All 50 US states have adopted ‘Little’ Miller Acts. These laws protect first-tier subcontractors and suppliers on state-funded projects, ensuring that they get paid. Since public projects are not subject to mechanics liens, these Little Miller Acts are vital to protecting payments on public projects.
What is the Little Miller Act?
Let’s start with the Miller Act. The Miller Act was passed in 1935 and applies to federally funded public works projects. It protects suppliers, first-tier subcontractors, and the federal government by requiring general contractors to purchase performance and payment bonds on each project.
These bonds protect the government from unfinished work and protect first-tier suppliers and subs from nonpayment. If a sub or supplier is not getting paid, they can file a claim against the payment bond on the project. The surety investigates the claim and pays them if the claim is legitimate.
The Little Miller Act is the name given to the collection of state laws that are based on the federal Miller Act. Like the Miller Act, the Little Miller Acts require general contractors on state-funded public works projects to purchase performance and payment bonds.
However, the terms of each state’s laws are different.
General terms of Little Miller Acts
Although each state has its own set of laws regarding performance and payment bonds on state-funded projects, there are some similarities.
Each state says that the general contractor must purchase performance and payment bonds on state-funded public works projects. Usually, there is a baseline contract amount that has to be exceeded before bonds need to be purchased. For example: In Texas, bonds are required on projects over $25,000; in Nevada, it’s $100,000.
The value of the bonds also varies, as some states, like Alabama, only require a bond for 50% of the contract value. Requirements like these can make collecting difficult if you delay filing a claim. That’s why it’s always good to file as soon as possible.
Some states require subcontractors and suppliers to submit a preliminary notice before beginning work on a project. This notice may need to be sent to the owner, the general contractor, and possibly recorded with the county clerk. Failing to submit a preliminary notice when required may invalidate your right to file a bond claim, so make sure you find out if one is required before you start work.
If a first-tier supplier or subcontractor hasn’t been paid, they have a certain number of days after the project is completed to file a payment bond claim. The amount of time they have to file varies by state and can be anywhere from 75 days to a year. If you miss the deadline for filing a bond claim, your claim will be denied.
Little Miller Acts – State-By-State
Since each state has different requirements, we’ve created guides for each one. Simply click on the state name to be taken to the page with everything you need to know about that state’s Little Miller Act.
Laws provide structure to our society and the way we run our businesses. There are a wide variety of laws that affect the relationships formed during a construction project. From contracts to mechanic’s liens, prompt payment, and licensing — these construction laws all affect contractors’ and suppliers’ ability to get paid. Construction companies need to be aware of these laws and make sure that they are following them. Otherwise, they may unwittingly give up their rights to collect payment for work they’ve performed.
Contract law
Contracts form the basis for all relationships in the construction industry. From architects and engineers, to subcontractors and suppliers, everyone is linked by a contract, whether written or verbal. Although written contracts are not required for every agreement, they are strongly recommended by construction attorneys and insurance companies as a way to protect everyone involved. In addition, a written contract may be needed to secure mechanics lien rights, as several states require a written contract in order to secure and maintain those rights.
Contracts often contain specific clauses that describe how payments will be made and their timing. These clauses should be reviewed carefully, as they can restrict lower tier contractor’s rights to collect in a timely fashion. In particular, pay if paid, pay when paid, and flow down clauses can affect when, and even whether, a subcontractor or supplier gets paid.
When disputes arise on a project, contract provisions spell out the procedures for filing a claim against the other party to recover losses. Such notice requirements have to be followed precisely to protect the right to file a claim. Breach of contract is often a major part of any claim, and clauses pertaining to it should be looked at carefully.
Each state has its own construction laws regarding the filing of mechanic’s liens to protect construction payments. The jurisdiction of these laws is determined by the location of the property, not the contractors involved. Contractors and suppliers should be familiar with the rules and requirements for the states they perform work in.
Mechanics lien laws can be quite complicated, with specific requirements for notices and timing of filings. Laws may require the filing of preliminary notices that let property owners know a company is working on or furnishing materials to the project. A notice of intent lets the owner know that a lien will be filed if payment is not received promptly. Lien waivers are often exchanged for payments to protect owners from fraudulent lien claims.
Some states allow all contractors and suppliers to file a lien for the total amount of work that they have provided, often called a full-price lien. Other states mandate that liens can only be filed for the balance that has not been paid to the general contractor or prime, called an unpaid balance. This means if the GC has been paid in full for a project, lower-tier subs and suppliers could lose their lien rights.
Prompt payment laws
Prompt payment laws cover federal, state, and sometimes even private projects, in most states. They help ensure that project owners make timely payments to general contractors, and that subcontractors and suppliers are also paid within a reasonable timeframe.
These laws pertain to projects funded by the federal government, state government, and in some states even to privately funded projects. If payment is not received within the timeframe set by the laws, contractors and suppliers can send demand letters based on the statutory requirements.
Although these demand letters are not liens, they provide notice to the owner that payment hasn’t been received and provide incentive for prompt payment.
Miller Act and public construction laws
The Miller Act requires general contractors on federally funded construction projects to post a payment bond that guarantees payments to subs and suppliers on the project. If a subcontractor or supplier is not paid by the general contractor, they can file a claim against the payment bond and receive funds from the surety company.
Many states have enacted similar laws, often called Little Miller Acts, to protect subcontractors and suppliers on state-funded projects. On these projects, unpaid subcontractors and suppliers file a claim against the payment bond posted by the general contractor.
Retainage laws
Retainage is often treated separately by prompt payment and mechanics lien laws. States may have specific deadlines and notice requirements that pertain to the collection of retainage. Because these funds are often held until the project is completely finished and the owner has moved in, contractors may wait six months or more for final payment.
Licensing laws
Unlicensed contractors do not always have the right to file a mechanics lien or even file a lawsuit to collect unpaid amounts. In some states contractors must be licensed in order to retain their lien rights or file a lawsuit to collect unpaid funds, like California and Washington. Other states, like Louisiana, penalize unlicensed contractors by allowing them to only recover a certain amount for their work.
Not all states require contractors to be licensed, but where it’s required it is beneficial for both the contractor and their customers. Licensing protects consumers and property owners from unscrupulous companies and those that provide low-quality work or don’t warranty their work.
Residential contractors who are working for a homeowner on their primary residence (called a homestead in some states) may be subject to additional requirements through the state’s mechanics lien laws or licensing laws.
For example, in Texas, in order to file a lien on a homestead, there must be a signed contract between the owner and prime or general contractor. The contract must be in writing, be signed before any labor or materials are furnished, be signed by both spouses if the owner is married, and must be filed with the County Clerk. If any of these requirements are not met, the prime contractor and any subcontractors or suppliers working on the project lose their right to file a lien on the property.
Before starting work in a new state, be sure to check the lien and licensing laws so you know what to expect.
Know which construction laws apply to you
Contractors and suppliers need to be aware of the various construction laws that apply to their projects. These laws are put in place to protect contractors and their customers and provide guidance and resources to collect payment.
Companies that do not follow these laws and their requirements may find that they have limited options when it comes to collecting payments.
If you’ve been around infrastructure jobs for a while, you know Granite Construction is one of the best names in the game. And subcontracting with Granite could be a great way to fill your funnel and grow your business. With ongoing projects and a nationally recognized name behind you, it could be an excellent move for your company. That is, if it’s a good fit.
Before you even consider bidding on a project with Granite Construction, you need to do as much research as possible. You want to know ahead of time whether the companies will work well together or mix like oil and water. That’s why Levelset put together this subcontractor’s guide to working with Granite Construction, so keep reading to learn more about this infrastructure giant.
Granite Construction company overview
Granite Construction’s roots date back to the days right after the gold rush, when a banker and his son started a granite business from an old quarry in Watsonville, California. In the years that follow, Granite Construction would start rebuilding San Francisco’s infrastructure after The Great 1906 Earthquake.
