Contractor Licensing is it necessary

[Eieio]

I have been on both sides of the Licensing argument..

Does it really help to increase the level of professionalism in the construction industry by requiring licensing as a General contractor or sub.

Sure I think insurance and bonding are crucial and I think those should be in place but is having a license assurance that the home owners are getting a good job from a good contractor??


Why do you think licensing is or is not needed??


I would like to hear everyone's opinion...

[Eieio]

Bump What no takers??

[afkama]

Bump What no takers??

Sheesh.......I'll be there in a minute.....I've got a business to run.

I can't just disconnect my phone every time you have a question, Rory.

[afkama]

This seems obvious to me.
I can really only speak about California and Washington requirements. In Wash. the bar is fairly low, in California it's higher in some ways, but for some inexplicable reason we are not required to carry liability ins, just disclose whether we do or not.

Licensing was instituted to protect the public from contractors who may be well versed in the code, but not the law. Contractors can do serious financial damage to a client if they aren't competent. Licensing may not prevent that from happening altogether, but it does help weed out the repeat offenders.

In California we have some strict rules regarding legal disclosures we have to include in our contracts so the client can make an informed decisions in relation to their risks.

In order to be licensed I have to prove at least a minimal knowledge of the building trades and a firm familiarity with the legal and safety requirements of the business.

Personally I think the bar should be set a lot higher and yes, it does promote professionalism in the industry. No question.

There goes half my lunch break.

[afkama]

BTW as an added note: We are not allowed to invoice for any materials not yet delivered or for any work not yet performed. We also can't ask for more than $1000 deposit no matter the size of the job. I hear you guys talking about 50% deposits and I start to drool.

[PA Woodbutcher]

Pennsylvania just enacted a registration program last year. All I needed to provide was an insurance policy. People who have no insurance, just don't register. They did a little better job of announcing the program than they did with the EPA regs, but not much.

Insurance policy and $50 and your in.

Again no teeth and I don't believe any enforcement. Just another cash cow for the government.

[DavidC]

I've got an opinion for you, but it will have to wait for now. In a nutshell, I'm anti-licensing.

Good Luck
Dave

[framer55]

BTW as an added note: We are not allowed to invoice for any materials not yet delivered or for any work not yet performed. We also can't ask for more than $1000 deposit no matter the size of the job. I hear you guys talking about 50% deposits and I start to drool.

Nice part of living in a state that for some reason hasn't bought into the aguement that licensing is a necessity to get good work done.

As far as Rory's post, my opionon is that the current lisencing laws do no control the level of professionallism i any way. It justs "protects" contrators that comply.

In NY, there are no state wide laws about contractor lisensing anymore. There was in the 50's and it got eliminated because the laws are not enforcable.

The best way in my opionon to protect the cusumer is to make ever place that requires a building permit, check to make sure that contractors have the proper insurance in place to protect them. Then enforce the law.

[geogymn]

Framer55, "my opionon is that the current lisencing laws do no control the level of professionallism i any way"
How do you feel about the license requirements for plumbers and sparkies within the boundaries of your city? Is it a revenue thing? Is it enforced? I agree that said licensees have members that dwell on both sides of the spectrum.

[scctrim]

Licensing is merely a cash scam like wood butch mentioned above. It assures no one of anything. The only purpose it serves is to gain revenue, and as a result the gross population of ignorant people believe that it means your qualified when in all actuality its no different than 1/2 these associations out there taking your money so you can be a "member" and post a stamp or link on your site.

What was your comment the other day?

You wont make money off the educated masses...but off of the ignorant population...or something like that.

[Blue]

I hear you guys talking about 50% deposits and I start to drool.

I would have to find another gig. I couldn't imagine the cash flow problems one would encounter without 50% down. Maybe you get weekly progress payments, I don't know, but even then I would need to load those first progress payments extremely heavy.

[afkama]

I would have to find another gig. I couldn't imagine the cash flow problems one would encounter without 50% down. Maybe you get weekly progress payments, I don't know, but even then I would need to load those first progress payments extremely heavy.

We invoice every two weeks, but even then we can't charge for material not yet delivered or work not yet accomplished.

I understand the reason for the law. We've all heard the stories about the contractor who got a 50% down payment and then disappeared.

