Contractor Licensing Issues Part 2

january 3, 2018

What if you are working as a contractor on a residential project and part of the job (for example, concrete work, drywall, rough framing) doesn’t require a contractor’s license under O.C.G.A. § 43-41-17 but other parts of the job (for example, plumbing, electrical, hvac) do require a license. If you don’t have a residential light contractor’s license, and you have a contractual dispute with the homeowner, you may not be able to enforce your contract pursuant to O.C.G.A.§ 43-41-17.

The case of Bowers v. Howell, 203 Ga. App. 636 (1992) addressed this very situation. In that case, the contractor entered into a contract with the homeowner for renovations and additions to their home. The homeowners refused to pay and the contractor brought suit to foreclose on his materialman lien. The trial court granted judgment in favor of the contractor and the homeowners appealed on the grounds that the contract and work included electrical work which the contractor was not licensed to do.

The court of appeals held that contracts made in violation of the statute requiring a license for electrical and plumbing work were void. The court of appeals also determined though that the contract in question, could have been entire or severable. The court held that were the contractual agreement consisted of a single promise based on a single consideration (ie, lump sum for entire job), the entire contract was void. However, where the contract was founded on legal consideration (mutual promises) containing a promise to do several things and only some of those things were illegal, the legal parts of the contract were held enforceable.

If there is ever a question as to whether part of the job requires a license you don’t have, or is beyond the scope of your license, it is best to associate a contractor with a license to do that part of the work (with the owner’s knowledge and approval). Separating your contract into different separate trades, including amounts to be paid for each trade, will ensure enforceability of at least parts of the contract, should a licensing issue arise.