It is no secret that, in most cases, a contractor must be licensed. For example, in South Carolina, a contractor must obtain a license to perform commercial building over $5,000. But other than being against the law, did you know being unlicensed could affect your ability to bring a lawsuit on a breached contract?
Under South Carolina law, if a contractor has not obtained a valid license as required by law, that contractor is prohibited from bringing an action to enforce a contract. See S.C. Code Ann. § 40-11-370(C) (“An entity which does not have a valid license . . . may not bring an action either at law or in equity to enforce the provisions of a contract.”); S.C. Code Ann. § 40-59-30(B) (“a person or firm who first has not procured a license or registered with the commission and is required to do so by law may not file a mechanics’ lien or bring an action at law or in equity to enforce the provisions of a contract for residential building . . . .”).
Additionally, if required to be licensed, such a license is required to enforce a mechanics’ lien. S.C. Code Ann. § 29-5-15(A) (“To file a mechanics’ lien, a contractor must provide the county clerk of court or register of deeds proof that he is licensed or registered if he is required by law to be licensed or registered.”).
You might be asking: does this situation ever actually arise? It certainly does. Recently, the South Carolina Court of Appeals decided Stolf Constr. LLC v. Sweetgrass Home Builders, LLC, Op. No. 2013-UP-375 (S.C. Ct. App. October 9, 2013). In that case, a contractor sued another contractor for breach of contract. The evidence contained in the record showed that the plaintiff did not have a residential builder’s license at the time the contract was executed. As a result, the South Carolina Court of Appeals found that the contractor lacked standing to bring the action.
The above case serves as a reminder that licensing is important. Not only because it is necessary to comply with the laws of this state, but also to protect your right to sue should the need arise.