Granite Construction’s areas of expertise include:
Transportation
Water treatment
Specialty mining, tunneling, oil, gas, and renewable energy
Materials mining
Federal projects
Before working with Granite Construction
Anytime you’re working with a new general contractor, it pays to do as much research as possible before you sign a contract. You want to take the opportunity to prequalify them just as much — if not more — than they’re prequalifying you.
But prequalifying a general contractor might be new to your policies. The good news is that Levelset aims to make it as simple and painless as possible. Here’s a roadmap to prequalification:
Familiarize yourself with the company’s payment process
During the process of prequalifying a business, it’s doubtful that you’ll find a squeaky clean company history. Construction is a tough business, and Granite has been in it for over 100 years. With that type of history, there’s bound to be a rough patch or two along the way.
Don’t let that deter you. Not right away, at least.
Instead of just shutting the book on Granite Construction because of a few red flags, reach out to them for answers. Give Granite, or any company you’re prequalifying, the opportunity to explain what happened. Remember that a slighted subcontractor is much more likely to complain about a company than a happy one is to brag about them. Hear out Granite’s side of the story — their willingness to talk might mean more than a sub’s poor review.
Granite Construction’s Payment Profile
As mentioned, Levelset wants to make the prequalification process as smooth and painless as possible while also offering all the info you might need. That’s why we put together our Contractor Payment Profiles. These reports take a deep dive into a general contractor’s payment practices, disputes, lien history, and payment speeds to give subs like you a clearer look. They can be an incredibly valuable tool to a sub.
At the time of writing this article, Granite Construction boasts an 83/100 payment score, giving the company a B rating. That score puts Granite in the top 55 percent of contractors, which is pretty impressive for a larger GC.
The payment profile scores highlight a company’s payment practices, and we compare them with the data of thousands of other contractors. These scores provide a benchmark for subcontractors to shop their prospective GCs, and if you’d like to know more about how we calculate these contractor payment scores, click here.
Granite Construction’s payment disputes
It wouldn’t be fair to rant about Granite’s shining payment score without giving subs the whole picture. While Granite does quite well among large GCs, the company’s projects don’t all go off without a hitch.
At the time of this article, Granite is managing a few projects suffering from slow payment complaints, and there are a few liens on the record.
In December 2020, a subcontractor filed a mechanics lien against a project in Washington, DC. The amount was $23,098.15, and it has since been canceled.
In November 2020, a subcontractor filed a mechanics lien on a project in Minneapolis, MN. The amount was $6,676.29, and the lien is still active.
In August 2020, a subcontractor filed a mechanics lien on a project in Independence, MO. The amount was $10,456.71, and the lien is still active.
In July 2020, a subcontractor filed a mechanics lien on a project in Independence, MO. The amount was $8,193, and the lien is still active.
On top of those liens, subcontractors have reported the Granite Construction has been slow to pay their invoices 23 times in the past year.
While that might seem like a lot of issues, it’s all about perspective. Levelset provides a payment history summary that might paint a clearer picture:
In the last year, 97 percent of Granite’s projects have gone off without a payment issue
In 2021 alone, that number drops just slightly to 96 percent
In 2018, 2019, and 2020, the percentage of projects completed without payment issues is 100, 99, and 98 percent, respectively.
Levelset also likes to provide a bit of background on the payment terms and policies that contractors use whenever possible. Granite Construction typically holds back 10 percent retainage on about 63 percent of its projects, 5 percent retainage on 9 percent of its projects, and no retainage on 23 percent. Granite also prefers to use pay-when-paid verbiage in its contracts.
Recent subcontractor reviews
Granite Construction’s written reviews are limited, but 50 percent of reviewers give the company 5 stars when it comes to working with them, with 67 percent total giving 3 or more stars. This gives Granite Construction an overall rating of 3.5 stars.
Reviews can often be the most telling, but a middle-of-the-road review had this to say about Granite’s payment process, speed, and policies: “It is a little better than some of the other big companies.”
Getting paid with Granite Construction
Even with a good overall score, not everything goes off perfectly with Granite Construction. For that reason, understanding what it takes to get paid can give you a layer of protection from payment issues.
Before work starts
Before you start working with a large general contractor like Granite, they’ll typically need a few important documents and pieces of information about you and your company. Those documents tend to include:
The project manager will typically contact you for these documents and explain if any additional paperwork requirements before work can start.
First payment
Large contractors like Granite work with thousands of subcontractors nationwide, so standardized paperwork tends to be the name of the game. Documents like AIA billing, G702 payment applications, and G703 continuation sheets help keep things uniform across several jobs.
When you speak to the project manager, be sure to find out when payment applications are due. They’re typically due on the 1st, 5th, 15th, or 20th of each month, but find out for certain so you don’t miss a payment window.
Progress payments
Large-scale infrastructure projects can carry on for years, so waiting until a project wraps up to get paid is not going to work. Leaning on progress payments, on the other hand, will help keep cash flowing in while the project is underway.
While you’re sending in your payment application, be sure to include an updated schedule of values to streamline the process.
Project close-out
Every GC has a different close-out method or their own unique requirements, but universally, these are the common documents:
Here’s the thing about close-out: Be sure to read every document carefully. Close-out tends to be when lien waivers start popping up. Signing one for work you haven’t been paid for yet could forfeit your rights to a lien prematurely.
3 tips for getting paid on every construction project
Even folks that don’t work in the construction industry know it has its pitfalls. Issues abound, and the potential for a payment issue is always present. The following tips will help you avoid a slow-paying (or non-paying) GC, so learn them and put them into practice.
1. Send preliminary notices
Sending preliminary notices should be second nature on all of your construction projects. In many states, they’re a requirement for protecting your rights to a mechanics lien. If you don’t send one within the proper time frame, you’re throwing away your chance at a mechanics lien in the event of a payment dispute.
But some states don’t require contractors to send preliminary notices to protect their rights. Does that mean you can afford to skip this step? Not a chance. Preliminary notices serve as a professional introduction between your company and the GC. They explain who you are and what work you’ll be doing. But what they actually say is that you’re a professional, and you know your rights.
2. Send other visibility documents
Preliminary notices aren’t the only docs you should be sending on your jobs. Visibility documents like invoice reminders, notices of intent to lien, and demand letters help bring your company’s name to the attention of the folks cutting the checks. These documents are often all it takes to get a check written with your name on it.
3. Maintain your right to file a mechanics lien
Maintaining your lien rights on all of your projects can save your neck when payments slow down and things get dicey. If a project owner or GC refuses to pay you for your work, you’ll have the right to file a lien against the property. The property then becomes less liquid to the owner, and they could have issues securing further financing.
Filing a mechanics lien is the fastest way for a contractor to get paid in a dispute. Because they’re so powerful, states have stringent requirements that contractors must meet to preserve their rights to them. Be sure to check out your state’s laws about mechanics liens to ensure your money is always protected.
If you’re stepping up to the plate with Fluor, one of the largest construction companies in the world, it’s helpful to have a little background on the company first. This article is your guide to Fluor for subcontractors: It will outline the company history, payment history, prequalification process, and more.
The more you know about Fluor, the better prepared you’ll be for working on its projects, getting paid on time, and meeting company culture standards.
The company grew quickly, focusing much of its efforts on public projects and then the oil industry. Fluor built refineries, pipelines, and other facilities in California and then expanded its operations to Texas and the Middle East. By the 1960s, the company expanded into oil drilling and coal mining.
After suffering losses from its mining operations and the gas crisis, Fluor pulled out of the oil industry and focused its attention on construction and other services. By the 1990s, the company began offering equipment rentals, staffing, nuclear waste cleanup, and more.
As of 2019, the Fluor Corporation made over $15.7 billion in revenue, making it one of the largest construction companies in the world. Fluor is currently #2 on ENR’s list of Top 400 Contractors of 2020.
