When conducting research and deciding who to hire to build your next garage, barn, or workshop, you may come across the ‘lone ranger’ or Amish contractor offering a suspiciously low price. Don’t be fooled! These builders are often operating unregistered and contracting with them doesn’t come without severe consequences. In the post, we’ll list 7 ways that working with an unregistered contractor can cost you, and your community, precious time and money.
1. Contracting with an unregistered business puts the responsibility, and liability, of the project on you.
Many Amish builders, sole proprietors, and DIY contractors are not registered with the Secretary of State. They haven’t even completed the first step in becoming a legitimate business. Without being registered, they can’t pay taxes, carry worker’s compensation, or even obtain the necessary building licenses they need to legally operate. They will likely force you to complete building permits for them, because as an unregistered business, they can be denied and face serious consequences. If the permit is registered in your name, you become liable when the project isn’t up to code.
2. Contractors that operate without the necessary business licenses can be forced to close, leaving your project unfinished.
Many local governments require builders to hold specific licenses in order to erect a building within their boundaries. They can easily find out about unlicensed contractors through suspicious zoning permits and building inspections. A few different things can happen in a situation like this when the builder is forced to shut down: they can be allowed to start operating again as soon as proper licenses are obtained (this can take months because they have to actually become a business before this), they can be required to undergo a probationary period before they can open again, or their application for a business license can be rejected entirely. In this situation, you as the customer could be left with a half-finished building for months, or even longer. It could be extremely difficult to get a different contractor to finish your building, leaving you to fix it yourself. You might even have to pay to tear it down and start the planning and permit process all over again.
3. Their low-quality work can be physically, and fiscally, dangerous for you and others that work on or inhabit the building.
Becoming a registered builder is a sign of quality workmanship. Unregistered contractors haven’t proved their reliability and their mistakes can be costly. If a subcontractor is injured on the job due to faulty work, they can sue you, since the accident occurred on your property. Any occupancy of the structure becomes a risky situation. You might end up paying much more for the building in the long run through repairing mistakes that the original unlicensed builder made.
4. Without builder’s risk insurance, your project is unprotected.
Because builder’s risk insurance isn’t required by law, many independent contractors won’t carry it. Instead, they force you to foot the bill for the insurance or face the possible consequences of building without it. If a natural disaster or fire comes across your in-construction building and damages it, you will have to repay for thousands of dollars’ worth of materials and labor. Ask yourself if that’s a risk you’re willing to take.
5. Without liability insurance, there’s no protection for you or your property.
Licensed contractors in Ohio are required to have liability insurance, so if you come across a builder that doesn’t have it, you might want to reconsider working with them. If someone is hurt, or an item is damaged on your property, and the contractor doesn’t carry liability insurance, the responsibility for the accident falls onto you. Of course, you could always attempt to sue the ‘company’, but you would still incur hundreds to thousands of dollars in court costs along the way. The unregistered builder can actually sue you for damages as well if the accident occurred on your property.
6. Without worker’s compensation insurance, you can become liable for accidents that occur on your property.
Registered businesses in Ohio are required to pay into worker’s compensation. Amishmen are exempt, as insurance is against their religion (they believe it violates their faith in God). If a worker from an uninsured business is injured on the job, they can sue you because they were hurt on your property. Remember, they don’t have insurance for themselves, so they have to find some way to pay for medical bills themselves. Workers compensation fraud also hurts our whole community. It increases premiums for honest employers, requiring them to charge more for their products and services, reducing their ability to compete.
STATISTIC: Construction workers have one of the highest workplace injury rates of all careers, with 1 in 10 site workers being injured every year. Fall hazards are the leading cause. [OSHA]
7. Your insurance likely won’t cover mistakes made by an unregistered builder, and you could run into unforeseen legal trouble.
If you signed a contract knowing that the builder you hired was unregistered, that can complicate the legal process should anything go wrong. Your insurance likely won’t cover any mistakes they made, because you knew they were unregistered. You also won’t be able to use this in a legal defense against them, or as a reason for not paying.
As you can see, working with an unregistered business, specifically in the post-frame construction industry, can be a very risky situation. Employers and contractors that cheat their way around laws put your livelihood in jeopardy and hurt your local economy as well. There are a few ways you can check to see if your builder is trustworthy just as reading consumer reviews and checking their rating with the Better Business Bureau.
Are there any dangers we missed? Share your cautionary tales with us below.
Angie’s List: https://www.angieslist.com/articles/how-unlicensed-contractors-can-cost-you.html
Up Counsel: https://www.upcounsel.com/can-i-start-a-business-without-registering-it
Legal Match: https://www.legalmatch.com/law-library/article/unlicensed-contractors.html
SFM Insurance: https://sfminsurance.com/ohio-commercial-insurance/ohio-contractors-insurance/
BWC Ohio: info.bwc.ohio.gov
Kirkham Building System, Inc. is a registered business with the State of Ohio. We would love to help you plan your agricultural, residential, or commercial pole building. Call us today at 740-548-7810 or send us a message on our contact page to schedule free consultation.