Tips for Resolving a Contractor Dispute

When a contractor dispute erupts, state and local licensing authorities have the muscle to get you satisfaction.

When you can’t resolve a contractor dispute on your own, you can access a powerful local ally: your state and local licensing authorities.

Most contractors are subject to licensing requirements, and you can call upon the regulating authorities for help. It may save you time, money, and the hassle of an expensive lawsuit.

What Does it Mean to be Licensed?

This varies from one location to another and one profession to another. Plumbers and electricians typically have strict licensing requirements. General home contractors usually face fewer licensing requirements.

If a contractor has a license, however, you can usually assume he has:

  • A certain level of education or training.
  • A minimum level of experience.
  • Passed an examination.
  • Kept up with changes in code.

There is no absolute guarantee, but with a licensed professional you’re far more likely to have your project turn out well, and a better chance of redress if it doesn’t.

Note also that licenses usually refer to professional competence, not general business practices. If your contractor takes two months to add a new bathroom when he promised it would be done in three weeks, that’s probably not a violation of his license but of the remodeling contract. In that case, you may have recourse with a lawsuit or a bond.

What Can Licensing Authorities Do?

A lot!

If you face a case of actual contractor incompetence, you may be able to hit them where it hurts by reporting them to whichever agency regulates them. 

You need to check your area -- state, county, or town -- to discover who is regulating the contractor working on your home. Check your local government website to see which work your town or county licenses.

If you contact the state or local licensing agency, and if your claim has merit, you can have your contractor disciplined, says Kia Ricchi, a Florida licensed building contractor and author of the book, "Avoiding the Con in Construction." Remedies may include:

  • Fines, on top of refunds for poorly done work.
  • Suspension or revocation of a professional license.
  • Loss of membership in a professional organization.

In short, these agencies can temporarily or even permanently take away their right to work.

In addition, some states also have recovery funds available to homeowners who have suffered monetary losses to a licensed contractor. Again, this varies by state, and the amount available may be limited.

Of course, you can’t get help unless your contractor is licensed, so check before you sign a contract to make sure the firm you’re considering has all the relevant state and local licenses. 

Registration — It's Not a License!

Before you rev yourself up to settle a contractor dispute, however, know your terms: In some areas, firms have to register with a local authority, but this is different from licensing, says Carmen Amabile, a Michigan residential maintenance and alteration contractor, and author of "How to Hire, Manage, and Fire Your Contractor."

Registration is usually little more than a list. Almost anyone can easily register by providing name and address to a local authority and paying a fee. You’ll get little traction in reporting a firm that merely had to “register.”

Related: How To Fight a Bad Contractor

Gwen Moran
Gwen Moran

Gwen Moran has written about finance and real estate for over a decade. Her work has been in Entrepreneur, Newsweek, and The Residential Specialist. A Jersey Shore resident, she's weathered hurricanes, Nor'easters, and one earthquake.