Contractors’ licenses: Why they are important

The Legal Point

Some builders view the Board of Contractors in Richmond as another bureaucratic nuisance. Others understand the important role that the board plays in protecting the public. Indeed, the Supreme Court of Virginia ruled as early as 1952 that the purpose of the licensing statutes and regulations was to “protect the public from inexperienced, unscrupulous, irresponsible or incompetent contractors.” Therefore, being aware of the licensing requirements, and its harsh ramifications, is important not just for contractors, but for those thinking of hiring a contractor as well.

To begin, the Virginia Code contains a broad prohibition against contractors who perform work without the proper license: “No person shall engage in, or offer to engage in, contracting work in the Commonwealth unless he has been licensed under the provisions of this chapter.” Like many laws, there are exceptions. For instance, a person who performs work or supervises construction of his or her primary residence owned by him or her during a two-year period is exempted from the licensure requirement. Similarly, licensed architects and engineers are exempted when they are performing work as an owner-developer under a design-build contract, provided that the actual construction work is performed by a licensed contractor. For most builders, remodelers and other types of contractors, however, a license will be required.

The cost of the contract will determine the class of license required. A Class A license is needed when the total value of a single contract or project is $120,000 or greater, or when the total value of all work performed by the contractor within any 12-month period is $750,000 or greater. A Class B license is required when the total value of a single contract or project is between $10,000 and $120,000, or when the total value of all work performed within a 12-month period is between $150,000 and $750,000. A Class C license is needed when the total value of a single contract or project is between $1,000 and $10,000, or when the total value of all work performed within a 12-month period is less than $150,000.

Failing to adhere to the licensing requirements can have steep consequences. It is a Class 1 misdemeanor (punishable by not more than 12 months in jail and/or a fine not to exceed $2,500) for any person or company to contract for, bid upon or to perform contracting work without being properly licensed. Presenting or attempting to use the license of another is also punishable.

Running afoul of the license requirements can also have serious consequences when it comes to payment, or if you end up in court. As a litigator, I have successfully represented contractors and property owners on both sides of this issue. In cases where a contractor was not properly licensed, I have successfully had claims for payment dismissed entirely; I have had expert witnesses excluded from testifying; and, I have had mechanic’s liens completely invalidated and removed. Judges routinely take a dim view of contractors who are not properly licensed. Under the right set of circumstances, a contractor can be left completely holding the bag on an unpaid invoice or change order.

In addition to licensing, the Board of Contractors plays an important role in vetting contractors. As part of the application process to obtain a license, the applicant must provide information for the previous five years regarding outstanding debts or judgments, tax obligations, defaults on bonds and any past or pending bankruptcies. In addition, construction firms must disclose whether any members of its “responsible management” have had any misdemeanor convictions within the last three years or any felony convictions. Applicants for Class A and Class B licenses must also provide information regarding their financial position.

Anyone who is interested in whether a particular contractor is licensed or whether the contractor has had any prior complaints can view this information online by clicking the “License Lookup” tab under www.dpor.virginia.gov/boards/contractors. All of this information is publicly available.

Homebuilders and remodelers who run a reputable business will know these regulations and will gladly comply with them. Fly-by-nighters and weekend-warriors will care less about these requirements so long as they are being paid. Be advised: you get what you pay for.

Joe Verser
About Joe Verser 3 Articles
Joe Verser is a partner in the law firm of Heath, Overbey, Verser & Old, PLC. He regularly represents both commercial and residential contractors in disputes, as well as homeowners and project owners. He can be reached at jverser@hovplc.com or at 757-599-0734.

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