With the current economy, you are probably considering traveling farther to work and bidding on a wider variety of projects than ever before. A decision in early August from the United States Court of Appeals for the Fifth Circuit, which has jurisdiction over Mississippi, Louisiana and Texas, underscores the importance of complying with the licensure laws of the states in which you are doing business. In Tradewinds Environmental Restoration, Inc. v. St. Tammany Park LLC, the Fifth Circuit affirmed the Louisiana law that an unlicensed contractor cannot recover under a contract because the contract is contrary to the public policy of the state. The unlicensed contractor is limited to the cost of materials, services, and labor incurred. This decision is even more significant because, in post-Hurricane Katrina Louisiana, some licensing requirements were not as strictly enforced.
If you travel across state lines to work on projects, be aware of the host states' licensing requirements and the consequences of not being properly licensed. Tennessee, Alabama and Georgia all have laws similar to Louisiana. In fact, in Tennessee, an unlicensed contractor can be found in violation of the Tennessee Consumer Protection Act, which opens the door to treble damages and the possibility of having to pay the other party's attorneys' fees. In Georgia, an unlicensed general contractor cannot enforce the purported contract and also cannot file a lien or bond claim for any labor, services, or materials provided under the contract.