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When Contractors Aren’t Licensed, Property Owners May Face Liability

Blue sign that read liable

When you’re rehabilitating an investment property, you have to be careful not to put more money into the renovations than you can expect to make from a subsequent sale. This often means shopping for contractors who can do the job well on a reasonable budget. This balancing of capability with budget concerns leads some investors to hire a general contractor whose license seems either dubious or nonexistent. After all, it’s the contractor who takes the risk by not being licensed and not the property owner, right? Not necessarily. Hiring an unlicensed contractor can lead to trouble for a homeowner.

Homeowner hires unlicensed contractor to handle landscaping and tree-trimming

A recent California court case is an example of the risks property owners take by hiring an unlicensed contractor—and the possible liability they can face. The case, which was decided by the California Court of Appeals earlier in the summer, is titled Jones v. Sorenson. The property owner, Danita Sorenson, hired a company called Designs by Leo to do her landscaping about 14 years before the accident on her property. The owner of Designs by Leo, Odette Miranda, was not licensed in any way. Miranda hired Mary Jones—the eventual victim—to assist her in her landscaping business.

On the day of the injury, Jones was using a ladder to trim a 15-foot-tall oak tree. For reasons that were contested at trial, Jones fell from a height of 8 to 10 feet, suffering serious injury. Jones filed a lawsuit against Sorenson for her injuries. Normally, a property owner would not be financially liable for the injuries of someone employed by a general contractor. However, this is no longer the case when the general contractor isn’t licensed. According to the California Labor code, if a worker is doing a job for which a license is required (or working for someone who should have a license), that person is considered to be an employee of the person who hired them.

Injured assistant to unlicensed contractor considered property owner’s employee

The trial court ruled that Jones was indeed Sorenson’s employee and, thus, was entitled to compensation for her on-the-job injuries, and Sorenson appealed, but to no avail. The trial court ruled that Miranda should have had a tree trimming license, but Sorenson argued instead that Miranda should be considered a “nurseryman.” Nurserymen are permitted under the Business and Professions Code to perform “incidental pruning of trees” without a tree-trimming contractor’s license. They are, however, required to hold a nursery operator’s license, which Miranda did not have. The judges affirmed the trial court’s opinion that Jones was Sorenson’s employee, and that Sorenson was thus liable for her injuries.

If you’re a real estate investor facing a legal issue in California, get help from seasoned and professional legal counsel by contacting San Diego real estate attorney Jon Alan at 619-421-3956.

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