The Fluor Corporation offers services in the following industries:
Engineering and design
Procurement
Fabrication
Construction
Maintenance
Recent notable projects include:
Aladdin Hotel & Casino – Las Vegas, Nevada
Rebuilding power, water, and infrastructure after the Iraq War
Gordie Howe International Bridge – Detroit River, Michigan and Windsor, Ontario, Canada
Governor Mario M. Cuomo Bridge – Hudson River, New York
The Fluor Corporation’s headquarters are in Irving, Texas, but it has 54 offices in 29 countries altogether. Those offices include:
Washington, DC
Richmond, Virginia
Calgary, Alberta, Canada
San Francisco, California
Buenos Aires, Argentina
Tokyo, Japan
Bangkok, Thailand
Abu Dhabi, UAE
Tarragona, Spain
London, England
Before working with Fluor
Before you take any steps toward working with Fluor, you should make sure that it seems like a good fit for your company. It’s always good practice to prequalify any prospective general contractor before you work with them. Prequalifying Fluor will allow you to get an idea of how the company works with subcontractors.
If you don’t know how to prequalify a contractor, Levelset suggests the following five steps:
Understand that through the prequalifying process, you’re likely to uncover at least one or two less-than-flattering reviews or disputes. With a company as large and old as Fluor, it’s unrealistic to think it will have a blemish-free history.
If you do find something particularly concerning, reach out to Fluor for some clarification before you write them off completely. If the company is entirely upfront with you, it says something about the type of General Contractor you might be working under.
Fluor’s payment profile
If you really want to get an idea of what it’s like to sub for Fluor, one of the best resources you can turn to is the company’s payment profile. Payment profiles compile useful information about contractors so subs have a better idea of the company’s practices.
As of writing this article, Fluor has a payment score of 72/100, giving them a C-rating. We use payment scores as a measuring stick for a company’s payment practices, including on-time and late payments. Levelset compared Fluor’s history with thousands of other GCs to calculate this score. To learn more about how contractor payment scores are calculated, click here.
To get a better idea of how quickly or slowly Fluor might pay you, check out the company’s recent payment history.
Recent payment disputes
In order to bring as much value to subcontractors as possible, Levelset compiled data on many of Fluor’s most recent projects. In the past 11 months, at least 20 mechanics liens have been filed against Fluor for slow or non-payment.
While that might sound like a lot, 90 percent of Fluor’s projects go off without a payment hitch. With that said, one of a GC’s most important responsibilities is to make sure that payment goes smoothly. If the company’s payment history concerns you, reach out to Fluor directly for more information about their payment disputes and issues.
Fluor’s prequalification process
Before you can start bidding on projects with Fluor, you have to submit your company information to Fluor’s Supplier and Contractor Registry. Luckily, the process is straightforward.
Step 1: Go to Fluor’s Supplier and Contractor Registry page
You can find the registry in several ways, but the most direct is to head to the Fluor homepage, click on “Login Areas,” and then click “Supplier/Contractor.”
Step 2: Create a registration
By clicking on “creating a company profile,” you’ll be prompted to fill out your company’s information. You’ll need the company’s legal name, address, phone number, and email address. Be sure to click the checkbox to accept the terms of use before clicking submit.
Step 3: Check your email
Within minutes you’ll receive a username, password, and login link in your email address. You’ll use this information to log into the system.
Step 4: Provide a list of services
Once you’re logged in, you’ll be prompted to fill out a questionnaire of sorts about your company. You’ll be able to input the types of work you do, the services you offer, and how you can bring value to Fluor. Choose your words wisely, though, as you’ll only get 1,000 words to do so.
Step 5: Submit
Once you fill out every applicable field, go ahead and submit the registration. You should receive an email notification stating your registration is complete.
Get paid with Fluor
In construction, profits and cash flow are everything. When you’re working with a big contractor like Fluor, it’s wise to know what they expect ahead of time. You’ll cut down on mistakes which should ultimately reduce the amount of time it takes to get paid.
Before work starts
The bidding process is just the first step, and there are many more you’ll have to navigate before the job starts. A large general contractor like Fluor will want certain pieces of information about you and your business. They might include:
In most cases, the project manager on the job will go through all of the required docs.
Progress payments
If you want to avoid late fees on loans, unnecessary interest, and other bottom-line destroyers, get to know the progress payment schedule. You’ll need it to maintain positive cash flow.
When you’re applying for a progress payment with Fluor, you should send a completed pay app as well as an updated schedule of values.
The contract you signed with Fluor will outline any other important terms or items that you need to include with your progress payments. If you have questions, check with the project manager before you miss a progress payment window.
Project close-out
Every general contractor handle project close-out a little bit differently, but there are some relatively standard requirements for they’ll issue final payment. Those requirements include:
Close-out paperwork can be tricky though, so be careful. If you sign certain documents, like lien waivers, you could be forfeiting your lien rights before you’ve received final payment.
3 tips to get paid on every construction project
There are times on construction projects where payment issues are tough to avoid. But, if you want to minimize a payment issue’s effect on your bottom line, the following three steps will improve your chances of getting paid on time.
1. Send preliminary notices
Even when they’re not required, sending a preliminary notice on all your projects is an excellent habit to get into. They serve as an introduction between your company and the owner and GC. A preliminary notice tells them who you are, what you’re doing on the project, and that you intend to be treated fairly.
Some states require preliminary notices by law in order to preserve lien rights. Not sending a preliminary notice within the required timeframe could cost a contractor their most effective line of recourse. If the customer doesn’t pay, you won’t have a mechanics lien to fall back on.
2. Send other visibility documents
Beyond preliminary notices, sending visibility documents can speed up the payment process. Sending invoice reminders, notices of intent to lien, and demand letters keep your company’s name fresh in the GC, admin staff, and owners’ minds. Many times they can spur a payment on their own.
3. Maintain your right to file a mechanics lien
Preserving your mechanics lien rights should be a priority on any project, regardless of the GC managing the job. When payments slow down, a mechanics lien is one of the most effective ways to speed them up again.
A mechanics lien can affect the owner’s financing, the property’s saleability, and cause issues up the chain. For that reason, there are certain requirements and deadlines you’ll have to meet in order to preserve your rights. Get to know the rules in whatever state you’re working in to make sure you’re preserving your lien rights.
Idaho requires everyone who performs work as a contractor to be licensed with the Idaho Contractors Board. Only employees and companies working on projects of less than $2,000 are not required to be licensed.
Trade subcontractors (mechanical, electrical, plumbing) and construction managers are required to be licensed through the Division of Building Safety. In addition, any contractor that works on a public works project needs to be licensed through Building Safety.
Fire sprinkler contractors need to be licensed through the Department of Insurance State Fire Marshal. Any work that is done outside the scope of these specialty licenses requires the contractor to be licensed through the Contractors Board as well.
Read on for details about the Idaho contractor licensing process — and how you can get the license you need for your business.
How to get an Idaho general contractor license
Contractors who serve as a general contractor or construction manager should apply for licensing at the Idaho Contractors Board.
The process for getting licensed is quick and easy. The contractor must fill out a form, get it signed and notarized, then mail or deliver the original notarized form, along with a copy of their photo ID, the application fee of $50, and proof of general liability and workers insurance, to the board. The state requires a minimum of $300,000 in general liability coverage for general contractors.
Veterans and active-duty military personnel, along with their spouses, are provided with expedited application processing and credit for their service.
Subcontractors and trade contractors licensing and registration
Mechanical, plumbing, and electrical subcontractors need to register with the Division of Building Safety. Contractors or construction managers who want to work on public works projects must also register with the Division of Building Safety. Fire sprinkler subcontractors register with the Department of Insurance State Fire Marshal. We’ll go through the process for each one of these trade contractors.
Additionally, contractors and construction managers who want to work on public work projects costing over $10,000 need to be licensed through the Division of Building Safety.
