UNLICENSED BUILDERS ARE STILL A PROBLEM

By David J. Meyers

Almost 15 years ago, BAM successfully helped enact the Minnesota Contractor Licensing Law. I was part of the BAM Committee that helped write the law, and I am happy to say that for the most part, it has worked as we intended.

Still, there is a continuing problem in out-state Minnesota with unlicensed contractors. An unlicensed contractor hurts legitimate, licensed builders, because chances are the unlicensed contractor does not have the insurance, technical skills, or business skills to run a contracting business. Even more importantly, they hurt consumers by all too often running off with the consumer’s money or doing poor workmanship.

The licensing law makes it a misdemeanor, punishable by 90 days in jail or a $500.00 fine, for anyone doing unlicensed construction work. The law gives the Commissioner of Commerce the power to issue Orders stopping unlicensed work. Violating a Commissioner’s Order to cease unlicensed work can result in a conviction for a gross misdemeanor.

Unlicensed contractor’s do not have Mechanic’s Lien rights. All of this sounds good, but what is a licensed out-state contractor to do when he or she is losing work to an unlicensed contractor?

If you see an unlicensed contractor doing work, you should notify the Department of Commerce. You need to provide them with the contractor’s name, telephone number and location of where you think they are working.

Often times a local, licensed builder does not want to be directly involved because, after all, it is a small community and everyone has to live there. In that case, I suggest you take this information to either the local Builder’s Association office, or to BAM. In the past, BAM has been willing to share this information with the Department of Commerce. Your name need not be involved.

Our law firm has had success in helping consumers not pay unlicensed builders. An unlicensed builder is committing a crime. The Courts do not enforce contracts for criminal activities. For example, if you are not licensed as an attorney in Minnesota, but prepare someone’s Will, you could not sue that person for payment for drafting the Will. The same goes for unlicensed contractor work. If you know of a consumer who is having work done by an unlicensed builder, you might mention to the consumer that they have no obligation to pay the criminal for the work. That should get the unlicensed builder’s attention.

Subcontractors also need to be aware of problems they could face when they are selling materials or doing work for an unlicensed builder. If an unlicensed builder is not paid by an unhappy owner, the subcontractor or supplier may also not be paid. It makes sense for subcontractors and suppliers to make certain they are only doing business with licensed contractors if they want to get paid.

Invariably, in my experience, it is the consumer who is most often heard by the unlicensed builder when the work is done poorly, or all of the consumer’s money is gone and the builder cannot be found. The recovery fund is not available for any consumer who hires an unlicensed builder.

Educating the consumer on the benefits of hiring only licensed builders is the best way to put unlicensed builders out of business.

©2005 by David J. Meyers and Rinke-Noonan Law Firm, St. Cloud, Minnesota.

David J. Meyers is licensed to practice law in the State and Federal Courts in Minnesota and Wisconsin. He is a former BAM President.