Because the highway to the danger zone of unlicensed contracting continues (yes, that is shameless homage to the Top Gun theme song), we must as well. If you missed it, check out the first part of this mini series here on homeowner's consenting to unlicensed contracting and how consent is no defense.
While states may vary, people who engage in unlicensed contracting often are limited in what they can recover on a project if a dispute arises. In Tennessee, for example, an unlicensed contractor cannot seek damages for his overhead and profit. Rather, he can only (potentially) recover his actual expenses for the job.
Let's say a contractor in Tennessee bid and undertook a project for $15,000. The property owner paid $10,000 and refused to pay the balance. If the contractor is not properly licensed giving authority to perform that particular scope of work at that particular price, he is limited in what he can recover if he were to file a lawsuit. Depending on where the threshold lies for actual expenses (such as material and labor costs) on the job, the contractor may not receive another dime and in fact, may face an award against him. The same principles apply if an owner files a lawsuit that the contractor is forced to defend. More often than not, the owner will prevail, subject to certain limitations.
Regardless of where you work or what trade you perform, if a conversation is being had with a property owner or general contractor for that matter about how you are unlicensed, imagine a sign flashing before you that reads, "Danger: Do Not Enter - Consent is No Defense." Whatever is enticing you to move forward can cost you far more in the long run.
Now you know. Pass it on. All For Contractors is All For You!