I often get asked what should the minimum qualifications be when selecting a contractor. Of course, the answer depends on the project. In addition to being competent, and if the project is set out to be a long-term one, a personality “match” is sometimes just as important (landscapers, property managers, etc.).
However, that is not the precise issue I want to address here.
What if you hire a contractor and they are not licensed (under their applicable trade)?
First, the Board has probably breached its fiduciary duty of care in hiring someone without the proper credentials.
Still, that is not what I want to touch on.
Second, let’s assume that “you did not know” they were not licensed due to an oversight (this still does not diminish my concern about breaching your duty as a Board member) but let’s say that is the reason why…
NOW – the contractor comes to your for payment. The problem is, however, that they have done a poor job, so poor in fact you feel that they have breached their contract with you and you (obviously) do not want to pay until it is done right.
I have heard many attorneys tell their clients “…go ahead and pay the balance of the invoice, and then sue for damages because then you have a tangible number for which you can claim as damages….”
Simply stated, be careful when this happens. If you ask them to cure the defect, they are still working without the proper license and you may get in trouble for continuing to work with them. This is the point in time to contact both our office and Utah’s Department of Professional Licensing (DOPL).
HERE IS THE POINT: Utah Code 58-55-604 states that a contractor may not commence or maintain any action in any court of the state for collection of compensation for performing any act for which is a license is required…
IN OTHER WORDS, IF THEY ARE NOT LICENSED WHEN THE CONTRACT WAS ENTERED INTO AND THE WORK WAS DONE – THEY CANNOT LAWFULLY SUE YOUR HOA.
Do not fall victim to their threats of court action to collect on the contract.
Contact us immediately if you find yourself in this situation for a full analysis and review of your rights.
This entry was brief but I hope if brings you some comfort if your Association faces this issue so you don’t end up paying just to avoid a suit by an unlicensed contractor. You have significant rights and the backing of the Sate of Utah if you find yourself in this position.
Hope these entries are informative.