Electrical contractors
Electrical contractors must employ at least one licensed master electrician.
The master electrician’s license application is found at the Division of Building Safety website. The contractor must submit a completed application, pay a $15 application fee, and take an exam in order to be licensed.
Once they pass the exam, they are required to turn in a certificate of insurance for general liability and workers comp insurance and a $125 licensing fee. The state requires at least $300,000 in general liability insurance coverage for electrical contractors.
Idaho honors journeyman electrician licenses from the following states: Colorado, Maine, Montana, Nebraska, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, and Wyoming (includes master electrician license).
HVAC and mechanical contractors
HVAC and mechanical contractors also must employ at least one journeyman technician. The application for an HVAC technician can be found on the Division of Building Safety website.
The contractor must submit a completed application, a $35 application fee, and take an exam in order to be licensed. The application includes a verification of experience that must be completed by someone other than the applicant. Once the applicant has passed the exam, they must submit a $2,000 bond and the licensing fee, which isn’t specified.
Plumbing contractors
Plumbing contractors must employ at least one journeyman plumber. The application for a plumber license can be found on the Division of Building Safety website. The contractor must submit a completed application, a $22.50 application fee, and take an exam in order to be licensed.
The application includes a verification of experience that must be completed by someone other than the applicant. Once the applicant has passed the exam, they must submit a $2,000 bond and the licensing fee, which isn’t specified.
Idaho honors journeyman plumbing licenses from the following states: Montana, Oregon, and Washington.
Fire sprinkler contractors
Fire sprinkler contractors must be licensed through the Department of Insurance State Fire Marshal. The contractor must complete an application, pay a $400 application fee, and take an exam. Once the exam is passed, the contractor must submit a $2,000 bond and proof of general liability and workers comp insurance. The contractor must carry at least $250,000 in general liability insurance coverage.
Before beginning work in Idaho, it’s best to check local jurisdictions to verify there are additional licenses required, whether they’re contractor’s licenses or business licenses. Requirements vary widely by location.
For example, the cities of Boise and Coeur d’ Alene do not require contractors to be licensed. However, the city of Pocatello has 13 different contractor licenses that may be required depending on the type of work you are doing.
No matter where you live, it’s always best to check your local municipality to make sure you’re following all the licensing and registration rules and requirements to operate above-board and keep your payments protected.
Penalties for not being licensed
Unlicensed contractors are subject to civil penalties if they are caught working without a contractor’s license. The financial amount of the penalties is not specified.
Contractors working on public works projects without a public works license are also subject to administrative assessments.
However, suppliers do not need to be licensed to protect their lien rights. If a contractor starts a project not being licensed, but gets licensed in the middle of the project, they have the right to file a lien for the work done after they are licensed. The work they did before getting licensed is unprotected.
The rules for subcontractors are a little more complicated: Subcontractors need to be licensed to qualify for lien rights. However, if the general contractor is not licensed, the subcontractor may not have lien rights, depending on whether they knew the GC was unlicensed. If the subcontractor knew the GC was unlicensed, they do not have lien rights. If the subcontractor did not know that the GC was unlicensed, they can file a lien.
Whether you’re a general contractor or subcontractor, it’s best to be licensed to protect your lien rights and ensure that the contractors above and below you are licensed as well.
Payment protection
In the state of Idaho, contractors need to be licensed to protect their payment and mechanics lien rights. Here it also pays to check whether the contractors above you are licensed —n since knowledge of an unlicensed contractor can cause you to lose your lien rights. General contractors should check all of their subcontractors to make sure they are properly licensed as well.
If you’re working on a residential project in Idaho, general contractors must send a Residential Disclosure Notice before entering into a contract for more than $2,000. Other contractors aren’t required to send a preliminary notice before filing a mechanics lien. However, it’s advisable to send preliminary notices before every project. Sending such a notice can reduce payment problems and help you get paid faster.
If payment problems do arise, contractors have 90 days after work is finished to file a lien.
Massachusetts contractors license requirements can be a bit confusing. Between licensing and registering, just about every contractor has some rule or regulation to meet.
General contractors and specialty trades are required to carry a state-issued license. On the other hand, home improvement contractors have to register their businesses.
In some cases, you might need to do both. We’ll show you exactly what you need to know about the Massachusetts contractor licensing process, so keep reading for all the details.
How to get a contractor’s license in Massachusetts
How you go about obeying Massachusetts contractor licensing requirements will have a lot to do with the type of work you offer.
We’ll break each section down so you’ll know which license you need, which agency oversees that license, and how you can go about applying for one.
Getting a construction supervisor license (CSL)
In Massachusetts, general contractors are considered “construction supervisors,” and there are several types of construction supervisor licenses (CSL) that apply.
Restricted construction supervisor license holders can build two-family dwellings, including accessory buildings and structures. Unrestricted construction supervisor license holders can oversee the construction of any building under 35,000 cubic feet. Specialty construction supervisor license holders follow the same rules as unrestricted, but they can specialize in:
Masonry
Windows, doors, and siding
Insulation
Roof covering
Solid fuel-burning appliances
Demolition
Construction supervisor licenses are a function of the state’s Division of Professional Licensure. Whether you’re applying for a restricted, unrestricted, or specialty CSL, the steps are relatively similar.
To qualify for a construction supervisor license, you must be able to prove that you have three years of experience in building constriction or design. It doesn’t have to be three consecutive years, but the work must be full-time (40 hours per week), and all be within the last 10 years.
However, there are exceptions to this, which include:
Three or four years of high school vocational training can substitute for one year of experience
A bachelors degree can substitute for one year of experience
A bachelors degree in architecture, science, engineering, or technology can substitute for two years of experience
Active construction-related military experience counts for the entire full three years
If you meet those requirements, you’re free to start your exam application journey. The CSL licenses all involve taking a standardized, open-book test. This test is held by Prometrics, and you need to fill out this exam application and mail it in. After waiting a suggested 10 days from mailing, you should contact Prometrics and schedule your exam. You’ll have to score a 70 or better on this test in order to continue with the application process.
If you pass the exam, the score report will include instructions on applying and obtaining your license. It typically takes around 30 days for the Department of Professional Licensure to process each application.
Fees for applying for a construction supervisor license are $150 for the restricted and unrestricted license, and $150 plus $100 for each specialty for the specialty CSL license.
Home improvement contractor registration
In addition to a CSL, any contractor or subcontractor who intends to work on a one to four-family residential properties in Massachusetts must register as a Home Improvement Contractor.
Applicants can register as an individual, proprietorship, partnership, or corporation. If you’re registering under a trade name, or DBA, you’ll have to provide a copy of the business certificate issued by the city or town where the business is based.
To apply, create a login using the online portal. The fee for applying is $150, plus a mandatory payment to the Guaranty Fund. Luckily, the state bases this fee on your company size:
0–3 employees: $100
4–10 employees: $200
11–30 employees: $300
More than 30 employees: $500
For more information about which lines of work require licensing, registering, or both in Massachusetts, click here.
Plumbing contractor licenses
To operate a plumbing contracting business in Massachusetts, you will have to carry a license issued by the Division of Professional Licensure. To apply, you’ll fill out this application and mail it, and a $150 license fee, to:
The Commonwealth of Massachusetts Division of Professional Licensure \ 1000 Washington Street, Suite 710, Boston, MA 02118-6100 Board of State Examiners of Plumbers and Gas Fitters
Note: To qualify for a plumbing contractor license, you will have to have a master-level plumber on staff to act as an officer of the company.
Electrical contractor licenses
Electrical contractor licenses are also a function of the Division of Professional Licensure, and you’ll need one if you want to operate as an electrical contractor. Similar to a plumbing license, you will have to have a master-level electrician on staff.
Applicants can submit their applications through the state’s ePLACE portal. The fee for the application is $221.
