When we are starting to think about remodeling our homes, we’re much more likely to spend time thinking about the process and appearance of our remodel, rather than any legal aspects of the remodeling process. However, too many homeowners get into hot water with legal aspects around home remodels every year, being caught unaware of the risks and dangers that can be involved, and what is required of contractors from a legal viewpoint. Here we look at 4 legal aspects involved in remodeling, specifically in regards to the remodel contractor, that every homeowner should be aware of.

Contractor Licensing

The importance of using a licensed contractor for home remodels is paramount, and yet if you’re confused about what licensing is or how to tell if a contractor is licensed, you’re not alone. Each state has its own set of rules and regulations regarding contractor licensing. In California, anyone who contracts to perform work on a project that is valued at $500 or more for labor and materials must hold a current, valid license. For most home remodel projects, including kitchen remodels or bathroom remodel projects, this will mean that a licensed contractor is required.

A contractor’s license involves getting registered with the license-issuing agency (in California this is the California Contractors State License Board) and also involves proving that the contractor holds the minimum necessary insurance and bonding required. Becoming licensed may also involve passing competency tests about business practices and trade skills in order to ensure the capability of the contractor.

Furthermore, specialized technicians such as electricians, plumbers or HVAC technicians require more specific knowledge and experience than basic contractor licenses, and they may need to obtain trade-specific licenses that involve completing a minimum number of hours of work as an apprentice in the trade, passing a standardized written test based on their trade, and completing continuing education courses to renew their license.

Licensed Vs. Registered

Registration is another process some contractors may go through that is less stringent than licensing. It may simply require contractors to prove insurance and pay a fee. Sometimes it requires bonding, but registration rarely tests competency. Caution is needed however, because some places use the terms ‘licensed’ and ‘registered’ interchangeably, so if possible, simply ask your remodel contractor for clarification.

What About Bonding?

Bonding is traditionally a form of insurance that a contractor purchases to protect their customers from things that could go wrong with the remodel project, like failure to complete the job properly or failure to fulfil financial obligations such as paying for permits or subcontractors. In most states, contractors must be bonded in order to obtain a license. Choosing a bonded contractor is essential as it prevents the homeowner from being left with the costs of damaged or stolen property, poorly finished work, or unpaid bills and workers.

The Importance of Insurance

An uninsured contractor means that if something goes wrong in the course of your remodel project, you as the homeowner will need to pay the costs involved. An Insured contractor is essential for your peace of mind and safety, and most states require that contractors show proof of insurance before obtaining a license.

Insurance for contractors falls into two categories, liability and worker’s compensation, and both are necessary for contractors performing home remodel projects.

Save yourself from the stress, worry and costs of dealing with remodel issues by being prepared for these legal aspects of partnering with contractors and planning your home remodel project.