The following information is provided by the "Arizona Registrar of Contractors" and is available for viewing at http://www.rc.state.az.us/Invest/invweb.html#Why_hire_licensed

The cost of buying and owning a home is probably the biggest investment made by most people in their lifetime. Property owners therefore often look for the lowest price when looking to build or remodel a home. Since most unlicensed contractors are not bonded or insured and do not pay into the residential contractors' recovery fund or pay any unemployment compensation for their workers, they can often under bid the licensed professional. This bottom line may at first be attractive to the property owner, as a way to lower costs and save money. Most of the time, it is not.

With the unprecedented growth in the country, and especially in the southwest, hundreds and even thousands of "would-be" contractors have appeared. People who may have worked as a laborer or a framer for a short period of time decide that they are ready to start their own business. In spite of the fact that they lack sufficient capital and experience, they print up flyers, distribute business cards and place an ad in the yellow pages.

In an attempt to get "the best price", the unsuspecting customer calls the number listed on the flyer or in the ad and asked for a bid. Often, such operations are run out of a mail drop or on an answering machine, but someone usually calls the customer back. When you get the bid, you are really pleased at how much this person / company says they can save you. You may even see "licensed, bonded and insured" on the business card or in the ad. Then the story begins. The contractor tells you he is going to need a large portion of the money up front. He may say he needs it to purchase materials, or to pay workers for another job where the property owner is slow to pay. He may even tell you about the unexpected medical bills he had to pay for a sick child (that he really doesn’t have), in hopes of gaining your sympathy.

At first things may seem fine. In a day or two a worker shows up and starts measuring, or a small load of material is delivered to the job site. Then the excuses begin. After a week has passed, with no work being done, you call your unlicensed contractor. All you get is a recorded message, so you leave a message, politely requesting a return phone call. Several more days passed, with no response, so you call and leave another message, not as polite as the first. When the contractor does call, he is very apologetic and tells you about some catastrophe involving either his truck, his family, his help or another job he just had to complete. He promises to get right on your job the next day. A week later he still hasn’t shown up, or he does show up and says he needs more money.

Sound ridiculous? Well it happens every day, often with the consumer losing hundreds or even thousands of dollars. You, as the property owner have little recourse other than to pursue the matter in court.

Hiring a licensed contractor offers many additional protections to the property owner, especially regarding residential property. First of all, a contractor cannot obtain a license without possessing a minimum amount of experience and must pass a business management test. The applicant also may be subjected to a criminal history background check, and must not have any unresolved contracting complaints outstanding.

Should you experience the above problems with licensed contractor, you as a residential property owner have significant protections not available to persons utilizing an unlicensed contractor. Among them is the ability to file a complaint against the contractor’s license, in most cases, for a period of two years from the date of occupancy or date the last work was performed. This is your guarantee should the workmanship be below standard or in violation of existing codes.

Under certain conditions, you may also be eligible to apply to the residential contractors' recovery fund and receive up to thirty thousand dollars to have the work corrected or completed. Each licensed contractor is covered for up to $200,000.00 to a maximum of $30,000.00 per residential property owner, on a first come, first serve basis upon filing a complete claim. Keeping detailed records of your contract, checks or other forms of payment will speed the processing of your claim, should the need arise. For more detailed information, you may contact the Residential Contractors' Recovery Fund in Maricopa County Monday through Friday during regular business hours at 1 (602) 542-1525 extension 7730 or from elsewhere in the state at 1 (888) 271-9286, toll free. These protections are in addition to other remedies available through the courts.

How to Avoid Becoming a Victim of Unlicensed and Unscrupulous Contractors

Each year, thousands of property owners in Arizona are solicited by unlicensed contractors who promise deals which sound too good to be true. Most of the time, they are, and all too often, the complainant is defrauded out of hundreds or even thousands of dollars. Some of the questionable tactics a consumer should be on guard against are:

DON’T accept a contractor’s advertising or word as proof of being legitimate or of possessing a current, valid contractor’s license. Call the ROC.

DON’T respond to "scare tactic" door-to-door salesman who say they were just driving by and notice a problem with your roof or driveway, and they just happen to have extra material on their truck. Call the ROC.

DON’T make major or full advance payments to the contractor for purchase of "tools" or "material" for your job site. Con men will often do superficial defective work, or even no work at all and never return. You then might encounter major bills to correct the damage or problems left behind.

DON’T supply telephone solicitors with credit card or other personal credit information on promises of free inspections or free gifts. Call the ROC, the Attorney General’s office, or the Better Business Bureau to check on other consumer complaints against the company.

DON’T accept the first price or bid that comes along, especially on major construction or remodeling projects. Be skeptical of bids or prices that are much lower than others obtained. Be sure all bidders possess current contractor’s licenses for the type of work to be performed.

DON’T assume that even if a contractor is licensed that you will get what you pay for and be protected. Occasionally, even licensed contractors develop financial difficulties, have employee or credit problems, or fail to keep their license current. Call the ROC before signing any contract or advancing any large payments for work that has not been performed.

DON’T allow solicitors or contractors to have access to your home or property without a prior appointment, and without having first verified the contractor’s name, the name of the business, the company’s current contractor license number, and the name of the person who will be sent to your home to do the work.

DON’T judge a book by its cover. Many con men depend upon their victims being fooled by their friendly, professional appearance or confident approach.

They may also take the other approach of attempting to intimidate or threaten people into signing contracts or making payments. Call the Registrar of Contractors or call your local police.

DON’T forget that you are the customer. That means that you may also be a target for a fraudulent scheme or theft. Call the ROC!

Remember there is seldom a case where a property owner needs to sign a contract immediately.

A contractor who tells you that the work must be done right away, for your family’s or your own safety, is probably trying to force an immediate sale, or is perpetrating a fraud.

If you are told, or believe you have an emergency, such as a gas leak, or a serious electrical problem, call your local fire department or public utility company.