Unlicensed Contractors Could Cost Homeowners Thousands - NBC Southern California

Unlicensed Contractors Could Cost Homeowners Thousands



    Home Construction Insurance Scams Part of Underground Economy

    Builders and contractors who don't follow the law is part of a multi-billion dollar underground economy. Mekahlo Medina reports for the NBC4 News at 5 p.m. on Thursday, May 21, 2015. (Published Thursday, May 21, 2015)

    It’s part of a multi-billion dollar underground economy.

    State officials say unlicensed builders and contractors who are not following the law could cause financial ruin for homeowners who don’t do their homework.

    Now, a statewide multi-agency task force is working to tackle the problem.

    The team invited NBC4 exclusively to ride along during one recent undercover operation in Downey.

    “The purpose of the operation is to educate the homeowners of the responsibilities that they have when they hire a contractor,” said Det. Sgt. Jose Solorio, who supervises the team.

    Masroor Sheikh is building an addition to his house on Orizaba Avenue. He is also a contractor.

    “We are just adding about 2000 square feet,” Sheikh said. “Being a license holder you know you got to make sure you do it right.”

    Everything checked out at Sheikh’s expansion. He said it’s expensive to have permits and insurance for his workers, but worth it. He also noted that it’s tough when unlicensed construction workers underbid him because they are forgoing the pricy paperwork.

    “See a guy with no license and no insurance, I can’t compete with a guy like that,” he said.

    The story is quite different when the team makes a stop across town on Lesterford Avenue.

    “The employees were asked to go home because of the fact that the contractor does not have workers comp insurance,” Solorio said after the team swept the site.

    A stop work order was issued and the contractor was fined close to $22,000. NBC4 was not able to reach the owner of the property.

    “If the contractor does not have workers compensation insurance and one of their workers is injured on the job (the homeowner) could be liable. And it could ruin you financially,” said David Jones, the state’s insurance commissioner.

    Jones said that if you are hiring someone to work on your house you better do some research, and offered some advice.

    “Check to make sure they have a license and check to make sure they have workers compensation insurance.”

    That goes for all sub-contractors as well.

    “Hospital bills add up quick, said Joe D’Orazio, who works for the owner of a new home in Downety. He just found out that a sub-contractor’s license recently expired.

    “Owners. It ultimately goes back to the owner and they are responsible for it. Me being the owner’s rep, I got to take care of that,” he said.

    Across the state, 17 stop work orders were issued during the team’s most recent operation. Aproximatly one-third of all locations inspected had violations.

    “If you are trying to cut corners, you could be buying yourself thousands or tens of thousands of dollars in ultimate liability,” Commissioner Jones warned.

    To check your contractor, visit the Contractors State License Board website and enter the license number or names and search. This will show whether or not the contractor has an active license and if they have workers’ comp insurance. Although, the system does take some time to upload the latest insurance information so it is always a good idea to call the insurer and double check the insurance status.

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