The Unlicensed Sub and the Failed Inspection
A licensed general contractor subcontracts the electrical rough-in on a $300,000 addition to a sole proprietor who holds no electrical license. The GC reasoned the sub was "just helping" and that the GC's own license covered the work. The electrical rough-in fails inspection, and the local inspector issues a stop-work order on the electrical scope. The homeowner has paid the GC $180,000 to date. The electrical sub has been paid $14,000 and has disappeared. The GC now must hire a licensed electrical contractor to correct and complete the work at an estimated $22,000. The homeowner demands the GC cover all correction costs and threatens to report the GC to the licensing board.
1. Did the GC violate licensing law by using the unlicensed electrical sub, and what is the GC's exposure?
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Yes. A general contractor's license does not authorize electrical work; electrical contracting requires a separate electrical license. Subcontracting licensed-scope work to an unlicensed person is a violation, and the GC cannot cure it by pointing to its own license.
Exposure includes:
- Disciplinary action by the licensing board - the homeowner's threatened complaint is a real risk.
- Liability to the homeowner for the cost to correct and complete the work, since the GC is responsible for its subcontractors' performance and for delivering code-compliant work.
- Loss of the $14,000 paid to the vanished sub, plus the $22,000 correction cost, which the GC likely cannot recover from the sub.
- Potential stop-work and schedule impacts on the rest of the project.
2. What should the GC do now, and how should the correction cost be allocated?
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Immediate steps:
- Hire a properly licensed electrical contractor to evaluate, correct, and complete the rough-in; obtain the permit in the correct name and schedule reinspection.
- Document the failed inspection, the stop-work order, and the correction scope.
- Cooperate fully with the inspector and the board; do not conceal the unlicensed sub.
Cost allocation: The GC should bear the correction and completion cost ($22,000) and absorb the $14,000 loss on the vanished sub. The homeowner should not pay twice for work the GC was obligated to deliver compliant. The GC may pursue the sub for the $14,000, but recovery is uncertain.
Prevention: Verify licenses and insurance before any subcontract; require license numbers on subcontracts; and never treat a trade sub as "just helping" to avoid licensing requirements.