On March 9, 2018, the Georgia Court of Appeals reaffirmed the applicability of Georgia’s contractor licensing requirements (Ga. Code, Title 43, Ch. 41) to residential and general contractors. In Baja Properties, LLC v. Mattera, a homebuilder filed a lawsuit against the homeowner alleging breach of contract. In the trial proceedings, the homebuilder admitted that he did not have a general contractor’s license either when he contracted to build the home or during performance of the work.
Under Georgia Code § 43-41-17, subject to a few limited exceptions, an unlicensed contractor cannot enforce a contract in law or in equity. When the homeowner moved for summary judgement citing the statute, the court granted the motion and dismissed the builder’s breach of contract claims finding the claims void and unenforceable under state law. The Georgia Court of Appeals affirmed the dismissal of the homebuilder’s claims.
This case is unremarkable in its result but highlights the importance of complying with state contractor licensing laws. Failure to comply can be fatal to an otherwise valid claim and cut off access to contractual rights and remedies for the unwary contractor. Many states also impose fines on contractors for failure to maintain a proper license, and other states require contractors to ensure their subcontractors are appropriately licensed or else incur substantial penalties.
Securing contractor licenses can take time, and requirements vary across states. So, pay attention early on when determining whether to pursue work in a new state or with a subcontractor with which you don’t have prior experience. You may not be able to remedy any licensing deficiency post-contract execution or even post-submission of a bid, so you want to make sure any potential issues are known and dealt with well before then. Additionally, most states allow you to check a party’s licensing status online, so you can verify quickly whether a particular subcontractor is appropriately licensed before soliciting a proposal from them.
A proactive and conscientious approach to licensing on the front end of any project will help you preserve your bargained for contract rights and avoid substantial penalties or other damages later on. Bradley attorneys routinely help owners, contractors, and subcontractors address licensing requirements nationwide. If you have any questions about this topic, please contact Aman Kahlon.