By Steven Krieger
Hiring a contractor for a renovation or remodel project is a major decision – some renovation or remodeling projects cost more than a new car. Certainly, you want to interview several contractors and check the referrals to find one you feel comfortable with, but perhaps the most important piece of information to verify is the contractor’s license.
A consumer (or anyone) may verify a contractor’s license by confirming with the Virginia Department of Professional and Occupational Regulation (“DPOR”). Unfortunately, there are individuals and business entities that claim to be licensed contractors, but do not actually hold a valid contractor’s license. Just because the contractor has set-up an LLC or a Corporation (or simply put the LLC, Inc. or Corp. at the end of their name without properly setting up the business entity) to shield the individual owner from liability does not necessarily mean that the contractor has a valid license to perform contracting tasks. A business license is not a contractor’s license.
Possessing a valid contractor’s license is critical because the Virginia Contractor Transaction Recovery Act provides relief to eligible consumers who have “incurred some type of loss through the improper or dishonest conduct of a licensed residential contractor” through the Contractor Transaction Recovery Fund.
Unfortunately, if the contractor is not licensed, the consumer homeowner is not able to seek relief through the Contractor Transaction Recovery Fund. A consumer could certainly file a complaint with DPOR about an unlicensed contractor and “[i]f an investigation indicates the individual or business is not properly licensed, DPOR may take criminal action.” But, criminal action does not necessary put any money back in the consumer homeowner’s pocket.
Previously, I’ve written about the Virginia Consumer Protection Act (“VCPA”), which is a powerful tool for consumers because it allows consumers to recover reasonable attorney’s fees. This is significant because a consumer may not want to engage an attorney to sue the contractor if the attorney’s fees are not recoverable from the contractor.
The VCPA identifies 54 different violations to help protect consumers in Virginia. Number 46 says that the following is unlawful: “[v]iolating the provisions of clause (i) of subsection B of § 54.1-1115.” Virginia Code § 54.1-1115(B) states: “[a]ny person who undertakes work without (i) any valid Virginia contractor’s license or certificate when a license or certificate is required by this chapter.”
So, the question becomes: who is required to possess a license as “required by this chapter,” which is Chapter 11 Contractors from Title 54.1 Professions and Occupations. Virginia Code § 54.1-1100 is the definition section of this chapter and defines a contractor and what license class (A, B, or C) the contractor is required to possess.
A contractor is defined as: “any person, that for a fixed price, commission, fee, or percentage undertakes to bid upon, or accepts, or offers to accept, orders or contracts for performing, managing, or superintending in whole or in part, the construction, removal, repair or improvement of any building or structure permanently annexed to real property owned, controlled, or leased by him or another person or any other improvements to such real property. For purposes of this chapter, “improvement” shall include (i) remediation, cleanup, or containment of premises to remove contaminants or (ii) site work necessary to make certain real property usable for human occupancy according to the guidelines established pursuant to § 32.1-11.7.”
Based on this definition, the term “contractor” is pretty broad, so anyone who provides a consumer homeowner an estimate to perform any remodeling, renovation, or improvement work around your home likely falls into the definition of a contractor and is required to have some type of license – even if the “contractor” plans to sub out all of the work.
However, this is one exception: if the project is under $1,000, the contractor is not required to have a Class C license unless “the total value of all such construction, removal, repair, or improvements undertaken by such person within any 12-month period is less than $150,000.” In other words, your handyman, who charges you $200 to repair a bit of drywall is not required to have a license – unless this handyman is really doing a lot of work during the year that exceeds $150,000.
If the contractor does not have a valid license, then the contractor may have violated § 59.1-200(A)(46) of the VCPA, which allows the consumer homeowner to file a complaint against the unlicensed contractor to recover whatever financial damages were caused by the contractor in addition to reasonable attorney’s fees (and potentially punitive damages if the violation was intentional).
Although, the consumer homeowner may not be able to recover financially through DPOR and the Contractors Recovery Fund from damages sustained by an unlicensed contractor, the VCPA does allow the consumer homeowner to recover from the unlicensed contractor.
If you’re a consumer homeowner struggling with an unlicensed contractor (or even a licensed contractor), please feel free to contact my office for a consultation.