Getting Nailed The consequences of contracting without a license

The consequences of contracting without a license

By Judge Gerald A. Williams

Performing work that requires a contractor’s license, when you don’t have one, is not just a bad idea. It is also a crime. 

Almost any business that builds, alters, repairs, adds to, or subtracts from any building, highway, road, or excavation, must have a contractor’s license. There are separate licenses for commercial and for residential work. There are also specialty residential contracting licenses that cover work such as swimming pool service and repair, carpentry, floor covering, air conditioning and refrigeration, and roofing.   

Contracting without a license is a class one misdemeanor, which is the most serious type of misdemeanor under Arizona law. Most misdemeanors do not have a mandatory minimum punishment; but this one does. The mandatory fine, for the first offense, is $1,000. A.R.S. § 32-1164(B). There are economic consequences in addition to the fine.   

Victims of unlicensed contractors are entitled to restitution if they suffered an economic loss. This is often measured by a reimbursement of the amount paid with an offset for any benefit received for the work performed. However, the damages can exceed the contract price. In one recent case in Tucson, in addition to the $1,000 fine, the unlicensed contractor was ordered to pay up to $15,609 in restitution to the victim.  There are also some collateral consequences. 

The Registrar of Contractor’s office will not issue a contractor’s license to someone convicted of contracting without a license for a year.  A.R.S. § 32-1122(D). Contracting without a license impacts civil lawsuits as well. 

Contractors must have a license before they can bring a lawsuit for nonpayment of a debt from a contract. A.R.S. § 32-1153. Some unethical homeowners are aware of this prerequisite and refuse to pay for work performed because they know that any lawsuit for collection will be dismissed. This seems like a harsh result.

Arizona appellate courts have held that if someone is performing the type of work that requires them to be a licensed contractor, and they are not, then they lack the capacity to enter into a valid contract. If there is no contract, then there is also no payment for services performed. The public policy behind this law is so that the public will be protected from contractors who lack the requisite skill and ability to perform the required work. 

Additional information and resources for both contractors and consumers is available on the Arizona Registrar of Contractors web page at https://roc.az.gov/  

© 2018 85085 Magazine. A Division of Strickbine Publishing Inc.

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