At this point, contractor registration laws have been passed by the legislative bodies of the State of Idaho. We do not espouse bucking the law. However, we do contend the consumer and the small contractor will pay a high price for the law. We recommend repealing the law in all states, if the opportunity arises.
Below is a copy of a letter I wrote to other contractors during several legislative seesions after I moved to Idaho, before the law was passed. After that, is a copy of a legal review I wrote in 1997 regarding an appellate court case in Washington State where the tradition of dismissing municipal obligations to a building permit related suit was once again reinforced. I hope after reading these two articles, your understanding of the issues and what is at stake will be increased.
The Letter
Does it make us more professional to espouse views that increase regulations and the cost of construction? Or don't you agree, contractors owe an obligation to the consumer to fight needless regulation and do our best to help control the cost of housing for you and your children? Then please read on . . .
Remember: quality and licensing are not related!
- Contractor registration is a straw man:
- It regulates the most basic element of entrepreneurship -- the ability to freely market the labor of one’s hands;
- This will make criminals of those who do not agree with the regulation of the state (and we always need more jails).
- It establishes another bureaucracy that will increase the burden upon the contractor with fees and increasing regulations;
- This increases the cost of housing for the homebuyer.
- It will increase the cost to local building departments which will have to meet State requirements and procedures for registration verification;
- This will increase the cost of permits and property taxes.
- It will reduce Idaho’s market share of affordable housing as the gap between costs in Washington State and Idaho diminish;
- This will reduce jobs and revenue in the State of Idaho.
- It will make it difficult for young contractors to enter the market;
- This will reduce or eliminate competition which means higher costs to the consumer and taxpayer.
- It provides a false sense of security to the consumer while providing no relief or accountability;
- This will give empire-builders more power to micro-manage commerce, making more-and-more rules while extracting more-and-more fees.
It is a common notion in our lost republic to use the tool of civil government to solve all of our problems. The easiest solution to a perceived crisis is to call upon our lawmakers and promote another public law. Most these problems are not real but are stirred up by special interest groups with the aide of the news media.
At the time of this revised writing [March 2004], the most recent contractor registration bill is promoted as a consumer protection measure but nobody can explain how it protects the consumer! According to the Coeur d’Alene Press article (Contractor Bill Clears Senate, 27 Feb 2004), Senator Dick Compton recommends even if this bill becomes law “people should check references when selecting a contractor.” This bill does nothing but provide people with a false sense of security.
“Buyer Beware” has been and always will be the best consumer protection. Any legitimate contractor will be willing to provide proof of insurance and references to prospective clients. This bill adds nothing to this and there is no bill capable of changing or perfecting the rotten character of some people; no matter what profession.
The best consumer advocacy is to provide for their prosperity. Competition benefits the consumer more than a toothless “watchdog.” If you register contractors, you reduce competition and you increase the cost of housing. Licensing, or registration, has not eliminated or even reduced contractor scams in any State. The State will license anyone who meets the qualifications set forth in the statutes. In licensed States, there are licensed rip-offs.
Not only do bonding or certification requirements do nothing to stave off bankruptcy or scams, but we build a giant bureaucracy upon the premise that it does so. Certainly, this bureaucracy will start small and have a minor budget but you know that the nature of bureaucracy is to build empires. As the burden of the bureaucracy increases, the cost of construction will increase, the people will demand more control of an industry going out of control, the bureaucracy will increase, the burden increase, the cost of construction will increase . . . and on, and on. In time, Contractor Registration will have multi-storied buildings with skywalled atriums and mezzanines and three hundred thousand dollar fish tanks, filled with armies of bureaucrats with benefits and pensions that far exceed the hopes and dreams of most small-time contractors and we will be wondering how a starter home came to be $250,000 so fast.
- Two sidenotes on the previous paragraph:
- Idaho is facing huge shortfalls in meeting the budget this year and our elected officials are discussing adding new bureaucracies to siphon even more taxpayer money;
- North Idaho, like it or not, is the bedroom, or suburb of Spokane. The only reason our housing market is so strong is because of the regulations in Washington State. The Growth Management Act in Washington State adds almost twenty-five percent more to the cost of housing than the regulations in Idaho. Idaho is very attractive to the starter-home buyer. If we increase our regulations and our fees to meet Washington’s, our market will diminish, if not disappear. Then we will lose jobs and tax base.
You only get what you pay for: If you hire just any low-bidder to work on your house, it will cost you. If you want civil government to protect you from your own laziness or lack of common sense, it will cost you. Don’t be fooled: every little regulation, every little fee, every little tax and every little report and piece of paper add to the increasing cost of housing.
Don’t be deceived by industry experts who try to convince you this is a good bill and try to convince you there is unity in the construction industry. When I belonged to the North Idaho Building Contractors Association, we were split wide open. It was the leaders who were promoting this (and most of them were from California) and it is their desire to squeeze out the competition to increase the cost of their services and the value of their assets. Who will protect us from that? – and they do not intend to stop there. They will promote Conservation Easements, Growth Management ordinances, Development Rights Transfers, stricter building codes and other tools that will squeeze out smaller contractors and increase the value of their properties – at the expense of the consumer and homebuyer. To oppose contractor registration is to protect us from a greater scam than the nickel and dime artists this bill is intended for.
