Unlicensed Contractors

Started by AnitaS • 16 replies • 4006 views

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AnitaS (Michigan)
Posts: 3

Posted:

Does anyone else have experience with a management company that uses, and endorses, unlicensed contractors? Our association's management company has awarded jobs to unlicensed contractors (yes, I know that the Board is ultimately responsible for all decisions, but it's a case of 6 marionettes, one string) that represented nearly 25% of our annual budget (over $500,000). Some of the contractors have criminal records, including one with a conviction for a violent felony (breaking and entering with an accomplice AND a weapon), but the management company has succeeded in sweet-talking the board into accepting his pretzel logic that "even though a contractor may be unlicensed, he still does a good job".
The state of Michigan has strengthened its laws regarding contractor licensing, but it's not a crime to HIRE an unlicensed contractor.
What gives here?

TracieS (Colorado)
Posts: 460

Posted:

Whether they're licensed or not, to me, is a secondary issue to one that is not addressed in your post.

Are these "unlicensed" contractors INSURED???

I don't know...my opinion is that licensure is not necessarily the GOLD standard for finding good tradespeople (or community association managers, as we've discussed on this forum previously). Electrical and plumbing SHOULD be professionals, and PROBABLY should be members of their local union, and SHOULD have passed their "masters" test if they're on their own. Those are city/county code issues, and not having repairs/renovations done by a true professional can really jam your assocation up.

Fixing a fence? Replacing broken irrigation heads? Laying a standard slap of concrete? Just what contractors do you think should be licensed? All? Most? Some?

What kind of licensure are you looking for? Define that for me, because I'm not sure we're thinking of the same thing.

I'm not being argumentative...just trying to find out your expectations, so I need more info.

Finally...what do your founding documents (probably CC&R?) say about contractors? Anything? If your community is old like mine, it might not say anything.

MicheleD (Kentucky)
Posts: 4,491

Posted:

You should have support somewhere in your documents.

If you don't then all I can tell you is that your insurance company may have some back up for you.

It sounds to me like a disaster waiting to happen.

"Good" work at a reasonable price can also be accomplished with properly licensed and insured or bonded contractors and subcontractors, so that is a very weak position the MC is taking.

I would not want to risk the assets of the organization for the sake of a few miscellaneous bucks here and there.

AnitaS (Michigan)
Posts: 3

Posted:

Tracie--
Here are answers to your questions:

Are these "unlicensed" contractors INSURED??? We have not been able to get the MC to provide certificates of insurance for the unlicensed contractors.

Regarding code issues:
Structural work was recently begun without the contractor pulling the required permits (as per the specifications of the contract). The city shut down the job until the plans were filed and permits pulled. That contractor did not have the required Michigan Residential Builders License.

Fixing a fence? Replacing broken irrigation heads? Laying a standard slap of concrete? Just what contractors do you think should be licensed? All? Most? Some?
In the state of Michigan, we have a definitive list of who/what needs the state Residential Builders License, in addition to a separate code for Mechanical Contractors.

A Residential Builder may build a new home from the ground up or may do any kind of repairs regulated under Article 24 of the Occupational Code. The builder may contract for the whole job, but will have to subcontract for plumbing, electrical, and mechanical (heating, ventilation, air conditioning) work to licensed plumbing, electrical and mechanical contractors.

A Maintenance & Alteration (M&A) Contractor is licensed to perform only specific trades and services and may accept contracts only in the trade(s) or craft(s) for which he or she is licensed. The contractor's wall license and pocket card identifies the trades for which the M&A Contractor is licensed. The pocket card contains a letter code that represents the trade or trades in which that contractor is licensed. The M&A trades and their equivalent letter codes are: Carpentry (A); Concrete (B); Excavation (D); Insulation Work (G); Masonry (I); Painting & Decorating (J); Siding (K); Roofing (M); Screen & Storm Sash (N); Gutters (O); Tile & Marble (P); House Wrecking (R); Swimming Pools (S); and Basement Waterproofing (T).

Finally...what do your founding documents (probably CC&R?) say about contractors? Anything? If your community is old like mine, it might not say anything.
Nothing in CC&R documents about requirement to use licensed contractors, and MC balks at including it in their contract or in individual contracts with trades people hired to work at community.

Basically, the MC has about 50+ communities, and these same jokers have been popping up at most of his other sites.

JaneD (Florida)
Posts: 7

Posted:

Our property manager contracts only licensed and insured workers. MicheleD is correct and your board has an obligation to make sure these workers are covered under the HOA's insurance policy. If a worker without workmen compensation insurance is hurt on the job the HOA may be sued. it is a liability issue. We have workmen compensation insurance for volunteers who do work on the property, example, an owner doing minor repairs to the common area. Better to be safe as accidents do happen.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Jane and everyone.

In Florida, it is the LAW!! that contractors working are required to be licensed. Part of the licensing is a requirement to carry at least liability insurance.

