Legal Question in Construction Law in California

Re: unlicensed contractor

Of course it won't work. There are problems everywhere with this arrangement. You cannot contract without a license, which is what your neighbor is proposing to do. You cannot "borrow" a license. Technically, this man will be your employee and if he gets hurt without your having worker's compensation insurance... I don't have the space to tell you all that will happen to you if this occurs. Suffice to say that I'm handling a case right now where a homeowner hired unlicensed people to work on his home and didn't have worker's compensation. One worker fell off the roof and shattered his leg. Even the defense agrees that the damages are in excess of $1,000,000. The other problem is that unlicensed contractors are invariably less skilled than licensed people. Worker's comp carriers are much more savvy than your neighbor realizes. They audit the policies and I'd also be surprised if the contractor with the policy wants to take the risks for a mere $1000.

Your alternative is to either hire a licensed contractor or take out your own workers compensation policy as well as hire a payroll service for the men and women you hire. My advice: hire a licensed contractor, check to be sure that he has both workers compensation (if he has employees) and general liability insurance. Check his reputation by calling not only customers, but a couple of the vendors he regularly uses. Even with using a licensed contractor remodels can be remarkably tense and difficult.

Re: unlicensed contractor

One possibility is to check with your homeowner insurance provider. Most homeowner policies have some (very limited) workers' comp coverage for domestic, temporary, etc. workers on your property. Don't exceed the boundaries of that coverage, though.