The state of Georgia takes contractor licensing very seriously. In fact, so much so, that an unlicensed contractor can’t even enforce the terms of their contract for work performed. Period. However, in many states, including Georgia, there can be a qualifying agent for a construction company that covers the work performed. This isn’t always as clear cut as it seems. A recent case out of the Georgia Court of Appeals dismissed a contractor’s claims against an owner because the qualifying agent wasn’t registered for their business.
Georgia contractor licensing requirements
As mentioned above, the state of Georgia requires a contractor’s license in order to enforce rights under a construction contract. This is explicitly stated in O.C.G.A. §43-41-17(b):
“As a matter of public policy, any contract entered into on or after July 1, 2008, for the performance of work for which a residential contractor or general contractor license is required by this chapter and not otherwise exempted under this chapter and which is between an owner and a contractor who does not have a valid and current license required for such work in accordance with this chapter shall be unenforceable in law or in equity by the unlicensed contractor.”
When applying for a contractor’s license with the Georgia State Licensing Board, a person can apply for an individual license or apply as a qualifying agent on behalf of a business. The role of a qualifying agent is similar to a construction supervisor and is in charge of pulling building permits, and the like. However, the qualifying agent must be licensed for that specific business, as one contractor learned the hard way.
A licensed sole member of your LLC isn’t enough
The case in question is LFR Investments et al. LLC v. David Van Sant.
Project Snapshot:
- Owner: David Van Sant (Van Sant)
- Contractor: LFR Investments, LLC (LFR)
Van Sant had hired LFR for the construction of a house on a newly purchased piece of property. Before completion of the project, disputes began to arise between the parties, and Van Sant terminated the contract with LFR and hired replacement contractors to finish the work.
LFR filed a lawsuit against Van Sant for breach of contract and unjust enrichment. In response, Van Sant filed a motion for summary judgment to dismiss the claims based on the fact that the contractor wasn’t properly licensed. The trial court granted the motion and dismissed the claims. LFR appealed.
Appeals court declares the contractor’s business as unlicensed
LFR was a registered limited liability company whose sole member was Louis Reynaud (Reynaud).
Reynaud was a licensed, residential qualifying agent, and registered with the Department of State as the qualifying agent for Peachtree Gardens Development, Inc. He was not registered as the agent for LFR. Furthermore, the building permit acquired by Reynaud was in his capacity as an agent for Peachtree, not LFR.
LFR contended that since Reynaud was a licensed qualifying agent, his licensed status should be imputed to LFR as a whole. Since Reynaud was the sole member of LFR, LFR should be considered licensed. Therefore, LFR would be able to enforce the contract.
The court disagreed. The statute explicitly states that for a business to be considered properly licensed, they must have at least one qualifying agent licensed expressly on behalf of such business or entity. Since Reynaud wasn’t a qualifying agent specifically on LFR’s behalf, LFR was an unlicensed contractor.
GA contractors should confirm their licensing compliance
This case gets down to the nitty-gritty of how qualifying agents work in Georgia. LFR made the mistake of relying on the fact that the sole member of the LLC was a licensed, qualifying agent.
But that’s clearly not enough. The qualifying agent must be registered as the agent for that particular construction company. A qualifying agent can even cover the licensing requirements for more than one business, but another license must be issued based on that company’s finances and insurance. Failing to do so can leave a construction company with zero recourse if they end up going unpaid.