TracieS (Colorado)
Posts: 460

Posted:

Wow! With those kind of statutes/laws in place, why on earth would your management company go against it? I'm guessing the management company are the jokers, not necessarily the workers.

Regardless of whether the management company balks at contracting/hiring licensed contractors, your BOD should be more proactive in making sure that happens. I've got an uninvolved board, but still, a worst case scenario is that someone gets killed doing work, guy isn't insured, court awards HUGE damages to be paid by association... That should make the BOD sit up and take notice.

I'd be sending a registered/certified letter to the management company (if you're on the BOD) requesting insurance documentation on each and every contractor your association is currently contracted with. It's just a one or two page form...Certificate of Liability Insurance (or whatever it's called in Michigan). If your management company doesn't respond, then I'd start forcing the issue. How, I'm not sure.

Will your management company pay the worker's comp claims if your contractors don't carry insurance????? Will your management company pay any fines that may be coming (probably down the road) for hiring/contracting with unlicensed contractors? What about lawsuits from homeowners who had work done by the association contractors and the work is really shoddy?? Remember, the buck may not stop with the management company, but with the ASSOCIATION.

EllenS1 (Florida)
Posts: 1,148

Posted:

I agree with everything Tracie has said. In addition, I would contact the city, county or whatever to see if these companies have pulled permits and are licensed and insured to do the work. You do not have to be a board member to do this..as an owner in an HOA you have every right. Let the management company know you will be doing this and put them on notice that you will be reporting this to their regulatory agency in your state.

GordonD1 (California)
Posts: 131

Posted:

I ALSO AGREE WITH TRACIE AND ELLEN. I WILL LOVE TO HEAR FROM MARY.

I BELIEVE THAT THE BOARD MEMBERS HAVE NOT TAKEN THE TIME TO EDUCATE THEMSELVES FOR THEIR POSITION. THE MANAGEMENT COMPANY SHOULD BE FIRED. I CAN NOT BELIEVE THE LIABILITY THIS COMMUNITY/HOMEOWNERS
HAVE BEEN EXPOSED TO.

AnitaS (Michigan)
Posts: 3

Posted:

GordonD1:

Thank you for your insight. I, too, believe that the board members have seriously missed a crucial point that I have made again and again--unlicensed contractors usually cannot get liability insurance. In addition, many municipalities request the contractor's license information when they file the paperwork for a permit.
And yes, the management company SHOULD be fired. Why would a property manager knowingly hire an unlicensed contractor, with a violent felony conviction (using a gun), and who just filed for bankruptcy 6 months prior?
Can you say "kick back"?

MaryA1 (Arizona)
Posts: 7,043

Posted:

Anita,

I'm not doubting what you say is true but I'm wondering if you are a board member who is privy to this info regarding the unlicensed contractor with a felony conviction.

EllenS1 (Florida)
Posts: 1,148

Posted:

Anyone should be able to check out licensing and felony records by going online.

I check periodically to search for predators near my grandchildren's home.

JohnB26 (South Carolina)
Posts: 1,569

Posted:

Quote:

Posted By EllenS1 on 09/11/2009 3:36 PM
I agree with everything Tracie has said. In addition, I would contact the city, county or whatever to see if these companies have pulled permits and are licensed and insured to do the work. You do not have to be a board member to do this..as an owner in an HOA you have every right. Let the management company know you will be doing this and put them on notice that you will be reporting this to their regulatory agency in your state.

It is NOT the contractor's responsibility to 'pull a permit' .... it is the OWNER's responsibility.

Generally the contractor will get the permit (usually for a nominal addidional fee) ON BEHALF OF THE OWNER.

After the permit has been 'posted' and the work completed it is the OWNER's responsibility to call for the inspection. Hopefully the contractor has not been paid in full until the work has passed inspection and the permit has been 'signed off'.

.... oh what a tangled web we weave ....

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By JohnB26 on 09/13/2009 3:17 PM

.... oh what a tangled web we weave ....

??

Excuse me, did you just accuse Ellen of lying?

??

She may have misstated something, but implying she's fibbing might be a tad harsh?

EllenS1 (Florida)
Posts: 1,148

Posted:

John,

"It is the owner's responsibility"? Are you certain you know that this applies to the entire country or just your area?

MaryA1 (Arizona)
Posts: 7,043

Posted:

I agree the management company should go; but I wouldn't come down as hard on them as I would on the BOD. They hired the mgmt co and they've allowed the manager to do as he pleases with no supervision whatsoever. They must shoulder the bulk of the irresponsibility of this issue. Perhaps it's time for a recall of this board of "marionettes". If an accident were to happen while an unlicensed contractor was at work, it's the assn that would be a part of the lawsuit not the manager or the mgmt co. All the manager has to do is say he was following the boards instructions. The Board (usually the Pres) signs the contract not the manager.

GordonD1 (California)
Posts: 131

Posted:

John,

It all depends what is on the contract. Many of our contracts in our Association the contractor will pull all the permits.

Thanks

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