This bill will squeeze out the little guys and hinder other “little guys” from entering the field. I remember well, when I started contracting in 1975 (in the Seattle area) how hard it was to obtain and maintain my license while trying to build (or survive) my small business. And through the years, I have watched scammers come and go in a State (Washington) that was strict upon registration – with no relief to the consumer.
- Two sidenotes on the paragraphs above:
- For most residential jobs and small contractor can perform the work much cheaper than a larger contractor who has to pay staff. If you squeeze out the small contractor, you will be forced to do business with the larger, more expensive contractor.
- Three or four years ago, while applying for a building permit in one of the larger cities of Eastern Washington, the clerk went into a soapbox speech against the Washington State contractors’ registration. She was angry at the State because she had to do a mountain of paperwork to prove the city was in compliance with State regulations monitoring the relationship between permit activities and licensing verification. Then she listed several examples of people who were being ripped off by local, registered contractors and the State’s refusal to address the homeowners’ claims.
Finally, my friend, consider the premise that we should be free to conduct our affairs and business with each other with minimal government interference. The fact that some businesses are already regulated and licensed is no justification that we should license or register the rest and especially the most elemental of all occupations – contracting. Compare the words of the Declaration of Independence to the words of the most recent contractor registration bill:
Therefore, I respectfully ask you to contact your State Representatives and ask them to oppose Contractor Registration.
Sincerely,
Dean Isaacson; Idaho contractor and Washington registered
Moore v Wayman, 85 WnApp 710
This one is for all you builders out there who get so tired of bureaucrats justifying every new code and regulation as being necessary to keep the county or city out of court. This is the one case in the last ten years to make it as high as the appellate courts system. Maybe I exaggerate, this might be the second.
The purchasers of the home sued the builders, the county, the realtors and an adjacent property owner. As is typical with these cases, the trial judge entered a summary judgment dismissing the purchaser’s action against the county. Double-underline that last sentence.
The reason this case went as high as the appellate court with the county still tied on is because the judge later entered a judgment finding the county liable to the builder for negligent inspection. Thus making it the singular, or minority case that made it past the trial court stage.
Not to worry! The appellate judges saw through the error and held that it is the builder’s responsibility to make certain that the house conforms to code and not the municipality. Their reasoning was eyed toward protecting public revenue (as if the builders have unlimited funds and the civil government is on a diet [at 726]. “To burden government with ensuring compliance may cause budgetary and personnel costs more aptly borne by builders.”). Our belief is that the duty is on the builder to protect the buyer of the property. The Bible is clear that we have a duty to be honest with each other and not to defraud in business. (Lev 19, Hos 12). Nonetheless, we gave those good ole boys a “pass”!
This whole matter centers on the public duty doctrine. This is the doctrine that holds that civil government is not liable to individuals, only to the general public, except in certain situations. I will summarize the judges’ reasoning on this before we continue: If you live in an unsafe house, the government owes you no duty, However, if the general public lives in the house with you, the civil authorities may be liable for any dangers that may lurk there. “[B]uilding codes are meant to protect the public safety, not to compensate individuals.” [at 726].
There are only four exemptions to the public duty doctrine. To pierce this protection, one must prove that the service rendered was proprietary, that a special relationship existed, that a failure to perform one’s duties existed or that the Legislature intended an exemption.
The courts have long held that building code inspections are not part of a State business venture (though they do produce excellent revenues). Code compliance is recognized as a governmental operation. [at 716].
To establish that a special relationship exists, one must ask specifically if the building meets specific building codes and these assurances must be specifically rendered by the building official. A correction notice, whether the inspector confirms the corrections were made or not, does not constitute a special relationship. Signing off a building permit does not constitute a special relationship, unless there is an assurance on the document that the building does now conform to all applicable building codes. [at 718-24]. This, incidentally, is why some building permits specifically state that even with a final approval, there is no assurance that the building conforms to all building codes and may even be deficient.
Similarly, a building inspector is not required to discover all violations. The liability exists only when he is aware of any violations and does not enforce correction. When he issues a correction notice, he is not obligated to enforce compliance. [at 722-24].
As for legislative intent: Do you know why we have a State Building Code? “The primary intent of the state building code is still to provide building codes throughout the state.” Plaintiffs against the State would only have a case if the clear intent of the State Building Code was to protect building occupants. [at 724-26].
It is time for the State to get out of the building business. The intent of the Code is regulation. The State offers no protection to the public from bad builders. The best rule has always been and will always be, “Buyer Beware.”
On the other hand, it has been my experience that buyers want the double-walled, cedar sided, hardwood floors and upgraded roofing, appliances and carpets for the same price as the single-walled, cardboard-sided, vinyl floors and low grade - but shiny - finish. They will buy price every time. But when they discover they were out-snookered, they run to the State. The State, in turn, makes more laws, which bankrupts a few smaller, quality builders and helps the high-quantity, low-quality builders raise their prices. The cycle will continue until the people wake up.
[This article was from a court review published in the Judicial Forum newsletter 1997.]
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