Making Sense of Chicago Contractor License Laws

Sarah Stevens says she was at her wits' end in late 2007. Prior to moving into her downtown Chicago condo earlier in the year, she hired Progress Remodeler to remodel two bathrooms and do repairs in a laundry room. After experiencing what she says was miscommunication, postponements and disputes over work quality, Stevens asked the company to refund half her $8,000 payment.

Progress offered to redo Stevens' work under warranty, but she insisted on a refund. She says her attempts to get one proved unsuccessful.

But soon after initiating a complaint with the City of Chicago's Department of Business Affairs and Consumer Protection, which led to an administrative hearing, she received $3,200 in court-ordered restitution.

Court documents indicate the city charged Progress with violating local law for not holding the proper license to perform the work. "I was thrilled," Stevens says. "My last recourse was to incur legal costs and take them to court."

Chicago's home repair license

The court action spurred Progress owner Casey Wdowiak to obtain his Chicago home repair license in 2008. He says he didn't agree with the hearing's outcome but wanted the issue resolved. His company paid Stevens' restitution and $1,900 in fines.

According to a 1992 law, businesses that fix, replace, alter, convert, modernize, improve upon or make an addition to any real property that is primarily used as a residence within Chicago's city limits must possess a BACP-issued home repair license. To obtain one, companies must pay a $250 biannual fee and submit proof of $300,000 liability insurance.

Many contractors seem unaware of the law. "It's surprising how many people, licensed or unlicensed, don't know what the law requires of them," says BACP spokeswoman Efrat Stein.

The home repair license also allows consumers to initiate complaints that can lead to fines of up to $5,000 for violations, and possible restitution.

"One of our primary goals in prosecuting a business is to make sure the consumer receives restitution whenever we can," Stein says, pointing to Stevens' case as an example.

Of the 100,000 BACP licenses typically active in a given year, including liquor, taxi and auto repair shop licenses, only about 2,600 are home repair licenses. Last year, Stein says her office investigated nearly 500 home repair-oriented complaints, with the majority lodged against improperly licensed businesses.

Chicago general contractor license differs

But a homeowner may be easily confused by the general contractor's license issued by the Buildings Department. The type of work regulated by both the home repair and general contractor licenses can be almost identical.

Like the home repair license, general contractors must submit proof of insurance and pay a fee, and no certifying exam is required. Annual fees range from $300 to $2,000 and insurance coverage minimums are $1 million to $5 million. But the general contractor license allows an individual or business to hire subcontractors and obtain permits, whereas the home repair license does not.

The general contractor license also is not intended to protect consumers' pocketbooks. "The home repair license is designed for consumer protection," says Bill McCaffrey, Buildings Department spokesman. "The only time we take disciplinary action is if they were suspected of improperly using their license."

Pulling your own permits

Former Chicago homeowner Sheri Long says prior to moving this year, she and her husband Jerry remodeled their downtown condo's kitchen.

She says she was dismayed when their contractor, Gregory Construction in Northbrook, which is highly rated based on two reports, asked that she obtain the work permit because he didn't carry a general contractor's license. The law allows homeowners to act as their own general contractor and obtain permits for work on their own homes, as long as specialized trades like plumbers and electricians carry proper licenses.

Despite delays and problems such as a 2-by-4 board flying out her sixth-floor window, Long says she ultimately was satisfied with the work. But she insisted on using a licensed general contractor when remodeling two bathrooms just prior to moving.

"There are probably many unlicensed contractors who do great work without problems like we experienced. But we're never going to take that chance again," she says.

Gregory Construction, which has never held a Chicago general contractor license or home repair license, according to Stein and McCaffrey, did not return calls seeking comment.

Some jobs require both licenses

Some home improvement professionals may need to carry both licenses. "The home repair license allows you to work on homes, and if you subcontract work or the work requires permits, you would also need the general contractor license," Stein says.

Dan Gbur, president of Samanco Construction, a highly rated Chicago kitchen and bath remodeling company, says his industry, with varied job sizes that could require multiple permits and trades, is a perfect example of why he carries both licenses.

"The general contractor license doesn't supersede the home repair license, so it's definitely necessary to have both," he says.

But it's up to the homeowner to ensure a contractor is properly licensed. According to Stein, if BACP actively verifies a professional's home repair license, it's generally not until after the office has received complaints.

Although general contractors and skilled trades may need a home repair license, the Buildings Department only verifies license information for the general contractor, electrician, plumber and masonry licenses it regulates before issuing permits.

Differing views on licenses

Home improvement professionals' opinions about the value of licenses are split. "The home repair license is strictly a number; you pay them your money and they say, 'Here's your number.' It doesn't protect the consumer," says Rick Selle of R.A.S. Concrete in Gurnee.

But others believe consumer restitution provided by the home repair license or the mandatory insurance required by both licenses are an important consumer safeguard, even though a company's insurance premiums may result in higher fees charged to customers.

"It adds several dollars to my hourly labor rate," says George Emerick of home repair-licensed A Good Handyman in Chicago. "But the customer gets a lot more protection should something go wrong."