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schlodc
LSU Fan
Member since Dec 2015
15 posts

Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
Doing an addition to my home. We are almost done framing. Found out my contractor has a suspended license (prod due to financial reasons). Total cost is about $150K and I'm 2 payments in. What should I do to mitigate risk going forward? I've heard get a "release of lien" so no subs can sue if he doesn't pay them. I can get him to show me receipts of when he pays for material/subs. Anything else I should be worried about?


LNCHBOX
LSU Fan
70001
Member since Jun 2009
53882 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
How big are the two payments and what does your contract say?


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cave canem
Mississippi St. Fan
pullarius dominus
Member since Oct 2012
9096 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
Did he represent himself as having a license?

This would guide my reaction to this news and determine if he had finished his last day for me or not.


HubbaBubba
LSU Fan
RIP - los angeles tiger
Member since Oct 2010
27050 posts
 Online 

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
You need these things right away.


A copy of his worker's comp insurance.

A certified copy received in the mail from his insurer of his liability insurance WITH you (and your spouse if her name is on the house) named as "OTHER INSURED". This is free from the insurer and guarantees that if anything the contractor does causes damage or injury to anything or anyone that you are covered. Do not accept NO as an answer from your contractor and tell him he can't step foot on your property to work until you get it.

Call the worker's comp company and verify the policy is in force.

Agree to payout amounts for materials delivered and work completions. TD can help you with those values. Withhold 10% back of everything until your final punch list is completed and you approve a final inspection of the work. Then release final payment.

*Edit: UNDER NO CIRCUMSTANCE release final payment until he signs a waiver of lein in front of a notary and delivers an original signed and stamped copy.
This post was edited on 5/15 at 2:09 pm


theOG
Oklahoma Fan
Member since Feb 2010
7724 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
quote:

I've heard get a "release of lien" so no subs can sue if he doesn't pay them.


FYI, a general contractor signing a lien release will has no affect whatsoever on a subcontractor's ability to lien a project or file a lawsuit. A lien release will have him swear that he paid his subs, but there is a chance may sign it even if he hasn't done so.

If the subcontractors have met all of the legal requirements laid out in the Private Works Act, they will be able to lien the project and sue you, as the owner of the project, even in the absence of a contractual relationship.

There are significant consequences for your contractor for performing work without a license. You'll probably get some good advice here, but it wouldn't hurt to sit down with an attorney and hash this out.


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keks tadpole
Auburn Fan
D'Olive Creek
Member since Feb 2017
1690 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
How has he pulled a permit with a suspended license?
Has anything been inspected by local authority (framing, plumbing rpugh in, etc)?
Can't get a c.o. until all inspections are signed off


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thatguy
New Orleans Saints Fan
Member since Aug 2006
6531 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
So you hired Matt Morris, eh?


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BottomlandBrew
LSU Fan
Member since Aug 2010
19815 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
Your state laws may differ. I'm in Tennessee, so I can only speak to my local laws. As a sub, I cannot file a lien on a residential property for non-payment unless the homeowner is acting as the GC. I have to sue the GC directly. That's different from commercial job where I can file a lien on the owner. Hopefully your state has a similar law.


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theOG
Oklahoma Fan
Member since Feb 2010
7724 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
I think OP is in LA, and subs can definitely lien residential projects. That said, the general contractor who is licensed cannot lien a residential project.


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schlodc
LSU Fan
Member since Dec 2015
15 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
Thanks for the advice. I am in LA, first 2 payments were for $25K each. He has a different contractor name and number on the permit he got. Not the same as on the contract I signed. wonder if i should get that contactor's name on the contract.


eng08
LSU Fan
Member since Jan 2013
3719 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
Ahh yeah. You need him.


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baldona
Auburn Fan
Florida
Member since Feb 2016
9140 posts
 Online 

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
quote:

Not the same as on the contract I signed. wonder if i should get that contactor's name on the contract.


Hell yes you should get that name. Figure out who it is, likely a friend helping him out for a kick back. If that guy is legit, you can approach him. Or sue them both if needed.


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sleepytime
Member since Feb 2014
2236 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
Homeowners are specifically exempt from comp in LA so you don’t have anything to worry about there.. I think it’s RS23:1035 but I’m too lazy to look it up right now. If you really want to check and see if he has comp, do a search for the online work comp verification system and look him up.
I’d be getting a new contract ASAP and communicating with the subs.


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East Coast Band
Alabama Fan
Member since Nov 2010
37426 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
What all are you getting added to your home?


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cave canem
Mississippi St. Fan
pullarius dominus
Member since Oct 2012
9096 posts

re: Hired a contractor with a suspended license. what is my risk and how do I mitigate it.
quote:

Thanks for the advice. I am in LA, first 2 payments were for $25K each. He has a different contractor name and number on the permit he got. Not the same as on the contract I signed. wonder if i should get that contactor's name on the contract.



If you were unaware of this going in then ask him to leave your property immediately and contact an attorney.

To the poster who claimed no comp issues for the owner all bets are now off as he is well aware the man is unlicensed and is no longer protected by that law.

OP you really need to go back and read the fine print on YOUR insurance policies and mortgage if any and sort out where you stand with them.


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