If you’re considering starting a contracting business in North Dakota, you should be proud of yourself. Going out on your own and starting a business is a big deal. Once you’re the boss, you’ll be able to make your schedule, work with the customers you actually enjoy working with, and take the types of projects you enjoy and challenge you. While most of the shots are up to you to call, one area isn’t: North Dakota contractor licensing requirements.
But, starting a business is a busy and hectic time. Keeping up with all the North Dakota contractor licensing requirements can be a challenge. This guide will help, as it’ll break down everything from who needs a license to how to get them.
Contracting in another state? Check out The Ultimate Guide to Contractors License Requirements in Every State.
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Who needs a contractors license in North Dakota?
The State of North Dakota considers anyone engaged in the business of construction, repair, alteration, dismantling, or demolition to be a “contractor,” and all contractors need to carry licenses issued by the state.
There is an exception to that rule: Projects valued at less than $4,000 do not require licenses.
Licensing is a bit more relaxed in North Dakota than it is in other states, which we’ll go into further detail in a bit.
Do you need a license to file a mechanics lien in North Dakota?
While almost all contractors need to carry a license, the state doesn’t explicitly require licensing to file mechanics liens. This means that contractors who don’t carry licenses might be able to file a mechanics lien for unpaid work.
But, just because North Dakota doesn’t require a license to file a mechanics lien doesn’t mean you shouldn’t carry one. If you file a lien and the customer still doesn’t pay, you might have to foreclose upon the lien to get paid. Once you take the case in front of a foreclosure court, the court might not look so fondly upon your unlicensed status.
How to get a contractors license in North Dakota
Other than those projects valued at less than $4,000, all contractors need to carry a license in North Dakota.
However, fortunately, getting a license within the state is easier than it is in most other states. And, since anyone engaged in the business of construction is considered a contractor, all general contractors and subcontractors are required to obtain a license.
Building contractors and subs
Contractor licensing is a function of the North Dakota Secretary of State. The Secretary of State offers three licenses, including:
- Class A, which allows contractors to work on projects valued above $500,000
- Class B, which allows contractors to work on projects valued up to $500,000
- Class C, which allows contractors to work on projects valued up to $300,000
- Class D, which allows contractors to work on projects valued up to $100,000
Beyond choosing a contractor license type, applicants will have to complete this application (keep in mind that it must be notarized). The process is very straightforward, but there are some requirements that hopeful contractors will have to meet. Those requirements include:
- Registering the business name with the Secretary of State (this is different than applying for the license)
- Providing a certificate of insurance in the exact name used to register the business
- The certificate must list the following as a certificate holder:
North Dakota Secretary of State
600 E Blvd. Ave., Dept 108
Bismarck, ND 58505
- The certificate must list the following as a certificate holder:
- Providing a statement from Workforce Safety and Insurance indicating good standing (ND’s version of worker’s compensation insurance)
- Paying the appropriate filing fee:
- Class A $450
- Class B $300
- Class C $225
- Class D $100
- Proving any additional licenses required by law (such as plumbing or electrical)
There are no exam requirements, so once the state reviews the application, someone will contact you about obtaining the license. Additionally, the Secretary of State offers this handy checklist to ensure you’re meeting all of the requirements before sending in the application.
Along with the Class A, B, C, or D licenses, electrical contractors are required by law to carry a trade license. This license falls under the control of the North Dakota State Electrical Board.
The license required for contracting is master level, for which the requirements are 10,000 hours of total work experience, the appropriate application fee, and this application. The board might also require employment verification if the applicant is not the business owner.
After obtaining the master-level license, contractors must schedule a contractor orientation with the board’s office in Bismarck. Both the business owner and the master electrician must attend this orientation.
The documentation required for orientation includes:
- Electrical Contracting Application
- E-Cert Application
- Certificate of liability insurance
- $50 annual license fee
Plumbing contractors in North Dakota have licensing requirements to meet as well. For one, they must meet the Secretary of State’s licensing requirements, choosing and applying for a Class A, B, C, or D license.
Also, plumbing contractors have to pass an exam and apply for a trade license. This license is a function of the North Dakota State Plumbing Board. The board’s Plumbing Licensure states that no company or firm shall install plumbing without employing a master plumber.
Master license applicants must meet the following requirements:
- Be at least 21 years of age
- Have two years or 3,400 hours of experience as a journeyman plumber
- Complete this application
- Pay the applicable license fee of $200
Penalties for unlicensed contracting in North Dakota
Compared to other states, North Dakota makes licensing a breeze. The right application, the applicable licensing fees, and insurance are all it takes to obtain a license (in most cases). For that reason, the State expects contractors to meet its requirements.
If they don’t, North Dakota considers unlicensed contracting a Class A Misdemeanor. This means working without a license could result in steep fines and even jail time.
So, even though an unlicensed contractor might retain lien rights, working without the appropriate contractor license is a recipe for fines and some weekends in county lock-up.
Protecting your payments in North Dakota
The last thing you need as a new contracting business is a hit to your cash flow due to fines and fees. But, protecting cash flow requires more than just carrying the correct licenses. Contractors who plan to build successful businesses will also protect their payments by preserving their lien rights.
North Dakota doesn’t have any requirements for contractors, subs, or suppliers to send a preliminary notice on jobs to preserve lien rights, but they should anyway. This document serves as a professional introduction between the contracting company and the project owner, informing them of who the company is and their role on the job. They also help put the company name in front of the people writing the checks.
While preliminary notices might not be a requirement, North Dakota does mandate that contractors, subs, and suppliers send a Notice of Intent to Lien at least 10 days prior to filing a mechanics lien for the lien to be valid.
Should the preliminary notice or notice of intent not produce a payment, contractors must watch the 90-day deadline that North Dakota puts on mechanics liens. Contractors, subs, and suppliers have 90 days from last furnishing to file a lien for recovering payment.
And enforcement is another animal altogether. Contractors, subs, and suppliers have up to three years from the date of filing to enforce a lien. That window can be significantly shorter, however, if the project owner files a Demand to Foreclose on the claimant. Things can get even dicier, as the state requires the claimant to file a Notice of Intent to Enforce at least 20 days before taking enforcement action. Truly, there is no time to spare when it comes to protecting payments in North Dakota.