CONTRACTORS : Read Fine Print Before Signing Contractor

Every homeowner has heard the scare stories: “The retaining wall was only up for six months when it fell on Uncle George,” or “We tried to call the contractor as soon as the new patio melted, but there’s a computer software shop at that number now.”

Maybe they weren’t exactly those stories, but property owners have always had a fear of having something go wrong with home repairs, only to discover they can’t find the person who did the work.

Worse, they find him but he denies his work wasn’t up to standards and mentions that he’s moving to Reno to be closer to the prison where his father is serving a life term.

It doesn’t have to be that way. State, county and local officials agree that property owners could save themselves a great deal of expense, court time and stress by following a few rules.

First, they say, nobody should hire an unlicensed contractor to do anything more complicated than pull out a tree stump or tear out some vines that have gone berserk.

Paige Roush, supervising deputy of the Santa Ana District Office of the Contractors State License Board in Santa Ana, says property owners who use unlicensed contractors may be risking their right to any kind of remuneration, since the board has no jurisdiction over workers who aren’t licensed.

Chuck Daleo, chief building official for the city of Fullerton, believes the use of unlicensed contractors may become more prevalent in the future. Daleo, who has spent more than 20 years working with builders, says the shaky economy probably means the problem will intensify.

“My experience has been that when you have a drop in construction activity, as in a recession,” he says, “you will have more unlicensed people on the street.

“They aren’t necessarily bad-intentioned. They may work for licensed contractors, but now there may not be enough work for them, so they tell you they can do masonry work, put in steps, block walls, patio covers, even new roofs and room additions.

“But they aren’t licensed, they aren’t insured and they aren’t bonded. The property owner has no protection. If some unlicensed worker puts a fence six inches onto a neighbor’s property, whoever hired him is going to have to pay to have it torn down.”

Roush, the Contractors State License Board official, points out that any work with a gross value of more than $300 requires the use of a licensed contractor. “You might think that you’re hiring a handyman,” she said, “and he’s just putting in a door here, or a light fixture there, but if he charges more than $300 for the work, he’s got to have a contractor’s license.”

A worker who acts as a contractor without a license, Roush said, may be guilty of a misdemeanor. In most cases, she said, the person is cited and possibly fined. In extreme circumstances, possibly involving multiple offenses or considerable damage to a property, they can be prosecuted criminally through the Orange County district attorney’s office.

Daleo said many independent workers mean well and may eventually become contractors. Others, however, may pose as licensed contractors, even using the state number of a real contractor.

“Anyone can see the number on a contractor’s truck or in his advertisements,” he said. “Nothing prohibits an unscrupulous person from using the number and even the name. This is real fraud, and we see it 20 to 30 times a year. The homeowner thinks he has hired a real contractor, but he hasn’t. And if something goes wrong, the homeowner is left with no recourse.”

Bill Reed, a spokesman for the city of Huntington Beach, says fraud has not been an issue in that community, but recalls a unique problem that left a homeowner and a builder upset.

“A contractor had put a patio slab next to a home and it looked fine,” he said. “All of a sudden, the patio broke and sank into a hole, and water started gushing from under the ground. An old artesian well, which had been capped years earlier, apparently had started to flow again. But that isn’t going to happen often.”

The key agency in these matters is the Contractors State License Board, an arm of the state government. Locally, its offices are at 28 Civic Center Plaza, Room 351, in Santa Ana. It issues a pamphlet warning property owners of the problems of so-called “moonlight” or “fly-by-night” operators, who merely set up business with a cellular phone and a pickup truck and see themselves as builders.

“If a person has a problem with a licensed contractor,” Roush said, “we can investigate it. We can talk with both parties and determine where the misunderstanding occurred.”

However, she said, since the agency has no jurisdiction over unlicensed workers, the board can’t help a homeowner get restitution or force a person to complete work that has been left undone. “To ask an unlicensed contractor to complete a job would, in essence, be aiding and abetting the violation,” she said.

The only thing the board can do along those lines is keep a file of complaints against unlicensed builders and “flag” them. That means that if the person should ever apply for a license, the “flag” will be noted and the applicant will have to explain it.

“It stays on the record,” she said. “Maybe forever, I’m not really sure, but at least 10 years. And if someone wants a license and owes someone some money, there might still be hope.”

In some cases, the Department of Consumer Affairs can be of help. It works closely with the Contractors State License Board and can answer general questions. Its telephone numbers are often busy, however.

Ultimately, many cases involving property owner and builder end up in court. Only those cases involving more than $25,000 in damage--a room addition or swimming pool might qualify--are likely to go to the Superior Court’s Civil Division. Disputes involving smaller amounts will go to Municipal Court. In Orange County, Municipal Court offices are in Santa Ana, Fullerton, Newport Beach, Laguna Niguel and Westminster.

Suits involving smaller amounts--up to $2,000 now and increasing to $2,500 on Jan. 1--are filed in Small Claims Court. Each Municipal Court division has a small claims office.

Employees in the North Orange County Small Claims Court say there is no way to determine how much of the caseload is involved with homeowner-builder disputes. One said a reporter would “have to come in and look at every case we have to see how many are builder disputes.” She was asked how long that might take. “Months,” she replied.

Another Municipal Court employee, who would not give her name, had a bit more information. She said she thought that only landlord-tenant disputes, always a staple in Small Claims Court, probably occupy more of the calendar than cases involving builders.

Roush’s pamphlet offers several tips for those who would like to avoid the headaches of litigation altogether. They include:

Demand to see the contractor’s state license. It’s about the size of a driver’s license. Assume that a builder who tells you he has forgotten his license doesn’t have one.

Call the Contractors State License Board and determine that the license is valid. It could have been suspended.

Ask for local references. Call to see if they were pleased with the contractor’s work.

Ask the contractor for a specific street address and business telephone number, and verify them. It could make it easier to find the builder should problems develop.

Solicit at least three bids for the work, and be sure all bids are based on the same specifications. Beware of a bid that is substantially lower than the others. It probably means the contractor has made a mistake.

Be sure everything is in writing before signing a contract. Don’t sign anything you don’t understand.

Look out for “come-on” or “high-pressure” tactics.

Never pay for the entire job in advance, and don’t pay cash without a proper receipt from the builder.