Penalties for unlicensed contracting in Massachusetts
While your lien rights might not be at risk, unlicensed contracting does put your business, and yourself, in a bad position.
Massachusetts takes licensing and registration very seriously. Working without one is punishable by a fine of up to $5,000 and up to two years in jail.
For that reason alone, it’s critical to stay on the right side of the Massachusetts contractor licensing rules.
Do you need a license to file a mechanics lien in Massachusetts?
Massachusetts contractors licensing requirements might seem confusing —but the state’s mechanics lien laws do not specifically require a contractor to carry a license. So technically, you can file a mechanics lien in the event of a payment dispute even if you don’t have a license.
Keep one thing in mind: Not carrying a required license could affect your chances of winning a suit if you have to enforce the lien. It’s always best to carry the appropriate licenses for the work you’re completing.
Regardless of what the statutes say about licensing, protecting your payments is vital to growing a thriving, successful business. Cash flow issues arise all the time in the construction industry, and they can take a serious toll on a business — new and old alike.
Not only do Massachusetts contractors have licensing requirements to look out for, but they also have specific steps and deadlines to follow to protect their lien rights.
While GCs aren’t required to send a preliminary notice, subs and suppliers have 30 days to send a preliminary notice to the prime contractor.
Aside from notices, GCs, subs, and suppliers have sliding deadlines they have to follow:
“Subcontractors and other sub-tier parties in Massachusetts must record a Notice of Subcontract the earlier date of the earlier date of (a) 60 days after a notice of substantial completion is filed, (b) 90 days after a notice of termination is filed, or (c) 90 days after last furnishing labor or materials to project.
In addition, they must record a Statement of Account the earlier date of (a) 90 days after notice of substantial completion, (b) 120 days after notice of termination, or (c) 120 days after last furnishing labor or materials to project.”
Additionally, Massachusetts allows a very small window to enforce the lien, requiring a GC, sub, or suppliers to take action within 90 days — not a lot of time to fool around with deadlines.
Bankruptcy is not uncommon among construction businesses. Construction companies often pay for much of a project’s costs up front, with the expectation of being paid in a timely fashion by their clients. But this doesn’t always happen — construction payments are notoriously slow, and payment delays can wreak financial havoc on a business’s cash flow.
Even a construction company that is profitable on paper may be forced into bankruptcy if they’re unable to manage their cash flow. If your construction business in the unenviable position of considering bankruptcy, read this article first —some of the industry’s most experienced construction attorneys weigh in with considerations before filing.
A Chapter 7 bankruptcy is also known as a liquidation. What does that mean? The important thing to remember with a Chapter 7 bankruptcy is your property and possessions can be seized and sold to repay your debts. Some essential property like clothing (provided it’s not expensive) and household goods will fall into the exempt category. But it’s still a serious consequence to consider, and many businesses who wish to remain open may want to examine other bankruptcy options first.
A Chapter 11 bankruptcy is also known as a reorganization bankruptcy. Business affairs, debts, and assets are typically restructured, allowing the company to repay their creditors over time while they remain in business. However, certain business decisions cannot be made without court approval. This is an option many businesses choose if they hope to remain open, but it is an expensive and complicated form of bankruptcy that should not be entered into lightly.
A Chapter 13 bankruptcy is also known as a wage earner’s plan. It allows individuals — typically sole proprietors — to keep their property and repay their debts over time, usually a period of three to five years. Homeowners can keep their homes and avoid foreclosure under this plan. Individuals who are self-employed or running an unincorporated business are eligible for Chapter 13 as long as the unsecured debts are less than $394,725 and the secured debts are less than $1,184,200. If those amounts seem oddly specific, it’s because they are adjusted from time to time to reflect changes in the consumer price index.
Why would a contractor declare bankruptcy?
There isn’t one singular reason why a contractor would declare bankruptcy. In some cases, it may be through no fault of their own. They could be the victim of late payments — or being stiffed altogether — on a job.
Bankruptcy is almost exclusively the result of cash flow problems. Such problems are caused all too often by partial or delinquent payments, made worse by the failure to implement an effective credit and collections policy. But they can also come from other factors, like an over-reliance on debt, financial fraud, or simply a drop in sales.
Many contractors run into cash flow problems when they fail to budget for retainage. Also known as retention, retainage is the practice of withholding some payment until the end of a project to make sure it is completed according to specifications. Contractors should always budget for this in a cash flow projection report to ensure they can continue operating until they are able to collect retained funds.
A poor debt-to-asset ratio can also be a reason a contractor might declare bankruptcy. How much of the company’s assets are being financed by debt and how much of them are being financed by the owners’ equity?
Two steps contractors should take before bankruptcy
Every business is different, so what worked for one business might not work for another. Bankruptcy is not an option any business should pursue impulsively.
“Some business owners give up too early instead of … collecting unpaid bills and executing construction liens.”
In many cases, there are other steps you can take to resolve cash flow issues. Before a contractor files for bankruptcy, they should take a hard look at two elements of their business: Accounts Receivable (the money owed to you by customers) and Accounts Payable (the money you owe your subs, suppliers, and other vendors).
“Some business owners give up too early instead of retaining legal counsel to assist them in collecting unpaid bills and executing construction liens,” says Cesar Mejia-Duenas, a construction attorney with experience in Florida, New York, and Washington, D.C.
No matter how old your accounts payable are, there is always room for negotiation. Get in touch with the rep for your past due accounts. They will very likely be willing to negotiate, even if it’s only to extend the payment deadline while you resolve the underlying cash flow problem.
Business owners should never be afraid to seek advice from an experienced attorney, especially one with deep knowledge of both construction and bankruptcy law.
“Although bankruptcy may sometimes appear to be the best possible outcome from a financial viewpoint, it is very important to seek the advice of a bankruptcy attorney that is familiar with construction issues before filing for bankruptcy,” said Bruce A. Inosencio, Jr., an attorney with experience in Michigan and Florida. “There may be a chance, for example, that your company may not ‘qualify’ for bankruptcy because of actions it took before filing. Not all bankruptcy attorneys have the same level of expertise – make sure your bankruptcy attorney has experience with clients in the construction industry.”
While you can start another business after filing for bankruptcy, a bankruptcy filing can affect your credit rating, which can affect your ability to get loans to start a business. Also, if your new business is too similar to your old and bankrupt one, creditors can attempt to collect from the new business. Talking to a lawyer can answer these questions in greater detail based on your specific case.
“Be aware of the future impact a bankruptcy will have on opening a business in the future,” said Scott Grier, an attorney with experience in Kansas, Missouri, and Oklahoma.
Even if bankruptcy seems like it is your only option, there may be other avenues to consider and a lawyer can help in that regard. Florida attorney David Adlestein says a bankruptcy lawyer is best suited to discuss every available option with you, and help you find the one that’s ideal for your specific business.
“Your company may not ‘qualify’ for bankruptcy because of actions it took before filing.”
Cesar Mejia-Duenas advises business owners to first familiarize themselves with bankruptcy requirements and perform a thorough financial analysis to see if their business is truly bankrupt.
“I would not recommend bankruptcy unless it is the only card on the table, not only because of the legal consequences but also because it leaves the client with the sour taste of failure,” says Mejia-Duenas.
Bankruptcy should also be a part of a business owner’s larger plan. It should not be viewed as a silver bullet that will magically solve all problems. Every owner should ask themselves: What is the long-term plan to keep the business alive and what goal will the bankruptcy accomplish?
“Bankruptcy is expensive and does not always provide the protection that one is seeking,” says Illinois attorney Samuel H. Levine. “This is especially the case if the contractor does not have a viable plan for keeping the company in business.”
“It’s just another tool — not a reflection of you personally.”
Aside from the cost of hiring accountants and lawyers to consult on bankruptcies, it costs money to file them, too. For Chapter 11 bankruptcies, the court charges a $1,167 case filing fee and a $550 miscellaneous administrative fee. Costs are lower for other types of bankruptcy: $235 and $75 for Chapter 13, and $245 and $75 for Chapter 7, respectively.
