When do I need a general contractor and when can I hire a handyman without a contractor’s license? This isn’t a question we want to think about when a tenant is demanding immediate repair of a leaky roof, when a new demising wall is required for a tenant to occupy, or when a vehicle damages a perimeter block wall. In fact, we want to hire the vendor who can get the job done quickly and cheaply.
Arizona Revised Statute §32-1121 requires that a contractor possess a current and active license even before bidding on a project. Violation of this statute constitutes a class 1 misdemeanor. Jobs up to $1,000 that do not require a building permit are considered “handyman” jobs, and these are exempt from the statute.
Thankfully, managers and owners have the option of hiring a cost-effective “handyman” for minor repairs requiring less than $1,000 in labor and materials. Handymen are not required to maintain a general contractor’s license.
You may hire a handyman only to find that the cost runs over the $1,000 handyman limit. Even if the handyman provides a certificate of insurance, the insurance may not cover work that requires a license. In other words, just because you have a certificate of insurance on file doesn’t mean you’re covered. Of course, hiring a licensed and insured general contractor does cost more.
General liability insurance protects the management company and the owner of the property provided these entities are named as additionally insured. However, even with a certificate of insurance, the property manager and owner may have exposure if the vendor unlawfully performs work without a license. Insurers may exclude coverage if the party performing the work is required to hold a license but does not.
A property owner, while managing his own property, decided to hire an unlicensed repairman in order to save on the cost. The repairman was in the business of small repairs, and he carried general liability insurance. The job involved minor electrical work, and eventually the job cost ran over the $1,000 handyman limit. Unfortunately, the work was not up to standard, and faulty wiring was the source of a costly fire. The insurance company refused to pay the claim stating the repairman performed work that required a license which he did not have. This is not a situation in which a property owner wants to find himself.
Workers’ compensation insurance is an even greater concern. Property managers should require their vendors to carry workers’ compensation insurance and provide evidence of the insurance. If an employee or subcontractor of a vendor with no workers’ compensation is injured on the job, the policy of the party who hired the vendor may be the policy that pays the claim.
Your best bet is to hire approved vendors with adequate general liability and workers’ compensation insurance for the unforeseen emergency as well as for day to day business.