You have to have financial resources to be a contractor in this state.

[scctrim]

Just one of many reasons why I live on the right coast...I could never pull that off.

[orson]

In PA we can take a third deposit not including special order materials.

I always set up payment schedules to include a commencement of work payment and then progress payments that in theory keep the cash coming in before expenses.

It often does not work out that way though, some clients are just oblivious to the concept even though it is clearly stated in the contract, and often times I end up waiting for the payment as they are transferring funds from wherever the hell they're coming from.

I don't know how those of you who don't have capital resources whether it's cash on hand or credit sleep at night when you have 3 or 4 jobs going and cash flow is getting complicated.

I think the primary goal of the PA registration was to give the state attorney general a better means of keeping track of contractors, and more to the point the ones who are ripping people off.

For me the 52 dollars every two years represents a net gain of about 55 bucks a year or more because the law stipulated that local municipal licenses could no longer be levied.

I have zero problem w/ the registration requirements, though I like to bitch about what I'll pay my lawyer if I ever get around to complying with the specific contract language requirements.

Shit, now Rory is going to turn me in. :censored:

[afkama]

Of course this is a difficult thread to address because licensing requirements vary so much from state to state.

I don't think the states I'm licensed in are making a windfall off of contractor's fees. In both cases I pay more every year to register my vehicles. I would be willing to pay even more if those revenues would be devoted to more vigorous enforcement.

In Washington State you can qualify by being able to basically fog a mirror. You don't have to prove even basic competency. Financial responsibility requirements are minimal.

In Ca you have to show a general knowledge of the trades and a fairly in depth knowledge of the law.

A hack in Ca could get their license, but they probably wouldn't be able to hold on to it long. If you have an unsatisfied construction related judgment your license is suspended until it is paid and you will probably get hit with an increased requirement in your bond to have it reinstated. Licenses are issued by the Dept of Consumer affairs and complaints are investigated.

Licensing doesn't so much make us more professional as it protects the public from the scam artists.

[Leo G]

don't think licensing does anything for any quality, competency, reliability or workmanship standards. All it is is a way for the state to get into your businesses pockets and to keep track of you. Nothing good will ever come from it, only bad news.

In Connecticut we only have a registration law. They bumped it up from $160 to $220 this year, why, because they can. I have to pay them this registration fee so I have the priveledge of paying the great stat of CT taxes. Hows that for a look at it. I need to pay them money so I can pay them taxes. How is that for a scam.

[framer55]

Framer55, "my opionon is that the current lisencing laws do no control the level of professionallism i any way"
How do you feel about the license requirements for plumbers and sparkies within the boundaries of your city? Is it a revenue thing? Is it enforced? I agree that said licensees have members that dwell on both sides of the spectrum.

In my city both the law for licensing of plumbers and electricians is enforced, if they catch you! They like to concentrate on the out of towners that come in and try to skirt the law.
It is a revenue thing and a restraint of trade by out local unions.

[neolitic]

We invoice every two weeks, but even then we can't charge for material not yet delivered or work not yet accomplished.

I understand the reason for the law. We've all heard the stories about the contractor who got a 50% down payment and then disappeared.

You have to have financial resources to be a contractor in this state.

Damned if I'd be on the hook
for non-refundable special orders
when the HO has no skin in the game.
They pay up front if I pay up front.

[neolitic]

If I were to hit on the four proposals
I'm working on, I will have to get
four licenses.

[afkama]

Damned if I'd be on the hook
for non-refundable special orders
when the HO has no skin in the game.
They pay up front if I pay up front.

We do have the option of insisting that the client deposit funds in an escrow account, and they have the option of requiring a performance bond, although performance bonds for residential are almost impossible to get.

I've never had to do either one of these. Our contracts and specs are very tight and we get EVERYTHING in writing.

For us requiring payment up front jeopardizes our license, so we don't.

[naptownCr]

What happens when the HO hoes into Homy's and orders a special order door to be installed. They require payment up front on at least the door part?

[afkama]

In California a client can withhold up to 10% on each payment as retainage until the job is complete.

[afkama]

What happens when the HO hoes into Homy's and orders a special order door to be installed. They require payment up front on at least the door part?

No- if they contract for installation- they are not supposed to charge more than 10% of the contract with a $1000 limit.
The contractor's board rakes HD over the coals constantly.
If they are going to play general contractor- they have to play by the same rules.