As long as you understand the risks, Texas-based attorney E. Aaron Cartwright, III offers a different view on bankruptcy.
“Do it —bankruptcy is a tool that all businesses and individuals have access to,” says Cartwright. “If things have gotten absolutely insane in your business life, bankruptcy will provide you a break from the collections efforts, will allow you to settle with some creditors for small amounts of money, and will generally just give you the beginnings of peace of mind. It’s just another tool — not a reflection of you personally.”
Bankruptcy can be a risk — especially in construction
Construction companies can often face unique challenges during bankruptcy proceedings. Carol Sigmond, an attorney with experience in New York, Washington D.C., Maryland and Virginia, said business owners should first evaluate whether the business or the owner should file for bankruptcy. She said, from her experience, most construction bankruptcies fail and become Chapter 7 bankruptcies.
“Construction companies are not good candidates for reorganization,” said Sigmond. “There is generally no good will, no work on the books or other assets to sell. Equipment generally does not generate enough cash to solve problems. Owners and higher tier contractors will find reasons not to pay for work performed. Often, there is debt to workers in the form of back wages or money due to tax authorities that may not be dischargeable. Liquidating 11’s sometimes succeed if either the bank or the surety will back the contractor while it battles with deadbeat owners, but generally, this is not the case.”
“Construction companies are not good candidates for reorganization.”
While attorneys are helpful in bankruptcy proceedings as mentioned above, talking to an accountant is also essential before filing for bankruptcy. A qualified tax accountant can help you determine if you are eligible for any tax discharges and when exactly you should file for them.
Accountants can also provide a fair and accurate valuation of a debtor’s assets. If bankruptcy proceedings take place, they can also manage the affairs of businesses during the process to make sure assets are not misappropriated or embezzled.
Starting a contracting business in Virginia is a big step, and it takes some careful planning. Between bidding jobs, lining up subs and materials, and other day-to-day activities, there’s a lot going on. And, squaring away your Virginia contractor licensing requirements needs to be a priority.
Levelset’s here to help. We’ve put together this article to help you better understand Virginia contractor licensing requirements and which licenses you might have to carry. Keep reading to learn more.
Compared to other states, Virginia’s contractor license requirements are generally straightforward. Anyone performing or managing a project — or removing, repairing, or improving a project valued in excess of $1,000 —requires a license.
Tradesmen like plumbers, electricians, HVAC technicians, gas fitters, and other typical subcontractors must also carry a state-issued license.
General contractors also need to carry state-issued licenses. GC licenses break down into a few categories based on project value and cumulative contract values, which we’ll go over in more detail.
How to get a Virginia contractor license
Unlike some other states with multiple terms and government agencies, all contractor licensing in Virginia goes through the Department of Professional and Occupational Regulation. This is a good thing, especially for specialty trades, as it certainly streamlines the application process.
General contractors
If you’re working on projects valued in excess of $1,000 in Virginia, you need a contracting license. As mentioned, the agency that oversees Virginia contractor licensing is the Department of Professional and Occupational Regulation.
There are three main types, and they break down by the value of the individual project and your business’s overall revenue throughout the year.
Class A contractors perform or manage construction, removal, repair, or improvements when (i) the total value referred to in a single contract or project is $120,000 or more, or (ii) the total value of all such construction, removal, repair, or improvements undertaken by such person within any twelve-month period is $750,000 or more.
Class B contractors perform or manage construction, removal, repair, or improvements when (i) the total value referred to in a single contract or project is $10,000 or more, but less than $120,000, or (ii) the total value of all such construction, removal, repair, or improvements undertaken by such person within any twelve-month period is $150,000 or more, but less than $750,000.
Class C contractors perform or manage construction, removal, repair, or improvements when (i) the total value referred to in a single contract or project is over $1,000 but no more than $10,000, or (ii) the total value of all such construction, removal, repair, or improvements undertaken by such person within any twelve-month period is no more than $150,000.
Depending on which license applies to your business, there are different requirements for experience and application fees.
To apply, you’ll use this license application. The DPOR outlines the steps to licensing clearly on the website:
Create an entity: It’s very important to create an entity of some sort, whether it be a sole proprietorship, LLC, partnership, or corporation. DPOR will not issue a license to an individual.
Name and register the business: Corporations, LLC, and limited partnerships have to register your business with the Virginia State Corporation Commission. Sole proprietors and partnerships register with the county in which they’re located.
Choose a license classification: Determine which of the classifications works best for your company and projects: A, B, or C.
Identify responsible management: Regardless of the entity type, contractors must identify the responsible management parties. For a sole proprietorship, that’s you. For corporations, partnerships, and LLCs, these are the individuals in charge of making sure the business maintains a license and obeys regulations. You’ll need names, addresses, and photo identifications for each of these parties.
Determine a Qualified Individual: Each license type requires a particular amount of experience in the field, and to apply, you must have someone who meets those requirements. That can be you, a managing party, or someone under full-time employment. Again, you’ll need names, addresses, and identification.
Choose and identify a Designated Employee: For Class A and B licenses, companies must have a full-time employee or responsible manager to act as the Designated Employee. This person must pass the required portions of the applicable exam. Again, you’ll need names, addresses, and identification. This is not a requirement for Class C licenses.
Take the prelicensing course: All businesses need to have the Designated Employee or a Responsible Manager complete the 8-hour prelicensing course.
Complete the application: Once you have all your ducks in a row, you can fill out the application. Make sure you fill out the entire application. Any missing information could prolong your approval.
Submit your application along with the licensing fee to:
Commonwealth of Virginia Department of Professional and Occupational Regulation 9960 Mayland Drive, Suite 400 Richmond, Virginia 23233-1485
Licensing fees are:
$385 for Class A
$370 for Class B
$235 for Class C
Wait it out: Once you submit your application and documentation, it’s a waiting game. The board will review your application and notify you of its decision.
There are also requirements based around net worth for Class A and B contractors. Class A contractors must show a net worth of $45,000 or more, and Class B Contractors must show proof of $15,000 net worth.
Some municipalities in Virginia now require a contractor bond for Class A and B contractors in addition following a recent change to Chapter 11 (§ 54.1-1100 et seq.) of Title 54.1. The DPOR provides a form to attest to the bond if required for a license in one of the following:
Fairfax County
Prince William County
City of Chesapeake
City of Falls Church
City of Roanoke
Subcontractors and specialty contractors
Subs and specialty trade contractors have the same requirements as general contractors. They must choose a license grade and follow all the steps outlined above. The only addition is they’re also required to pass an additional examination for their specific trade and carry a DPOR license.
This includes plumbers, electricians, HVAC techs, well drillers, gas fitters, and more. The complete list is available on the application.
For large projects, contractors will need a master-level license holder on staff. To apply for a master license, this person must have at least one year of experience as a licensed journeyman in their trade or 10 years of practical experience. They can also hold an out-of-state master-level license. This person will have to act as their Qualified Individual and Designated Employee.
For smaller projects, like those typical of a Class C contractor, a journeyman’s license might be all the state requires. Journeyman applicants must have one of the following:
Four years of experience in the trade and 240 hours of formal vocational training
Five years of practical experience in the trade and 160 hours of formal vocation training
Six years of practical experience in the trade and 80 hours of formal vocational training
Seven or more years of practical experience in the trade and 40 hours of formal vocational training
Associates degree or certificate of completion for at least a two-year program in a tradesman related field
Bachelors degree or certificate of completion from an accredited college or university in an engineering curriculum
Ten years of practical experience in the trade
An out of state journeyman’s license
There’s also an additional avenue for LP and Natural Gas fitters: Four years of practical experience and 80 hours of formal vocational training.
Specialty contractors will also have the same net worth requirements that they must meet: Class A contractors must show a net worth of $45,000 or more, and Class B Contractors must show proof of at least $15,000 net worth.
