Builders and Contractors Exchange
Weekly Bulletin: 10 Apr 2006
Make Sure You Meet All Licensing Requirements
By: Katherine Murray
Section 54.1-1115 of the Code of Virginia provides that a license is required when contracting for or bidding upon “construction, removal, repair or improvements” on another’s property. Failure to have a contractor’s license constitutes a Class 1 misdemeanor and fines can be assessed up to $500 per day for contractors working on a project without a license.
Outside of the obvious criminal liabilities that can be imposed against contractors who are bidding or working on jobs without proper licensure, there are liabilities in the civil context based on the general legal principle that someone should not be rewarded for his illegal conduct. See Bowen Elec. Co. v. Foley, 194 Va. 92, 172 (1952). Essentially, as originally written, if a contractor did not have a license his contract would be void and unenforceable as a matter of law and he could not use the court system to collect amounts due to him for the work he performed. Section 54.1-1115 has been amended since the Bowen days and now provides exceptions to the rule for contractors who (1) substantially performed the contract at issue in good faith AND (2) did not have actual knowledge that a license or certificate was required of them. These exceptions appear to be intended to quell some of the harshness of the law as it would apply to those who did not know any better while penalizing those who simply ignore their obligations. See J.W. Woolard Mech. & Plumbing, Inc. v. Jones Devel. Corp., 235 Va. 333 (1988).
However, even though someone is ignorant of the law, his contract may still be void and unenforceable in the civil context if he did not substantially perform in good faith. For example, if an unlicensed contractor bids on a project, but does not perform the contract due to an alleged unlawful action by the owner defendant, the contractor has no rights. This situation occurred in Bowers Family Enterprises, L.L.C. v. Davis Brothers Construction Company, Inc., 55 Va. Cir. 11 (2001). In Bowers, the unlicensed plaintiff alleged interference with a contract that the plaintiff was not awarded (and did not start performing) and sought lost profits from the defendant. The Circuit Court for the City of Richmond determined that since the contractor did not have a license and the contract was obviously not substantially performed, no recovery was allowed.
We recommend that all contractors maintain the appropriate license and can assist in determining the license class and other applicable requirements. We also recommend that when dealing with claims, a thorough run-down be performed of the claimant’s license — you never know what you may or may not find.
Questions?
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This article is meant to bring awareness to this topic and is not intended to be used as legal advice.