Becoming a licensed general contractor is often a long and tedious process. The applications can be lengthy and invasive, multiple reference letters may be required, and supplemental documents may need to be obtained. The process is often mistakenly viewed as a clerical exercise without due respect to the ramifications that can accompany the lack of licensure or omissions in the application process.
Contrary to common belief, the consequences of engaging in the practice of general contracting without a license are not limited to a slap on the wrist from the licensing authorities. Instead, there can be substantial criminal penalties. For example, the unlicensed practice of general contracting, the attempt to practice contracting, the use of or attempted use of the license of another, or the provision of false evidence when applying for a contractor’s license each constitute a Class 1 misdemeanor. These crimes may also be punished by a fine of $500 per day for each day of the violation.
Furthermore, a project owner may be allowed to withhold payment if he or she learns of the lack of licensure. Specifically, if an unlicensed contractor provides services with knowledge of his or her licensing requirements, his or her contract may be deemed void, including the provision of the contract requiring payment. In fact, if a contractor who was previously licensed fails to renew his or her license, a court will assume that the contractor had actual knowledge of the licensing requirements, unless proven otherwise.
Applying for a contractor’s license is not an easy or inexpensive process. The application paperwork can be tedious and there are substantial fees. However, the costs of practicing without a license are substantial and should not be taken lightly.