Contractor Beware: The Pitfalls of Florida Construction Licensing Requirements

by Doug Gartenlaub Partner Burr & Forman LLP

Chapter 489, Florida Statutes, which governs Florida construction licensing, requires a non-exempt party performing construction services in the State of Florida to obtain the appropriate license or be subject to both civil and criminal penalties.  However, unbeknownst to many attorneys and their clients, Florida’s licensing requirements are broadly construed, and impact more than the layman’s definition of a “contractor”.  As a result, many clients regularly fall afoul of Florida’s licensing law through sheer ignorance of their inclusion under the definition of contractor; a mistake which carries heavy repercussions for non-compliance including the invalidation of the all-important contractor lien and other civil or criminal penalties. This article provides an overview of Florida contractor licensing requirements and the potential penalties for non-compliance.  With better understanding of the contractor licensing laws, you will help your clients comply with Chapter 489, Florida Statutes.

When Construction Activities in the State of Florida Require a License.
The definition of contracting in Florida is very broad and covers most significant construction services in the state. Based on the definitions contained in Fla. Stat. § 489.105, a person or entity, who wants to perform construction work needs to become licensed in the state of Florida or risk substantial civil and criminal penalties. Fla. Stat. § 489.113(a).

A contractor is defined as ” . . . the person who is qualified for, and shall only be responsible for, the project contracted for and means, except as exempted in this part, the person who, for compensation, undertakes to, submits a bid to, or does himself or herself or by others construct, repair, alter, remodel, add to, demolish, subtract from, or improve any building or structure, including related improvements to real estate, for others or for resale to others; and whose job scope is substantially similar to the job scope described in one of the subsequent paragraphs of this subsection …”.  Fla. Stat. §489.105(3).

Florida law has three general categories of a contractor as defined by Fla. Stat. §489.105(a)-(c).

A general contractor, pursuant to that section, means “a contractor whose services are unlimited as to the type of work which he or she may do, who may contract for any activity requiring licensure under this part, and who may perform any work requiring licensure under this part, except as other expressly provided in §489.113.”

A building contractor means “a contractor whose services are limited to construction of commercial buildings and single dwelling or multiple-dwelling residential buildings which commercial or residential buildings do not exceed three stories in height, and accessory use structures in connection therewith or a contractor whose services are limited to remodeling, repair, or improvement of any size building if the services do not affect the structural members of the building.”

The final general category is a residential contractor, which is defined as “a contractor whose services are limited to construction, remodeling, repair, or improvement of the one-family, two-family, or three-family residences not exceeding two habitable stories above no more than one uninhabitable story and accessory use structure in connection therewith.

In addition to the general categories there are numerous categories of specialty contractors with specifically limited specialties such as roofing and air-conditioning. Fla. Stat. § 489.105 (d)-(p).

Requirements for Licensure in the State of Florida.
If your client meets the definition of a contractor, how does your client obtain a license? To become a state certified contractor in Florida, a party must obtain a passing score on the Florida CILB Licensing Examination, be at least 18 years of age, meet the educational and experience requirements, be of good moral character, pay the applicable fees, obtain workers compensation coverage and demonstrate financial responsibility.  An applicant for an initial issuance of a state contractor’s license is also required to submit to a statewide criminal history check through the Florida Department of Law Enforcement.

Additionally, if the party seeking a license is a corporation, it will need to have a qualifying agent who has met the aforementioned requirements.  Fla. Stat. § 489.119.  The qualifying agent has the responsibility to supervise, direct, manage and control construction activity on the job for which he or she has obtained a building permit.  Qualifying agents are also responsible to the CILB, not the general public, for the “financial matters” of the firm being qualified.  The applicant for a qualifying agent must include an affidavit stating he has final approval authority on all payments and approval authority for all construction work done.

Florida does not Honor Reciprocity.
In addition to having a broad definition of what construction activities require a license, Florida does not honor even limited reciprocity and, therefore, a license in any other state will not constitute an exemption to a licensure in the state of Florida.  All the aforementioned criteria, as well as the examination, will still need to be met, even by a person with licensure in other states.

Penalties For Unlicensed Contracting Are Both Civil And Criminal.
A person or legal entity must be licensed before it engages in the contracting business.  Fla.Stat. § 489.128.  For a legal organization or entity to be licensed, it must have a qualifying agent and be certified, which means it must possess a certificate from the Department of Professional Regulations.  See Fla. Stat. § 489.105(7)(8)(11).  An unlicensed party may not enforce either its legal or equitable rights to payment in Florida. See, Fla. Stat. § 489.128.

The prohibition on unlicensed contracting even extends to invalidation of the unlicensed party’s lien rights.  See Architectural Complements, Inc. v. R.G. Brown Properties, Inc., 686 So.2d 678 (Fla. 2nd DCA 1996); Fla.Stat. § 713.02(7).  Fla. Stat. § 713.02(7), clearly provides that “no lien shall exist in favor of any contractor, subcontractor, or sub-subcontractor unless such contractor, subcontractor, or sub-subcontractor is licensed as a contractor pursuant to the laws of the jurisdiction within which he is doing business.”

Finally, Florida law provides for criminal penalties. Fla. Stat. § 489.127. Unlicensed contracting is punishable by a first degree misdemeanor for a first offense. A second offense is punishable as a felony in the third degree.

Conclusion.
In conclusion, since ignorance of the law is no excuse, a working knowledge of Florida Construction licensing law is necessary for both a contractor and any attorney representing a contract in Florida. A failure to properly understand the broad, far reaching nature of this law can and will lead to an adverse result.

This article appeared in the April 2012 issue of Dixie Contractor.

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