It is critical that you research any potential general contractors you are thinking about hiring to build or remodel your home. In addition to obtaining references from other satisfied customers, you need to make sure that the general contractor is actually licensed by the sate of North Carolina. We often represent individuals who have spent tens of thousands – and in some instances hundreds of thousands – to repair work managed by a general contractor who was never licensed in North Carolina. These unlicensed or under-licensed general contractors typically do not have the financial ability to pay for the damages they cause, leaving homeowners footing the bills.
In general under North Carolina law, any person who performs general contracting services beyond $30,000 must be licensed by the North Carolina Licensing Board for General Contractors (see N.C. Gen. Stat. § 87-1). A general contractor license can be limited, intermediate or unlimited:
- Limited license: The general contractor can only contract for projects up to $500,000, and must show that their assets exceed their liabilities by $17,000.
- Intermediate license: The general contractor can only contract for projects up to $1,000,000, and must show that their assets exceed their liabilities by $75,000.
- Unlimited license: The general contractor is not restricted on the value of a project, and must show that their assets exceed their liabilities by $150,000.
One way builders try to get around the licensing requirement is to say that they are not acting as a general contractor, but rather as a consultant. In determining whether a party is a general contractor, North Carolina courts look at the degree of control to be exercised by the contractor over the construction of the entire project. Signature Development, LLC v. Sandler Commercial at Unions, LLC, 207 N.C.App. 576, 584 (2010). See also Harrell v. Clarke, 72 N.C. App. 516, 517, 325 S.E.2d 33, 35 (1985), citing Roberts v. Heffner, 51 N.C.App. 646, 277 S.E.2d 446 (1981) (“The principal characteristic of a general contractor, as opposed to a subcontractor or mere employee, is the degree of control to be exercised by the contractor over the construction of the entire project.”) Therefore, it is important to look closely at the facts and the language in the contract to determine whether the builder would be considered a general contractor versus merely a consultant.
A general contractor’s failure to comply with North Carolina’s licensing requirements will prevent him from enforcing his contract. Ron Medlin Const. v. Harris, 364 N.C. 577, 581 (2010). In an action brought against an unlicensed contractor, the contractor may not counterclaim to enforce the construction contract. Brock v. Day, 60 N.C. App. 266, 298 (1983). This is true even if the customer enters into the contract knowing that the contractor is unlicensed. Ar-Con Constr. Co. v. Anderson, 5 N.C. App. 12 (1969).
If you suspect your builder is not licensed, you should talk to an experienced North Carolina construction lawyer right away.