What to Do If Your Contractor Isn't Licensed

How to Tell If Your Contractor Is Unlicensed

There are several warning signs that a contractor may not be properly licensed. They cannot provide a license number when asked. Their license number does not appear in the state licensing board database or on LicensedCheck. The license number they provide belongs to a different person or business. Their license is expired, suspended, or revoked rather than active.

Sometimes homeowners discover the problem mid-project — the contractor fails a permit inspection, a subcontractor reveals the general contractor is unlicensed, or a neighbor or building inspector raises the issue. However you discover it, the important thing is to act promptly and protect yourself.

Stop Work and Document Everything

If you discover that your contractor is unlicensed and your state requires a license for the work being performed, stop making payments immediately. Do not pay for any further work until the situation is resolved. Document everything: take photos and videos of all completed and in-progress work, save all text messages, emails, and written communications, keep copies of your contract, receipts, cancelled checks, and any other payment records, and note the dates and amounts of all payments made.

This documentation will be critical if you need to file a complaint, pursue legal action, or make a claim with your homeowner's insurance. The more thorough your records, the stronger your position.

Your Legal Rights Vary by State

Your legal options depend heavily on which state you are in and what the licensing requirements are for the specific type of work being performed. In California, Business and Professions Code Section 7031 is one of the strongest consumer protections in the country — it prevents unlicensed contractors from enforcing contracts or suing to collect payment, and allows homeowners to recover all compensation paid. Some other states have similar provisions, though often less comprehensive.

In states that do not require a general contractor license — like Texas for general contracting — the situation is more nuanced. You may still have breach-of-contract claims or claims based on fraud or negligent workmanship, but you will not have the specific statutory protections that come with licensed-contractor-only states.

Consult with a local construction attorney who can advise you based on your state's specific laws. Many offer free initial consultations for construction disputes.

File Complaints with the Right Agencies

Report the unlicensed contractor to your state licensing board. Most boards have online complaint forms and actively investigate unlicensed contracting. In many states, performing contracting work without a required license is a criminal offense — boards can refer cases to law enforcement for prosecution.

Also consider filing complaints with your state attorney general's consumer protection division, which can investigate patterns of fraud. Your local Better Business Bureau complaint creates a public record that warns other consumers. Your city or county building department may have local registration requirements that were also violated. If the contractor advertised online, report the business to the advertising platform.

These complaints create a paper trail that strengthens any future legal claims and helps protect other consumers from the same contractor.

Recovering Your Money

Recovering money from an unlicensed contractor can be challenging, but you have several options. Small claims court is often the fastest and least expensive route for disputes under your state's small claims limit (typically $5,000 to $10,000, though some states allow up to $25,000). You do not need an attorney for small claims court.

For larger amounts, you may need to file a civil lawsuit. An attorney specializing in construction law can evaluate whether the potential recovery justifies the cost of litigation. If the contractor used deceptive practices, your state's consumer protection laws may allow you to recover attorney's fees and additional damages.

Check whether your state has a contractor recovery fund. Several states maintain funds specifically to compensate consumers harmed by licensed contractors — though these typically do not cover unlicensed work, which is another reason why verifying before hiring is so critical.

Your homeowner's insurance may cover some types of property damage caused by defective contractor work, though coverage varies by policy. Contact your insurer to discuss your specific situation.

Preventing This from Happening Again

The simplest way to avoid unlicensed contractor problems is to verify before you hire. Search the contractor on LicensedCheck.com or your state licensing board website before signing any contract or making any payment. Confirm the license is active, the classification matches your project, and the contractor has no unresolved disciplinary actions.

Always insist on a written contract that includes the contractor's license number. Get at least three bids for any significant project. Never pay more than your state's legal limit for a down payment — many states cap this at 10 percent or $1,000. Never pay in full before work is completed. And always verify that the person who shows up to do the work is the person (or company) whose license you verified — license fraud, where someone uses another contractor's license number, does occur.