No License? – No Pay (Maybe)

11/22/2010

Most states, including Virginia, have licensing requirements for contractors. Virginia’s requirements apply regardless of trade and regardless of whether the contractor is a prime contractor or one of the prime’s lower tier subcontractors.

Unlike some other states, Virginia has a 3-level “class” system for contractors, based – in general – on contract value: $10,000 or less = Class C; $10,000 or more up to $120,000 = Class B; and more than $120,000 = Class A (similar to an “unlimited” license in some other jurisdictions). Not only are there civil penalties for being unlicensed, but it is also a crime. There are certain exceptions, but rarely would they apply to a commercial project.

Besides being a crime, from a practical standpoint, non-licensure can also affect entitlement to payment. Non-licensure was previously judicially held as a total bar to payment in Virginia (and still is in North Carolina), but a key statute was revised to allow non-licensure as a defense to payment (but not the rest of the code requirements) if, even if not licensed, the contractor: 1) substantially performed with the contract terms; 2) in good faith; and 3) without actual knowledge of the licensure requirements.

It is always important to determine whether your contractor is licensed. There are sound practical reason for licensure, and while a license alone does not insure good workmanship, it is at least an indicator that the contractor has had requisite training and is not “fly by night.”

Conversely, if you are a contractor, it is important be be licensed. Not only is there the practical issue of entitlement to payment for your work, but non-licensure also establishes the basis for civil penalty, and criminal prosecution.

More information about Virginia’s licensure requirements is available at the Virginia Board for Contractor website.

License holders can be looked up on line at the Virginia Department of Professional and Occupational Regulation.

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