Anyone performing construction work should understand whether or not the work they are performing requires a contractor’s license. Many states have strict requirements concerning construction work licensing, and Georgia is no different. In Georgia, unlicensed contractors are barred from making legal claims for recovery of payment. There are, however, a few exceptions to the licensing requirements. A recent Court of Appeals case clarified what these exceptions are.
Georgia contractor licensing requirements
The state is particularly strict about licensing requirements for construction work. For example, if the work requires a license, an unlicensed person performing the work will not be entitled to file a mechanics lien in Georgia. But that’s not all: Georgia law takes it even a step further. A person who performs unlicensed construction work may be barred from any claim for compensation. Under O.C.G.A. §43-41-17(b):
“…any contract entered into… 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.”
In other words, if the construction work you do requires a license – and you don’t have one – you don’t have any legal rights if you’re not paid. There are some exceptions to this, such as the type of work being performed, and whether the property owner was informed of their unlicensed status. A recent case from the Georgia Court of Appeals clarified these requirements and exceptions for unlicensed contractors.
Performing contractor work without a license
The case in question is Xavier Fleetwood v. Scott Lucas
- Owner: Xavier Fleetwood (Fleetwood)
- Contractor: Scott Lucas (Lucas)
Fleetwood hired Lucas to perform repair and renovation work on two separate properties, one commercial and one residential. The total price of both contracts together was a little over $100,000. As the project progressed, Fleetwood had been paying each progress payment, but failed to make the third and final payment of $8,227. In addition, Lucas had informed Fleetwood that the project had gone over budget by $10,000.
Contractor filed breach of contract & quantum meruit claims
At trial, Fleetwood filed a motion for summary judgment based on the fact that the contractor was unlicensed and therefore unable to bring a contract or equitable claim (like quantum meruit). The court denied the motion, and the trial proceeded.
Lucas argued that the work performed on the residential property was only for repairs, and didn’t require a license. As for the commercial property, Lucas contended that Fleetwood was acting as the contractor, and Lucas was merely managing the project.
When the court asked whether if Lucas ever notified Fleetwood that he wasn’t licensed, he responded no, and that Fleetwood never asked. The trial court ruled in favor of Lucasl. Fleetwood appealed.
Unlicensed contractor’s claims were dismissed
The Appeals Court revisited the licensing statutes, and focused on the strict language and a series of definitions in the law. The laws state that “no person…shall have the right to engage in the business of residential or general contracting without a current, valid…license.” So, what is contracting work? Contracting is defined as performing or causing to be performed any activities, such as construction or improvement of, addition to, the repair, alteration, or remodeling of any building for compensation.
At this point, it’s fairly well established that Lucas had performed “contracting work.”
Lucas attempted to argue an exception under OCGA §43-41-17(g). This states that “Nothing in this chapter shall preclude a person from offering or contracting to perform… repair work, provided that the person performing the repair work discloses to the owner that such person does not hold a license.” The Court denied this on two counts. One, that a majority of work performed was new construction, not repair. And two, that he never disclosed he was unlicensed. There was an affidavit stating that he did, but he testified at trial that he never notified them.
Given these conclusions, the court declared that Lucas had performed unlicensed contractor work, and didn’t fall under any exceptions. Thus, The trial court decision was reversed. The court dismissed the claims brought by Lucas.
In general, contractors should always be licensed
Georgia, like many other states, requires anyone performing construction work to be licensed by the state. This requirement safeguards property owners from any faulty, inadequate, or unsafe work on their real estate. If contractors work without a license in Georgia, they will have little to no recourse when if they end up going unpaid. They won’t be able to file lien claims, contract claims, or equity claims. Anyone working in the construction industry should understand the state licensing requirements to ensure they are protected. Otherwise, you’re working without a safety net in case things go south.