jim Wilburn, Orlando Construction Inc.

While speaking as a guest at an educational meeting for a local Real Estate Investor Group in Portland, I was asked, “Why should I hire a licensed Contractor?”  This brought to mind that many homeowners and investors ask this very question.  A home is usually the largest investment many people make in their lifetime.  Protecting your home against liability and risk is the most important decision you can make for yourself and your family.  Providing consumers with information on how to protect your home and hire a licensed Contractor is a priority for the Oregon Construction Contractors Board.

The CCB’s main focus for homeowners is to help them protect their investment and regulate the Construction industry to lessen risk for the public.  The CCB requires a licensed Contractor to have active General Liability Insurance, Workers Compensation Insurance, and a Surety Bond.  These three items are a key factor to protecting you as a consumer.  Here are some reasons the CCB and others warn against hiring an unlicensed Contractor:

• Hiring an unlicensed Contractor exposes a homeowner to paying for damage to someone else’s property and injuries incurred on their property.  For example, if your unlicensed Contractor loses grip on a piece of lumber, it falls off your roof, and damages your neighbor’s car. You are responsible for the damage.
• Most Homeowners Insurance Policies specifically exclude claims resulting in damage from hiring an unlicensed Contractor.  If you have any insurance claims due to water damage that was caused by an unlicensed Contractor, then your insurance company will not pay to fix the damage.
• A homeowner may be responsible for unpaid worker’s compensation, property damage, and liability incurred while working on your home.
• The Oregon CCB can impose a $1,000 fine to anyone who hires an unlicensed Contractor under Oregon Administrative Rule 812-005-0100 (14) “Knowingly assisting an unlicensed contractor to act in violation of ORS Chapter 701”.  Chapter 701 is the statute requiring licensure.

Can you imagine the cost of one claim?  The money you think you might save by hiring someone who says they can “do a good job”, but isn’t properly licensed will cost you far more than you can imagine.  In some cases, you may lose your home due to the financial burden of Mechanics Liens and Liability Claims.

Many material suppliers (i.e. lumber yard, flooring supplier, etc.) may file a “Right of Intent to File a Lien”.  Don’t be alarmed if you receive this notice in the mail.  It simply means that if your Contractor doesn’t pay for the material, you as the property owner are ultimately responsible to pay for the material.  A Contractor should obtain a lien release from their material supplier upon payment in-full.  You can request a copy of this letter for your records.

One thing I always tell my clients is “let me take the risk”!  This is my profession and I have the knowledge to mitigate risk for both my clients and my firm.  Many of my clients work hard to save money to purchase and remodel their homes and don’t want to put their largest investment and hard work in jeopardy.  As a licensed Contractor, our ethical duty is to educate, protect, and provide outstanding craftsmanship and customer service to our clients.  These values should be upheld and never be sacrificed to save a penny!  You can work with a licensed Contractor to achieve your budget goals through good planning and communication.

I hope this information helps you make informed choices when considering hiring a Contractor.  Your dreams can become reality with a little careful planning and screening of licensed Contractors.  Remember, you are putting the value of the largest investment of your life in someone else’s hands.  Building on-going relationships and asking friends and family for referrals will often yield the best results.

The Oregon Construction Contractors Board (CCB) provides consumer information on their website.

Orlando Construction Inc. is a 50-year old full service General Construction firm that specializes in Residential and Commercial Remodeling and New Construction.  Our principal, Jim Wilburn, is a Certified Green Professional (NAHB).  Feel free to call our office for any advice or to discuss your dreams at (503) 777-1127.

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