Arizona Contractor License FAQs - Contractor Inspections

Arizona Contractor Inspections

What should I do if I have a problem?

If a dispute occurs while a project is under construction or after it is completed, the property owner should turn to the contractor first, applying equal doses of diplomacy and reason. On the disputes over workmanship, two reasonable parties usually can resolve their differences with an honest effort.

Occasionally, talking to the contractor does not solve the problem with workmanship. Perhaps there is an honest disagreement as to whether the work or materials are substandard. Or maybe the contractor has gone out of business and abandoned the job.

The Registrar of Contractors offers several methods of resolving disputes. The methods range from having all parties meet at the work site with an impartial inspector who will recommend a solution, to a formal hearing where specific action can be ordered. The primary goal of this process is to get necessary repairs performed for the homeowner. An important secondary goal is to remove the license from contractors who cannot or will not play by the rules.

How to file a complaint

When you are unable to resolve a dispute with a contractor through informal discussion, it may be necessary to file a formal complaint with the Registrar of Contractors. As a general rule, a complaint about defects in workmanship must be filed within two years of the completion of the project or occupancy of a new house.

Complaint forms are available at the State Registrar of Contractors Office.

On the complaint form it will be necessary to provide some basic information such as your name and address, the contractor’s name and address, the date of the contract, when the work was performed and the nature of the problem. A construction inspector is assigned to investigate each complaint. Chosen for their construction knowledge and experience in the industry, the inspector fills the role of an impartial third party who will evaluate each side’s position and reach an independent judgment as to responsibility.

What happens when a complaint if filed with the Registrar of Contractors?

• Licensed Complaints
  Once a complaint has been determined to be against a licensed contractor, it is assigned to a Construction Inspector. The Inspector will examine the allegations and decide if there are workmanship questions which require a job site inspection.
  
  
• Notice of Complaint
  The contractor is mailed a copy of the complaint filed against him. If a job site inspection is necessary, the contractor and the complainant will also be advised of the scheduled time and date.
  
  
• Inspection and Investigation
  The Inspector will research and evaluate information gathered through inspections, plans and specifications, building codes, workmanship standards and data supplied by the contractor and complainant. He will then make a decision, based on this material, as to the validity of each allegations made.
  
  
• Unsubstantiated Complaint
  If the inspector concludes that the allegations have no merit, he will notify the contractor and complainant by letter of this decision. The complainant will then have ten working days to request a hearing.
  
  
• Corrective Repair Order
  Should the inspector determine that some corrective action is required of the contractor, the contractor and complainant will be notified by letter of the items the inspector feels must be resolved.
  
  
• The Contractor is generally given fifteen calendar days to comply (a longer period of time may be given if circumstances warrant). The contractor or complainant may request an administrative hearing at this point.
  
  
• Administrative Hearing
  Although more than 80% of all complaints are resolved without an Administrative Hearing, any disciplinary action must come from here.

Financial Protection

The State of Arizona requires licensed residential contractors to provide financial protection to their customers. The protections apply whether you buy a new home, remodel, build a swimming pool or have a new roof put on. In order to recover money to compensate for damages on such a building project, legal action in civil court is required. While the advise and guidance of a lawyer may be helpful in settling a dispute, a lawyer is usually necessary when litigation is involved.

In order to obtain a license, a residential contractor must post a cash deposit or surety bond of $1,000.00 to $15,000.00. In addition, the residential contractor must either pay into the recovery fund or post a second bond of $100,000.00. The vast majority of contractors have chosen to participate in the fund; therefore, there are actually two bonding programs offering financial protection. We will explain in some detail how to collect from either program.

How to Collect From a License Bond

When a residential contractor becomes licensed by the State of Arizona, he or she must post a license bond ranging from $1,000.00 to $15,000.00. The money may be posted in the form of cash, a certificate of deposit or a surety bond. The first thing to do is to find out the type of bond held by the contractor and to make sure that it has not already been paid out. This can be done by calling any of our offices and asking for bond information on the particular contractor.

If the contractor has a surety bond, the surety company has the statutory right to pay a written claim prior to court action, but generally most surety companies require a judgment against the contractor and the surety company. So the first step with a surety bond is to file a written claim with the surety company. If the surety company does not want to pay your claim, then it is necessary to bring a lawsuit against the contractor and the surety company. Once a favorable judgment is received, the surety company will make payment to you. It is beyond the scope of this Agency to review the detailed procedures required during the lawsuit. For that you need to seek legal counsel. We also recommend that you review the statutes governing bonds and the recovery fund which begin at A.R.S. 32-1152, copies of which are available at any of our offices.

In order to collect from a cash bond, it is only the contractor who must be sued. It is important that our office be notified in writing when a lawsuit against a license bond has been started. This will prevent the bond from being refunded to the contractor.

A civil judgment against the contractor must specify that it may be satisfied from the cash bond on file with the State Treasurer. Since bonds are paid out in the order that judgments are received by the Treasurer, it is possible that a contractor’s account could be depleted before you are able to obtain recovery. For that reason, it is advisable to act promptly when a problem can’t be resolved administratively.

A lawsuit against a license bond must be started within two years after the commission of the act on which the claim is based. When payment is made from a license bond, the contractor’s license is automatically suspended.

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