I wouldn't be surprised if they get out of the game before long here.

[OGStilts]

OK, I'm going to just shoot from the hip on this one. I haven't thought much about it but I have some ideas that I think could improve our industry's standards.

1) Testing - it's ok I guess but for the most part from what I have seen it's useless because it's open book. Any experienced contractors could answer most of these easy test questions without looking in the book so why allow the open book policy, I don't get it.

2) Experience - I like this idea. I think it's Florida that requires a certain amount of experience before you can get certain licenses. I think that sounds reasonable to me and it allows a contractor to grow to bigger or more difficult projects as they have more experience. I see accurate documentation of experience as a difficulty.

3) Financial Burden - To me, this is the biggest thing that could be done to eliminate the illegals and the hacks. Think about how many times you have seen some guy loose his job and/or not be able to hold a job only to decide he's only fit to be his own boss so he becomes a contractor. Am I the only one that thinks that someone who can't hold on to a job shouldn't be allowed to be a general contractor. I think performance bonds should have to be posted with the state for your license, again I'd be in favor of different levels. Maybe $10k for simple remodeling, $25k for additions, $50k for new construction or whatever levels you want to make them. The idea here being that as a company grows they would be able to afford more bonding. Insurance of course should be a part of this requirement.



Well, that's some of my thoughts. I'm going against my smaller government, less regulations self and saying licensing could be a good thing here.

[afkama]

OK, I'm going to just shoot from the hip on this one. I haven't thought much about it but I have some ideas that I think could improve our industry's standards.



That's very similar to the system we have here.

Test is closed book and definitely not a slam dunk.

You have to show 4 years journeyman level experience in the last 10 years in framing and at least 2 other related trades.

The bond requirement is $12500

[Blue]

We invoice every two weeks, but even then we can't charge for material not yet delivered or work not yet accomplished.

I understand the reason for the law. We've all heard the stories about the contractor who got a 50% down payment and then disappeared.

You have to have financial resources to be a contractor in this state.

My supplier accounts invoice every thirty days and my lumber yard will float it to 60 if with a little intrest tacked on. So I suppose if you have everything delivered you could invoice right away and then take the progress payments. You would remain ahead the entire time.

So it's just a matter of invoicing differently.

[afkama]

My supplier accounts invoice every thirty days and my lumber yard will float it to 60 if with a little intrest tacked on. So I suppose if you have everything delivered you could invoice right away and then take the progress payments. You would remain ahead the entire time.

So it's just a matter of invoicing differently.

In theory that is exactly the intent- to weed out the guys whose credit is shaky. That's not how it's stated, but that is the effect.

Honestly, the retainage can be a bigger problem. If you have a big job that goes on for six months or a year it can amount to enough for the client to decide to fight you for it.

It also becomes an issue because if a sub is one of the first ones into a job, he can end up waiting a very long time for the rest of his money.

I know it's common on commercial jobs, but for residential remodel, it's an unfair burden on the contractor.

[Taylordhome]

We don't have contractors licensing in our state (Illinois) but certain trades have to be licensed in certain areas. Plumbers and roofers have to be licensed, but electricians don't. I wouldn't mind seeing some form of licensing however, just as long as it was legit and not just another way for the state to make money off of us.

[Eieio]

We don't have contractors licensing in our state (Illinois) but certain trades have to be licensed in certain areas. Plumbers and roofers have to be licensed, but electricians don't. I wouldn't mind seeing some form of licensing however, just as long as it was legit and not just another way for the state to make money off of us.


Why do you want to see licensing??

[Silvertree]

No licensing, doesn't help much.
Now if you had to show you knew what you were doing or could not pull permits maybe we would have better contractors.

[DavidC]

We don't need a license here. We do need to show proof of insurance to pull a permit and pass inspections to complete the process. We also have a state law requiring a contract for any work over $500 and it must contain some specific clauses.

I am getting a little tired of increased regulation in general and especially tired of new laws that can't or won't be enforced. Contractor licensing seems to fall under the won't category so why bother.

Good Luck
Dave

[Bender]

Now if you had to show you knew what you were doing or could not pull permits maybe we would have better contractors.

Wasn't that what unions did?