The Ultimate Guide to Growing a Construction Business.
Reciprocity for contractors currently licensed in neighboring states and wishing to work in Virginia is available to electrical contractors from Alabama, District of Columbia, Kentucky, Maryland, West Virginia, or North Carolina. Anyone applying by reciprocity or by examination exemption must submit a complete application along with verification of licensure from the out-of-state board. The full list and more details are stated by the Virginia Board for Contractors.
While Virginia doesn’t have plumbing license reciprocity agreements with other states, they do have an agreement with the Washington Suburban Sanitary Commission.
Additionally, the state recommends reaching out to the Board for Contractors for questions about reciprocity for general contractors or any other type not explicitly listed.
Virginia contractors caught working without licenses when the work requires one are susceptible to fines and penalties issued by the state along with potential loss of rights to get paid for work.
State issued fines
Virginia takes unlicensed contracting very seriously. Under Virginia Code 54.1-1115, the penalty for contracting without the proper license in Virginia is a fine in the amount not to exceed $500 per day of violation. It is also a Class 1 misdemeanor, and you could also do up to a year in jail.
So, not only could you be risking your payments in the event of non-payment, but contracting without a license could land you behind bars for a while.
Loss of payment rights
It’s not just the licensing requirements that are straightforward in Virginia. The rules around mechanics liens are plain as day: If the work you’re performing requires a license, you’d better have one. Otherwise, you’ll be unable to file a mechanics lien for unlicensed work per an amendment to the state laws that made this an absolute requirement. Not a good position to be in.
Regardless of the state and the licensing requirements it sets, cash flow is always an issue in the construction industry. If you’re working without a license in Virginia, you’re putting your company in a tough position: Non-payment could cost you all of your positive cash flow.
Beyond licensing requirements, Virginia contractors have specific deadlines of which they need to be aware to protect their payments. For example, contractors, subs, and suppliers need to send a preliminary notice on all of their jobs within 30 days to protect their payments. They also have up to 90 days from the last day of the month in which labor or materials were furnished to file a mechanics lien. And, should they have to go to court, an action to foreclose upon the lien needs to take place within 6 months.
Between licensing requirements and strict deadlines, it’s important that Virginia contractors do what they must to protect their payments and continue to grow.
As anyone knows, running a construction business has its ups and downs, and it takes a specific type of person to succeed. It also takes a keen eye for details and an understanding of the necessary Pennsylvania contractor licensing requirements.
Here at Levelset, we want to help you achieve success: Instead of walking blindly into the world of Pennsylvania contracting, we’ll guide you through the rules and regulations around licensing requirements.
The majority of contractors in the state of Pennsylvania fall under the term “home improvement contractor.” This term applies to general contractors, drywallers, carpenters, and all the typical subtrades on a standard residential construction project — with the exception of plumbers and electricians.
Pennsylvania is a commonwealth, so its oversight on contractor licensing is minimal compared to other states.
Instead, the state prefers to leave home improvement contractor licensing up to the individual municipalities and counties — and there are a lot of them in Pennsylvania.
The only two contractors that need state-issued licenses are crane operators and asbestos and lead removal contractors.
While the state doesn’t have any hard licensing requirements for home improvement contractors, it does require most to register with the State’s Attorney General’s Office.
Do you need a license to file a mechanics lien in Pennsylvania?
Pennsylvania does not have any explicit rules requiring licensing and mechanics liens. So, potentially, you could be an unlicensed contractor and still retain your rights to your payments. However, if you have to file a suit, not having a license for work that requires one might hurt your chances of winning.
In any case, it’s important to meet the regulations and requirements of wherever you’re working.
How to get a Pennsylvania state contractor license
Home improvement contractors don’t require licenses in Pennsylvania, but crane operators and asbestos and lead removal contractors do.
Crane operators
Crane operators need to go through the Pennsylvania State Board of Crane Operators to apply for a license. The requirements for licensing are as follows:
Contractors working in asbestos and lead removal must carry a state-issued license. That license falls under the Pennsylvania Department of Labor and Industry.
The application process is fairly straightforward for asbestos and lead removal contractors. Simply complete the Asbestos Contractor Certification Application, and pay the licensing fee (between $304 and $608). Send everything by mail to:
PA Department of Labor & Industry Certification, Accreditation & Licensing Division 651 Boas Street, Room 1606 Harrisburg, PA 17121
The process for registration isn’t terribly difficult to navigate:
Provide business information such as type of business (sole proprietor, partnerships, etc.), business name, address, and Federal Employer Identification Number
Provide personal information such as social security numbers, driver’s license information, and addresses for every owner, officer, or partner involved
Provide information identifying shareholders holding more than 5 percent stake in the company
Provide license and registration information if the applicant holds a license in any other political subdivision
Describe the business
Provide proof of general liability and workers comp insurance
Include a $50 check or money order made payable to “Commonwealth of Pennsylvania.”
Some municipalities in Pennsylvania have their own rules and regulations pertaining to contractor licensing. Here’s a breakdown of the laws in some of the most populated areas.
Philadelphia
Philadelphia requires all home improvement contractors working within the city to carry a city-issued license. The requirements for this license are quite simple. Applicants will have to provide proof of insurance, take the OSHA 30 safety training course, and disclose the names of each of their subcontractors.
To apply, use the city’s ECLIPSE system, create a login, and fill out the application online.
Electrical contractors must also carry a license separate from home improvement contractors, though they will use the same ECLIPSE portal to apply. The requirements are:
Provide proof of insurance
General liability: $500,000 per occurrence
Automobile liability insurance: $300,000
$500,000 policy limit
Have four years of employment doing electrical work
Take and pass the Philadelphia Electrical Contractor Examination
Provide proof of at least 8 hours of continuing education coursework
Photo identification
Be in compliance with City tax law
Plumbing Contractors need city-issued master plumbers licenses to operate in Philadelphia. They will also use the ECLIPSE portal to apply. Other requirements are:
Proof of insurance
General liability: $500,000 per occurrence
Automobile liability insurance: $300,000
$500,000 policy limit
Registration as a Philadelphia Apprentice Plumber for a minimum of four years
Registration as a Philadelphia Journeyman Plumber for a minimum of one year
Take and pass the Philadelphia Master Plumber Examination
Provide photo identification
Be in compliance with City tax law
Pittsburgh
There are a few contractors that the city of Pittsburgh requires to carry a license: general contractors, sign contractors, plumbing contractors, and electrical contractors. These licenses fall under the Department of Permits, Licenses, and Inspections.
General contractors are able to build and renovate one or two-family dwellings. The requirements are:
Valid driver’s license and photo ID
Proof of insurance
Proof of worker’s compensation (or an affidavit stating you have no employees)
Comply with City tax law
Check or money order made out to “Treasurer – City of Pittsburgh”
Sign contractors are able to erect, alter, repair, or maintain ground signs, wall signs, projecting signs, and more. They have the same requirements to meet as General Contractors, and they can apply online or with a paper copy.
Plumbing contractors must carry Allegheny County-issued master plumber licenses. This license falls under the County Health Department. To apply, would-be contractors will use this application. They must have two full years of work experience as a journeyman plumber.
Electrical contractors must carry city-issued licenses to take contracts in the city. They also have several other requirements to meet, including:
Valid driver’s license or photo ID
Proof of 8 hours of continuing education
Payment of check or money order to the city Treasurer
Neither the city of Allentown or Lehigh County have requirements for general contractor or home improvement contractor licensing. Instead, they rely on the Attorney General’s registration. However, plumbing, electrical, and sheet metal contractors do need licenses-issued by the city.
Plumbing contractors do require city-issued licenses. The city’s requirements aren’t explicitly outlined on its website, but the application is available.
Electrical contractors also require city-issued licenses, and the requirements are more clearly outlined:
Must be 21 years or older
Have a high school diploma or G.E.D.
