In today’s economy, maximizing profit from investment property is a priority for many investors. Hiring a contractor for your REO property requires an understanding of why a licensed contractor matters. First Freedom Preservation has a team of licensed and bonded contractors dedicated to keeping your property in top shape. A bargain price on a construction project is a risky move if the contractor you hire is not licensed and bonded. A shoddy job by an unqualified contractor can put your property at risk and end up costing you more money to fix the damages in the future.
Sure, competition in the construction industry is fierce. You can hire either a licensed and bonded contractor for $50 per hour or an unlicensed and unbonded contractor for $25 and both said they could do the job. But is it worth the risk to hire cheaper labor? Why does it matter?
Why Be Licensed?
A contractor’s license requirements vary from state to state; however, to do any skilled labor such as electrical work or plumbing repairs on another person’s property requires a license. For a construction worker who can perform a variety of construction tasks, a general contractor’s license is required. To earn that license, the applicant first needs to show documentation that he or she acquired adequate education or work experience and pass specific exams, and some states do require multiple exams to obtain licensure to perform different sized jobs. An active worker’s compensation insurance policy and being bonded are also usually required to obtain a license.
Why Be Bonded?
Being bonded is not the same as being licensed. Being bonded provides a certain amount of liability protection for the benefit of the property owner. If the contractor fails to fulfill his contract for a reason, the surety bond can provide compensation to the property owner who files a claim with the state contractor’s board and proves that the contract job was not met.
The Risks in Hiring an Unlicensed and Unbonded Contractor
First, an unlicensed and unbonded contractor is not in compliance with state laws for working without a license. Second, there’s no confidence that the unlicensed contractor is complying with local codes, permit and inspection requirements. This can catch up with you in the future should you request an appraisal or sell your property, and you will be required to fix these violations. Third, because the contractor has not been tested on his knowledge of construction matters by the licensing board, the quality of workmanship is questionable.
Further, hiring an unlicensed contractor may void any warranty claims you try to make because these implied warranty laws cover only licensed contractors, leaving you with the option of recovering your loss in civil court. It should be noted that if you win your case in civil court, chances are the contractor has no bond money to pay your damages.
One final reason is liability. An unlicensed worker may have no worker’s compensation insurance to cover his or her accidents on the job and may pursue a lawsuit against you to pay his medical bills, whereas the licensed contractor is legally required to have one. All these are reasons that a licensed contractor matters.
Use First Freedom Preservation for Your Needs
Now that you know why a licensed contractor matters, you should know that we at First Freedom Preservation are dedicated to providing full property management services and only hire skilled licensed and bonded contractors to oversee REO property maintenance issues. Coupled with our management experience, transparency reports and quality contractors, you can have a peace of mind and enjoy your investment properties. Contact us today to inquire more about how our services can assist you.