A recent NYC Civil Court decision (Fortes v. Decorating and Painting LLC) serves as a stark reminder for board members and property managers: unlicensed home improvement contractors cannot enforce their contracts or recover payment for their work—period.
Verifying contractor credentials before work begins isn’t just good practice; it’s an essential legal safeguard for your building.
Case Summary: The $50,000 Deposit Dispute
In 2024, Manhattan homeowners signed a $140,800 renovation contract and paid a $50,000 deposit. Crucially, the homeowners stated in writing that work could not begin until all required licenses, permits, and insurance were submitted to management. Despite this, the contractors were allowed into the building and performed demolition work.
When the contractor repeatedly failed to provide the paperwork (including umbrella coverage, worker’s comp, lead paint certificates, and a valid license), the owners terminated the contract.
The Ruling:
- The contractor admitted to being unlicensed and submitting incorrect insurance forms.
- Under NYC Administrative Code § 20-387, unlicensed contractors are strictly barred from enforcing contracts or recovering compensation—even under quantum meruit (the reasonable value of services provided).
- Because the owners explicitly conditioned the start date on valid paperwork, the contractor had no authorization to enter the premises. The court ordered the return of $43,000 (refunding the deposit minus an offset for unapproved demolition work).
5 Critical Lessons for Property Boards, Management and Condo Unit Owners/Coop Shareholders
1. Verify Licensing Before Work Begins
Never take a contractor’s word for it. The NYC Department of Consumer and Worker Protection (DCWP) maintains a searchable online database. Licensing applies to broad renovations—do not let contractors claim they are exempt under a “painting” exception if the scope extends beyond mere decorating.
2. Make Approval Required
Adopt the smart strategy used by the homeowners in Fortes. Update your building’s alteration agreements to provide that work may not commence and contractors may not enter the building until after management has approved all required licenses, permits and insurance for compliance with association rules.
3. Require Complete Insurance & Lead Documentation
Before permitting workers to enter a building, ensure the contractor has adequate insurance such as:
- General liability (typically $1M minimum) naming the association as an additional insured.
- Statutory Workers’ Compensation and disability benefits.
- EPA/NYC lead-paint safety certificates for pre-1960 buildings.
4. Audit Permit Notices
Under NYC Code, contractors must provide written notice detailing required permits and how owners can verify them. Require contractors to supply this notice to management before approving an alteration.
5. Educate Owners/Shareholders & Enforce Violations
Unit owners or shareholders often don’t realize that hiring unlicensed contractors exposes the entire building to safety hazards and legal risks. Send clear guidelines especially to new owners/shareholders. If an unlicensed contractor is discovered on-site, management should immediately issue a stop-work order and report the contractor to DCWP.
The Bottom Line
Courts will not bail out unlicensed contractors, but a failure to monitor credentials can still lead to building liability, property damage, and delays. Check licenses before the first hammer swings—not after a dispute starts.
Here’s the Court’s decision:
