Corporate Entity Construction Companies Beware - Meeting Contractor Licensing Requirements

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For construction companies that undertake residential and commercial contractor efforts as a corporate entity (i.e. a corporation, an LLC, etc.) there are numerous pitfalls to falling short of meeting contractor licensing requirements.

A HUGE one is failing to adhere to applicable Qualifying Agent license requirements. Georgia Law related to contractor licensure requires that corporate construction companies use a properly licensed Qualifying Agent through whom certain contracting efforts, including pulling permits, must be undertaken.

A properly licensed Qualifying Agent is a licensed person whose Qualifying Agent license specifically identifies the corporate entity for whom the Qualifying Agent can act.

Failing to adhere to Qualifying Agent licensing requirements can have catastrophic economic implications in that it renders the underlying construction contract void and completely unenforceable by the contractor. As such, the contractor can not sue on the contract, for breach of contract or any other legal or equitable claims or remedies, to recover any money owed on the contract.

For instance, if John Doe Contracting, LLC (or John Doe Contracting, Inc.) enters a contract to build a $2,000,000 home for Suzie Smith, and mid-way through the project Suzie Smith, while owing $500,000 under the contract, decides to terminate the contractor’s services, she can merely terminate the relationship and escape paying the $500,000 owed. Clearly, that is a HUGE risk for a contractor to be taking if licensing requirements are not adhered to.

Some relevant case law is:

Saks Management and Associates, LLC v. Sung General Contracting, Inc. et al, 356 Ga.App. 568 (2020);

LFR Investments, LLC et al. v. Van Sant, 355 Ga.App. 101 (2020); and

Baja Properties, LLC v. Mattera, 345 Ga.App. 101 (2018).

If you would like me to review your licensing status and procedures for compliance, I’d be happy to do so.