Contracting Trouble Complaints: Unlicensed contractors have become an increasing problem, underbidding licensed builders and then doing shoddy work.

September 15, 1996|By Adele Evans | Adele Evans,SPECIAL TO THE SUN

When James Gorham was seeking bids for new windows and siding at a rental property he owns in the Howard Park area, one contractor underbid everyone else by a whopping $5,000.

Gorham snapped him up, shelling out $6,000 upfront with a $6,000 balance due when the job was finished. A year later, Gorham is still waiting.

"For a few days he worked. Then he showed up less and less," Gorham recounted. "It went on and on. He fooled around. I almost begged him to finish. I threatened to sue him."

After paying the contractor $3,000 more to continue, Gorham became increasingly frustrated with the man's erratic schedules and no-shows. One day, the contractor returned to "finish" and stayed for only an hour. That's when Gorham contacted the Better Business Bureau and the Maryland Home Improvement Commission. It turned out the contractor was unlicensed.

The case went to District Court, and the contractor was ordered to pay Gorham $7,850 restitution in biweekly installments. The first payment came right on time in August, but so far, that's

been it. Meanwhile, Gorham has had to hire another contractor.

Unlicensed home improvement contractors, or "jacklegs," have become a nagging problem for Maryland's legitimate contracting industry. About 12,500 licensed home improvement contractors perform $3.5 billion annually in maintenance, repairs and improvements, according to the Maryland Improvement Contractors Association. MICA estimates that just as many full-time or part-time people are working without licenses. That's responsible for driving many contractors out of business, says Bob Mead, MICA spokesman.

"To the licensed contractor, they're a huge problem," Mead said. "They're working for half the pay and still profit. It cuts badly into a licensed contractor's business. The result is that licensed contractors have had to cut prices or go out of business."

As a result, licensed contractors are pushing for tighter controls and tougher punishments for jacklegs -- and legitimate contractors who hire them -- despite criticism that excessive red tape and expense shut out too many good workers.

"This is a huge underground economy that is taking hundreds of millions of dollars from legitimate contractors," Mead testified during the last legislative session.

It's already illegal to practice without a license in Maryland, with penalties including fines up to $5,000 and up to two years in jail. Prime contractors can lose their license for hiring unlicensed contractors. But with just 10 inspectors to cover Maryland, the state's regulatory agency, the Maryland Home Improvement Commission, pursues cases only when consumers file formal complaints. The usual sanction is court-ordered restitution.

In fiscal 1996, 801 complaints were filed with the MHIC involving unlicensed contractors, and the courts ordered unlicensed contractors to pay $781,145 in restitution to owners.

Officials point out that court-ordered restitution is not the whole picture. It only arises when homeowners are unhappy with the job. Even then, many cases are settled out of court or owners withdraw complaints, and many settlements don't involve the total value of the contract because some work has been completed. Many homeowners never bother to file a formal complaint.

"Many of them [unlicensed contractors] prey on the less educated and the elderly," said Georgia Duffee, MHIC director. "The only ones we hear of here are complaint-generated."

John Swain of Accusystem, a certified home inspection firm in Catonsville, has been called out to several problem jobs done by unlicensed workers. They have usually involved smaller tasks, such as replacement windows, where the owner was talked into an expensive product and got a bad job. But Swain cautions that a license doesn't guarantee top-quality work and urges people to get references and go see previous work before hiring a contractor.

"A license is a step but by no means all," he said.

Likewise, legitimate contractors also get calls from homeowners who need them to clean up after a botched job.

"Often times we get calls to look at jobs badly done, half done, or not done at all, by people who are scam artists," said Walter Stefanowicz, president of Bay Builders Inc.

"They're a plague," he said. "They can be in business today and out tomorrow. They're not licensed or insured; they operate with the barest of overhead."

"It hurts our business," Stefanowicz said. "People tell us 'Sorry, his price was half of yours.' We know he can't do it that low."

Still, consumers want to save money and many knowingly turn to unlicensed workers.

"Price, price, price," said Kim, a new homeowner who declined to identified, about why she hired jacklegs to lay her kitchen tile and complete landscaping. Kim watched them every tile of the way, and is satisfied with their work and their price. She paid them only when the job was completed.

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