Master applicants must have 4 years of practical experience
Sheet metal contractors must carry a city-issued license as well, though the requirements are a bit cloudy. This is the appropriate application.
Erie
Neither the city of Erie nor Erie county has any regulations for general contractor or home improvement contractor licensing. The city does require licenses for electricians, plumbers, and HVAC installers, but contractors must contact this office for any information on licensing.
Reading
To operate a plumbing or electrical contracting business in the city of Reading, you or someone on your staff must hold a masters-level license. The license requirements are as follows:
Electrical license:
PA Apprenticeship and Training Council – Apprenticeship Agreement or
PA Apprenticeship and Training Council – Certificate of Completion of Apprenticeship
And proof of completion of 4 years of approved apprenticeship training, consisting of at least 2000 work hours per year.
And proof of instruction in subjects related to each trade for the hours required by each trade during the 4 year apprenticeship by an accredited educational provider. Each Trade Board will have the discretion to decide whether or not to allow candidates to take their respective test in April before the completion of the 4th year. Candidates should inquire as to each Board’s respective rules regarding early testing, at the beginning of their 4th year or
Proof of a minimum of 8 years of work experience under a Licensed Master Electrician, Master Plumber, or Mechanical Contractor for all other license classifications or reciprocal licenses, contact the appropriate trades inspector for testing and licensing requirements.
Plumbing license:
Proof of possession of a City of Reading Journeyman license for 2 years or
Proof of employment as a Journeyman in another jurisdiction for 2 years
Penalties for unlicensed contracting in Pennsylvania
Penalties and fines for unlicensed work are the responsibility of the municipalities and will vary from location to location. However, working while not registered with the Attorney General’s Office is a violation punishable by fines of $1,000 or more.
Protecting your payments in Pennsylvania
Regardless of which state you work in, cash flow is always an issue in construction. Allowing a mistake like working without a license when it’s required could end up costing you some of that valuable cash.
On top of licensing requirements, Pennsylvania contractors have certain deadlines they need to keep an eye on to protect their payments. For instance, subs and suppliers have 45 days from first furnishing to send a preliminary notice on some projects. Also, they must provide a Notice of Intent to lien 30 days before filing a lien. They also have six months since final furnishing to file a mechanics lien.
Don’t let these deadlines or working without a license affect your cash flow. Protect your payments and stay on the right side of licensing regulations.
Construction is a tough business. It takes a strong work ethic, great problem-solving skills, and a dedication to customer service to survive. Ask most contractors about it, and they’ll tell you that it’s all worth it to make their customers’ visions come true. It’s even better when that check hits the bank account. When a contractor performs work on a property, they have the right to get paid for their work. That’s the entire reason construction liens exist.
What happens when contractors don’t get paid? I know it’s hard to fathom, but there are people in this world who don’t hold up their end of the deal. The contractor could perform the work according to the agreement, only to be left empty-handed by the customer.
In these situations, a contractor might have to file a construction lien to see any of the money owed to them for their work.
What is a construction lien?
A construction lien, more commonly known as a mechanics lien, is a type of security interest in real property provided to contractors, suppliers, and others as a tool to collect payment on building projects.
We owe the creation of modern construction liens to Thomas Jefferson. As a lawyer and architect, Jefferson knew well the pay-related dangers builders faced. To encourage the construction of the new capital in Washington, Jefferson created construction liens as a recourse for abused contractors.
A construction lien is filed on real property
In most cases, when a contractor creates an improvement on real property, they have a right to payment for their time, materials, and efforts. If the property owner or hiring party decides not to pay them, the contractor can file a construction lien against the property.
Notice that the lien is against the property, not the property owner. Because the lien attaches to the property, it can be very difficult to sell it or refinance. It can also be difficult to secure further financing for the project, should the owner need another infusion of cash to finish it.
A construction lien is public record
There are certain requirements that the contractor must meet to be eligible to file a lien, and these requirements vary from state to state. However, in most states, the contractor files the construction lien with the county clerk or recorder’s office in the county where the project lies. This makes the lien part of the public property records.
Anyone who looks for the property information at the county recorder’s office will see the lien against the property. This includes prospective buyers or business partners.
You don’t even need to know the contractor
It’s entirely possible to have a lien filed against your property by a contractor that you haven’t even heard of.
Say you hired a general contractor to handle your project. The GC will most likely hire subcontractors to work for him to complete the project. It’s your responsibility to pay the general contractor, and it’s the GC’s job to pay his subs.
But this isn’t always how it goes. On occasion, a GC will hold onto payments for many reasons: They could be dissatisfied with the sub’s work. They could be holding onto payment cash to shore up their account or front another job. They could just have no intention of paying the sub for their work.
Whatever the reason, a subcontractor who goes unpaid has the right to file a construction lien against your property, even if you didn’t hire him.
File a lien now
Levelset takes all of the guesswork out of the filing process. We’ll research the project information and ensure your claim is done right.
Many a construction lien resulted from a good, honest person running out of cash or getting in over their head. It’s not that they didn’t want to pay the contractor; they just didn’t have the money.
Prequalifying your contractor can be a huge step toward safeguarding your property from a construction lien. By checking into your general contractor’s payment and credit history, as well as their subcontracts, you’ll get a clearer picture of their payment practices.
Ask around before you enter into a contract with a GC. While isolated issues shouldn’t be much cause for concern, consistent issues across several projects should be a red flag. Even if those projects didn’t end up with the filing of a construction lien, the writing might be on the wall.
Levelset’s Contractor Payment Profiles make this process easy. It can serve as an incredible source of valuable information when vetting your contractor. You’ll learn about payment issues and overall payment speed. You can also read reviews from subcontractors and suppliers they’ve hired.
Communicate with everyone
Communication is the most important — but unfortunately most poorly handled — aspect of construction projects. Don’t let that be the case on your property.
If you want to ensure that the project is going well and that everyone is receiving fair treatment, talk to them. Ask your general contractor about the other contractors on the project. You can ask them to get a list of subs and suppliers from their subcontractors.
Speak to your GC about requiring a preliminary notice for everyone on the project. Even if it’s not a requirement in your state, a preliminary notice from every sub and supplier attached to the project will allow you to build a roster of project participants.
Pay on time
The easiest way for you to do your part in warding off a construction lien is to simply pay your contractors on time. If progress payments are due, send them out. Don’t be afraid to ask for lien waivers from subs and suppliers as well.
Ensure the GC has a plan for paying all the subs and suppliers
Talk to your GC about paying the other project participants. This is another good time to ask for a list of subs and suppliers, as well as making lien waivers a requirement on your project.
How to remove or release a construction lien
There are a few ways that a property owner can remove or release a lien, and it often depends on whether the lien is valid or not.
Removing invalid construction liens
Individual states have regulations that determine whether a lien is or is not enforceable. Essentially, they determine whether or not a lien is valid. It’s entirely possible to have an invalid lien filed against a property.
Here are some ways to fight an invalid lien:
Immediately file preliminary objections if the lien claim doesn’t meet the state’s requirements, and let the court decide.
Some states don’t allow liens on single or double residential projects if the property owner paid the GC in full.
File a lawsuit against the lienor.
Removing valid construction liens
For all of your best efforts, things do happen. If you do end up with a construction lien against your property, you do have some options.
Here are some ways to remove a valid lien:
Negotiate with the contractor. Communication is key in avoiding construction liens, but it can also be key in resolving them.
Enlist the help of a surety to bond off the lien. The surety will provide the county with proof that you can pay the lien’s amount if the court rules that you have to. The lien will attach to the bond at that point, not the property.
Hire a construction lawyer and take the contractor to court. Even if the lien meets all of the state requirements, you could have a case validating non-payment.
Enforcing a valid lien
If you’re the one filing the mechanics lien, it might not always be clear about what your next steps are after filing.
