# unlicensed subs



## thom (Nov 3, 2006)

My state (NM) supreme court just ruled, an owner has no responsibility to pay for work done by unlicensed sub-contractors. 

The case was a major stucco contractor that hired an unlicensed sub contractor to do a re-stucco. The court said the owner had no obligation to pay for the work. 

In my state, an unlicensed contractor has no expectation of being paid and no right to lien or sue. This now extends to work contracted to the owner by a licensed contractor when he hires an unlicensed sub contractor.


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## katoman (Apr 26, 2009)

Are you referring to a business licence or a trade licence?


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## TxElectrician (May 21, 2008)

Good.

Wish every state would adopt the ruling.


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## katoman (Apr 26, 2009)

Agree, that's one sure way to get rid of the hacks. :thumbsup:


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## thom (Nov 3, 2006)

katoman said:


> Are you referring to a business license or a trade license?


I'm referring to a business license. In NM all contractors must be licensed by the state. This requires a minimum of 2 years full time documented experience (W-2's from licensed contractors) then passing a trade specific test and a business and law test.

It will be fun watching how this plays out over the next several years. What happens when a contractor does not do withholding taxes on his "employee"? Does the unpaid contractor argue that he violated state and federal law by not withholding taxes and by not paying the employers portion of Fica and Futa and paying unemployment, or does he argue that he hired an unlicensed sub. In either case, I think it's pretty clear that t contractor trying to avoid employment law and taxes is pretty well screwed.


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## kevjob (Aug 14, 2006)

:thumbup: Hell yeah! Now get them to come to Denver and we can clean up the jerk offs real quick. :thumbsup: Re doing a bathroom in basement now where the hackyman nailed 2x2s for studs and plates to drywall on ceiling, not framing and ran electrical between plates and drywall ceiling, cut out 15 studs to run a sink drain horizontally 11 feet with no vent and back pitch. Electrical worked at some point then didn't, opened all walls and ceiling and found 5 hidden junction points in a 5x7 bathroom. :blink:


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## loneframer (Feb 13, 2009)

thom said:


> I'm referring to a business license. In NM all contractors must be licensed by the state. This requires a minimum of 2 years full time documented experience (W-2's from licensed contractors) then passing a trade specific test and a business and law test.


 One of my employees moved to New Mexico and went to work for a builder. Later, he applied for his contractors license. I got several phone calls over the next few weeks from NM officials following up on his app. They were very thorough as to time of employment, trade specific work experience as well as questions about work ethic and dependability. You fellas take this very seriously in NM.


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## rselectric1 (Sep 20, 2009)

kevjob said:


> :thumbup: Hell yeah! Now get them to come to Denver and we can clean up the jerk offs real quick. :thumbsup: Re doing a bathroom in basement now where the hackyman nailed 2x2s for studs and plates to drywall on ceiling, not framing and ran electrical between plates and drywall ceiling, cut out 15 studs to run a sink drain horizontally 11 feet with no vent and back pitch. Electrical worked at some point then didn't, opened all walls and ceiling and found 5 hidden junction points in a 5x7 bathroom. :blink:


Basements are *by far* the area where we find most of these types of things. I have found the work was usually done by the HO, or the "low bid" guy.

Bring that law to Illinois too!


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## jarvis design (May 6, 2008)

kevjob said:


> :thumbup: Hell yeah! Now get them to come to Denver and we can clean up the jerk offs real quick. :thumbsup: Re doing a bathroom in basement now where the hackyman nailed 2x2s for studs and plates to drywall on ceiling, not framing and ran electrical between plates and drywall ceiling, cut out 15 studs to run a sink drain horizontally 11 feet with no vent and back pitch. Electrical worked at some point then didn't, opened all walls and ceiling and found 5 hidden junction points in a 5x7 bathroom. :blink:


 
Sounds like my basement bathroom when I gutted it!!


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## Paulie (Feb 11, 2009)

How about the same law for every state. :whistling


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## Astrix (Feb 23, 2009)

Sounds like a positive development. Good for New Mexico.

I would hope that part of the qualification would include proof that they have appropriate insurance.

Another thought: Is there any consideration given as to how to handle general contractors who *knowingly* hire unlicensed subs? I would think that unscrupulous GCs might search out unlicensed subs with the idea that they can then get free labour.


