License Board Troubles

When a dissatisfied customer sics the state License Board on a cabinetmaker, what sort of position is he in? May 5, 2007

I have a little problem that I hope some of you can advise me on. I have an 8-12 man custom cabinet shop in Louisiana. We have recently completed a job that came out really nice with the exception of 3-4 extremely minor, very typical punch list items (a couple doors need adjusting, homeowner doesn't like the knob location on the trash pullout, and 1 small gap between the cabinets and countertops).

The customer paid in full by credit card. We assured her that we would fix everything to her satisfaction before realizing that it seems that she does not want to be satisfied. I don't know what she wants? It almost seems like she is trying to set it up to get money back or something. We have returned twice to fix the items she complains about, which are extremely minor, easy to fix, and insignificant by most of my customers' standards. She is conveniently never home to inspect the work when our guys are finishing up. While in the process of scheduling another return visit to attempt satisfying her, I received a letter from the BBB. This is not a major problem because I responded quickly, and sent photos of the job which were so nice that they could be in a Home and Garden magazine.

Here is the new problem, and one that I have never had to deal with in my 20 years of operation. Just today I received a certified letter from the State Licensing Board For Contractors. In summary, the letter states that I am not permitted to perform home improvement projects exceeding $7500. The letter also implies that I am being considered a contractor, which I do not consider myself. The letter then goes on to recommend that I voluntarily cease work, and reply to them in writing within 3 days.

Here are a few facts that you probably need to help me:
1. We did enter into a contract with the homeowners.
2. The contract was written like this: Fabricate kitchen cabinets per computer design $18,500. Install cabinets $3,500.
3. The contract totaled $22,000.
4. Payment terms were spelled out as 3 progress payments totaling $22,000. Deposit 50%, Delivery Payment 35%, and Installation Payment 10%.
5. The cabinets were fabricated in our shop which is totally licensed (occupational license), incorporated, and insured.
6. The installation was outsourced to a subcontractor.

The way I see it is that I am a cabinet shop that offers an "in house" manufactured product at a price. I also offer subcontracted installation as a convenience to my customers.

So, that is where I am. Any advice will be greatly appreciated.

Forum Responses
(Business and Management Forum)
From contributor J:
I see this as real simple. Every time you need to go back and fix something on this job, insist that the customer must be present. When complete, have her sign off. If after numerous tries to correct this problem, she is just trying to make your miserable, then ask your lawyer to have a conversation with her. Did this once and it all went away!

As far as licensing issue, you have to sit down with your local licensing board and see what is required. I am in Florida and licensing here is insane!

From contributor B:
If you sign a contract wherein you agree to have the cabinets installed by a third party (a subcontractor), don't you have to be a licensed general contractor? That is how I have read the laws in CA. How can you write a contract for work which you are not qualified to perform? I am not certain, just asking.

From contributor W:
Has she paid in full by c.c.? Maybe she's the one who notified the licensing board. It would make sense of all the crap she's pulling that if she hasn't paid in full and now is trying to weasel out of paying the remainder... my take. There's definitely something inasmuch as she's never there to supervise punch out.

From contributor M:
I would start talking to the board and see what the requirements are. Maybe you can do this anonymously. In Texas, if a project is greater than $20K, you must be registered as a builder. If the cost of the project is more than $5K, then you must have a separate 'Construction Account.' If not, you can be sued for DTPA (Deceptive Trade Practices Act), and the homeowner can recover damages. That's right... you pay the homeowner for furnishing their cabinets.

In short, be careful and find out what the rules are. I am surprised that she has not filed a dispute with the credit card.

From contributor R:
I am in Baton Rouge. The law says you do not need to be licensed as a subcontractor until the job exceeds $50,000. Question is: was a permit pulled? And if so, who pulled the permit? If you pulled the permit, then you would be acting as a remodeling contractor, which the $7,500 cap applies to; if she pulled the permit (as a homeowner/self contractor), then you are acting as a subcontractor. I personally am licensed, because we do commercial work with millwork projects that are in the hundreds of thousands of dollars - so I have to be. If no permit was pulled, then you are still just a subcontractor for her unless you did some improvement to the permanent structure of her home - plumbing, electrical, framing. If you did not, then you are fine. With the new Act 12 windstorm that has passed the legislature and goes into effect Jan 01, '07, a lot of the laws and building practices have toughened, all due to Katrina and Rita. As far as pleasing this customer - good luck. I just had the same from one of your fellow New Orleanians.

From contributor H:
The license issue is clearly between you and the State Licensing Board For Contractors. Nobody here can advise you about that.

Regardless of the fact that you sub-contracted the installation, the homeowner signed a contract with you for installation and paid you to install.

"The way I see it is that I am a cabinet shop that offers an "in house" manufactured product at a price. I also offer subcontracted installation as a convenience to my customers."

You didn't offer an in house manufactured product at a price. You remodeled real estate. You performed home improvement.

From contributor D:
Tough problem. Here in Vegas, any type of work you do requires a contractor license. The contractor board is really homeowner centered and requires every little thing to be perfect for we contractors. My maximum is at $5000 and I have many times done jobs higher and only hoped I never got into your situation.

It appears to me that your customer may know the ropes and is trying to get her job for nothing by turning you over to contractor board.

It always has seemed strange to me that the contractor board is made up of our peers and yet they are so difficult to work with. You need to work with the board and see if they will be lenient with you. Probably least thing is you will have to increase your maximum, which will require all kinds of financial proof or a cash bond, etc.

From contributor G:
Contributor R raises an excellent point about who pulled permits and who the contractor was. When I do work on a house, I always specify that the owner is acting as his own contractor, and that all permits and compliance with codes will be the owner's responsibility, unless they have contracted with me to be the general contractor on the project.

It may be that by combining installation and manufacture into a single contract, you made yourself into a home improvement contractor unwittingly. In any event, you can certainly assure the board that all work on this project has ceased (as the work has been finished).