Contractors - get registered!
Regularly, I volunteer at law clinics for low-income workers around the Greater Seattle area. The saddening presumption that I hear from contractors: I don’t need to be a registered contractor to do work. Its never easy to tell them, “yes, you do.” Washington’s Contractor Registration Act mandates that all persons or entities who bid, offer or actually perform any type of construction work must be registered as a contractor under RCW 18.27.
Three things that people often do not understand:
(1.) Construction is broad -
Over time, the Legislature has broadened the definition of construction work. It now includes just about anything from hanging a door to hammering a nail.
Furthermore, the minimum value of work is only $500.00, and you must be registered to perform any work above that amount. The only other exemptions are provided under RCW 18.27.090.
(2.) Homeowners Might Need to Register -
In the past, people would just buy properties, act as their own contractor and then sell properties. The Legislature changed the law in 2007 to require a homeowner to reside in the property for one year after completion of construction, otherwise it must be registered.
If you are a contractor, working for a “flipper,” you probably want to have your own registration (to avoid working for a potentially unregistered contractor).
(3.) Unregistered Contractors Cannot Sue for Payment -
This is the subject of this article. Often I hear contractors, who have been told a street theory that contractors can still sue for payment, but they might have to pay a fine. This is simply, not true.
A recent article by South Carolina attorney, Ryan McCabe, discussed a South Carolina court opinion that denied an unlicensed contractor a claim for payment when the contract exceeded $30,000.00. Well folks, South Carolina is lenient.
In Washington, Courts restrain unregistered contractors from making a claim against homeowners and the public. As an unregistered contractor – you will not be able to sue for payment.
The principal is put forth in RCW 18.27.080, where the law states, “No person … may bring or maintain any action in any court of this state for the collection of compensation for the performance of any work … without alleging and proving that he was a duly registered contractor.”
The Courts have routinely upheld that an unregistered contractor cannot recover payment for its services. Andries v. Covey, 128 Wn. App. 546, 550, 113 P.3d 483 (2005) dismissed a lien claim filed by a person who was acting as an unregistered contractor. The Court, in Stewart v. Hammond, 78 Wn.2d 216, 220, 471 P.2d 90 (1970), stated the fact that the law discourages noncompliance with RCW 18.27, “by providing a criminal penalty, RCW 18.27.020, and by denying offenders access to the courts for collection of compensation for performance of work or for breach of contract. RCW 18.27.080. Thus, your demand for payment, as an unregistered contractor, might be met with both a letter from the contractor/owner denying payment and a letter from L&I slapping you with a gross misdemeanor (or several), hefty fine and a two-year audit.
The moral of the story: Get Registered. You can follow this link to find out more on how to get registered. L&I provides simple advice for getting registered quickly. The cost of compliance is far outweighed by the cost of non-compliance.