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## Astrix (Feb 23, 2009)

Nevermind. I just read the original poster's message again and it answered my question - i.e. owner does not have to pay a GC who hires unlicensed subs.

Guess I better put the reading glasses on.


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## bwalley (Jan 7, 2009)

Astrix said:


> Sounds like a positive development. Good for New Mexico.
> 
> I would hope that part of the qualification would include proof that they have appropriate insurance.
> 
> Another thought: Is there any consideration given as to how to handle general contractors who *knowingly* hire unlicensed subs? I would think that unscrupulous GCs might search out unlicensed subs with the idea that they can then get free labour.


In Florida a GC or a HO can hire unlicensed contractors or sub contractors and the unlicensed contractor or sub contractor has no lien rights, or the ability to sue.


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## Ayerzee (Jan 4, 2009)

yeah around here there is nobody to enforce any codes or anything....Seems like just about any yahoo with a pick-up truck owns a construction company now and is a "carpenter"


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## izzy (Oct 6, 2009)

katoman said:


> Agree, that's one sure way to get rid of the hacks. :thumbsup:


I have held multiple licenses before, but lets face it there are plenty of hacks with licenses.
Sounds like a good law to hold GCs accountable. But I think caution needs to be taken so that this law doesn't encompass the home owners responsibilities outside a contract were a general is not used. Bigger government is definitely not the answer.


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## jimmys (May 1, 2009)

*business, trade = different?*

In my rural village, a business license cost $10 every 3 years and guarantees nothing, just says you registered with the town. Trade licenses are state-level. We register as Home-improvement contractors, and get licensed as Construction Supervisors, both with Mass. CS must be earned by testing, costs a lot more, and both HIC and CS are required for getting permits. If NM is similar, restricting the business license wouldn't stop any hack from doing anything except saving the small fee to the town. I like the theory, though for the state licenses, and might mention it to my state Rep.
Jim


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## thom (Nov 3, 2006)

We have multiple levels of licensing in NM.

Electricians, Plumbers, and Tinners need journeyman's licenses. That license allows them to do the work but does not allow them to be a contractor for the work.

All contractors must have a contractors license. This is trade specific. It requires a minimum of 2 years full time experience (as an employee of a licensed contractor) then passing the trade specific test and a business and law test. 

Most local governments require a business license to work in their jurisdiction. This license is just a form and some money.


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## Kent Whitten (Mar 24, 2006)

katoman said:


> Agree, that's one sure way to get rid of the hacks. :thumbsup:


I'm going to agree with izzy. I don't feel that having a license will get rid of hacks. I feel they will still be there, just licensed hacks. I think that it will get rid of some to most though.

Maine will not join the license party. Anyone can become almost anything they want to with a business card. Electrical, HVAC, and Plumbing are the only trade ones I know of. I think LV has a separate one, but not sure.


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## Kycym (Nov 23, 2009)

thom said:


> My state (NM) supreme court just ruled, an owner has no responsibility to pay for work done by unlicensed sub-contractors.
> 
> The case was a major stucco contractor that hired an unlicensed sub contractor to do a re-stucco. The court said the owner had no obligation to pay for the work.
> 
> In my state, an unlicensed contractor has no expectation of being paid and no right to lien or sue. This now extends to work contracted to the owner by a licensed contractor when he hires an unlicensed sub contractor.


As much as I hate fly-by-night contractors (the unlicensed sub may such) was the "major stucco contractor" licensed? Was the contract between the Owner and the "major stucco contractor"? Will the court say that because the "major stucco contractor" was trying to save a buck and use the cheapest guy with a used van who was willing to do stucco work the Owner has no obligation to honor the contract with the "major stucco contractor"? Or is the Owner still obligated to honor the contract, pay the "major stucco contractor" and that guy does not have to honor his agreement with the non-licensed sub and such walk away with a whole bucket full of money.

Wow, laywers are gonna have fun with this concept.


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## d-rock (Oct 17, 2009)

from what I've read, in NY a subcontractor is not required to have a business license. a GC is. You only need the license if you are working in homes, but not for commercial spaces. If you're working in homes you need a Home Improvement contractor's license. However, as a sub, every job I do requires me to provide cert. of workers comp and liabilty.


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