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Who Needs a Tennessee Contractor’s License?
It’s a fair question – “Who needs a Tennessee Contractor’s License?“
But that question should probably be a little more specific. If you’re in the construction business in the great state of Tennessee, the question you should probably be asking yourself is – “Which Tennessee Contractor’s License do I need?” That’s because there are 6 different licenses to choose from. Read on as we outline the specifics of each.
The 6 Different Tennessee Contractor Licenses
If a project costs $25,000 or more, one of the six (6!) different license classifications will be necessary for you to lawfully perform the work. Let’s take a look at what each of these Tennessee contractor’s license classifications entails.
->1) Building Combined (BC)– This is the most overarching of the licenses. It covers all types of projects (residential, commercial, or industrial), and covers all 34 types of building categories (masonry, carpentry, drywall, etc.).
->2) Residential (BC-A)– This license covers building, repair, remodeling, and improvements of residential properties. Keep in mind, though – Tennessee only considers a building residential if it is 3 stories or less.
->3) Limited Residential (BC-A/r)– A Limited Residential license allows the contractor to bid and work on residential projects. However, under this license, the contractor is limited to single family homes, and the project cannot exceed $125,000
->4) Commercial (BC-B)- This license covers repair, construction, alteration, or demolition of commercial properties. Similarly to the BC license, this license covers all 34 types of building categories.
->5) Small Commercial (BC-b(sm))– This license is similar to a commercial license but limited to projects of $750,000 or less.
->6) Industrial (BC-C)– This license allows for the repair, construction, remodel or demolition of industrial type buildings (like manufacturing, chemical, or power plants).
Keep in mind that in certain counties, there is a home improvement license requirement even for those who do not have or need a state contractor license. A “home improvement license” is required for remodeling projects between $3,000 and $25,000 in the following counties: Bradley, Davidson, Hamilton, Haywood, Knox, Marion, Robertson, Rutherford, and Shelby.
Editor’s Note: The Tennessee Department of Commerce and Insurance has a great site on licensure, which you can find here.
All contractors must pass the Tennessee “Business & Law” exam in order to file a license application. Some contractors may also need to pass a “Trade” exam, depending on the type of classification.
The trade exams are for the following categories of work:
- Small Commercial
- Residential/Small Commercial
- Residential/Small Commercial/Industrial
- MU-MUB (Municipal and Utility Construction)
Once you’ve passed the exam, it’s time to submit your application. Filling the application itself is easy enough, but there will also be some fees and potentially some additional supporting documentation. The fee for filing an application is $250, and it’s non-refundable.
In addition to the application, you must also provide:
- A financial statement prepared by a CPA
- A letter of reference from past client/employer
- Proof of general liability insurance and worker’s compensation
- A copy of your exam scores
In some states, penalties for performing work without a license can be brutal. For instance, in California, an unlicensed contractor might have to pay back every dollar they’ve earned by doing unlicensed work.
There’s no such rule in Tennessee. However, you still may face heavy fines. The Board can fine an unlicensed contractor up to $5,000.00, per offense. Plus they can suspend or even revoke any licensing you do have.
Unlicensed contractors can face criminal penalties, too. Violation of the licensing requirements is a Class A misdemeanor, which can result in up to one year of jail time and fines up to $2,500. If that’s not enough, the injured party can also bring a claim under the Tennessee Consumer Act. If found in violation of the Act, a contractor can be held personally (not your company — you, yourself, personally) liable for damages and attorney’s fees.
So, if the construction work you do in Tennessee requires a license, the best practice is fairly obvious: you better get that license!