Warning for Residential Contractors
All licensed residential contractors should know that the Registrar of Contractors was created to be a friend to the homeowner, and its goal is to “protect the public health, safety and welfare by licensing, bonding and regulating contractors engaged in residential construction.” To achieve this goal, the Registrar is charged with the overall responsibility of dealing with persons engaged in residential construction to afford the public protection against incompetent, inexperienced, unlawful and fraudulent acts of these contractors. When John Q. Public homeowner files a complaint against a residential contractor, the Registrar of Contractors will be looking to protect John Q. Public’s best interests, not the contractor’s. Thus, if you are a contractor who is faced with having to answer a Registrar of Contractors’ complaint, it must be taken very seriously or else you risk the possible suspension or revocation of your contractor’s license.
Although there are many reasons why a homeowner may file a Registrar of Contractors’ complaint, the most common are the failure to perform in a “workmanlike manner,” failure to complete Corrective Work Orders, working outside the scope of the contractor’s license, not having a written contract, and not having a license when the work requires a license. Handymen doing small construction and repair projects that do not require a building permit, that cost less than $750 for both labor and materials (even if the homeowner purchases the materials), and are not part of a larger project are exempt from the licensing requirements of the Registrar of Contractors. But if the contracted residential construction work does not meet the “handyman” exemption, you must be a licensed contractor to perform the work.
If you are a licensed contractor and a complaint has been filed against your license, the Registrar may suspend or revoke your license for any one of twenty-four possible statutory violations. Yes, twenty-four! If the Registrar determines that a contractor violated one of these twenty-four provisions, the Registrar can revoke a license, suspend a license for a predetermined period of time, suspend a license indefinitely, place a license on probation, order the contractor to pay a civil penalty, order the contractor to increase its contractor’s license bond, order the contractor to post a separate disciplinary bond, order the contractor to do specified corrective work and/or pay a specified amount of money as restitution in order to avoid suspension or revocation of his license, or any combination of the above. If the Registrar issues a Corrective Work Order, the Registrar can impose a cash penalty of up to $500 for each violation of the failure to make ordered corrective work. The Registrar of Contractors may assess a civil penalty of up to $2,500 for each day a violation exists or continues.
If your license is suspended or revoked after a hearing before an Administrative Law Judge, the loss of your license is only the beginning of your problems. After a hearing, the Administrative Law Judge will make Findings of Fact and Conclusions of Law. Those findings and conclusions of the Administrative Law Judge cannot be re-litigated and are binding in any subsequent lawsuit which is likely to follow. Since the Registrar of Contractors can only sanction a contractor’s license and impose certain penalties, money damages are not available for a homeowner in a Registrar of Contractors’ proceeding. To make a claim for money damages, a homeowner must file a lawsuit in civil court. Since the Findings of Fact and Conclusions of Law in a Registrar of Contractors’ proceeding are binding in a subsequent lawsuit, if a contractor loses before the Registrar of Contractors, the contractor is almost guaranteed to lose in the civil court as well.
If the Registrar suspends your license, the Registrar will renew or reinstate the suspended license only after the contractor corrects all issues addressed in the order suspending the license. During the period of suspension, the suspended contractor may perform the contractor’s own warranty work and other corrective work. If a license is revoked, however, the Registrar of Contractors may not reinstate it until the passage of one year from the date of revocation, plus proof that the contractor has fully satisfied all harm caused to the homeowner that resulted in the license revocation. The contractor cannot perform the corrective work and must hire a licensed contractor to do so.
When a homeowner succeeds in having a contractor’s license suspended or revoked, the homeowner may seek compensation from the Residential Contractors’ Recovery Fund. A homeowner may recover up to $30,000.00 from the Recovery Fund against a sanctioned contractor. The contractor has the right to challenge the homeowner’s request for access to the Recovery Fund and/or the amount of money claimed by the homeowner. But proceeding to a Recovery Fund hearing could result in another problem for the contractor. Although a Recovery Fund payout is limited to $30,000, the Administrative Law Judge is not limited from entering factual findings that the actual damages to the homeowner exceed $30,000. The homeowner has the right to file a lawsuit in the Superior Court to obtain a judgment for the difference between what the Recovery Fund paid out versus the actual damages. And since the findings of the Administrative Law Judge are binding, the homeowner would be entitled to utilize the factual findings in the Superior Court lawsuit. If an Administrative Law Judge finds actual damages to exceed $30,000 in a Recovery Fund hearing, the contractor can expect a lawsuit for the difference and the homeowner is almost guaranteed to prevail in the civil lawsuit.
If you are a licensed contractor and if a Registrar of Contractors’ complaint is ever filed against you, do not defend it by yourself. Your license and livelihood are at stake, not just money. Hire an experienced, competent attorney to protect your license.