Performing construction work without a license is always a dangerous proposition. Contractor licensing requirements in Alabama are particularly strict. A subcontractor needs the proper licenses for protection under Alabama’s mechanics lien laws. If they fail to secure the right license – in some cases, multiple licenses – they may be left with zero recourse if they aren’t paid. An Alabama subcontractor learned this lesson the hard way when they took the general contractor to court over non-payment.
Alabama subcontractor license requirements
Licensing for construction work in Alabama is governed by the Alabama Licensing Board for Contractors. Like most states, there are several different categories of licensure, including a number of specialty “sub-classifications,” such as mechanical, demolition, and electrical licensing.
However, there may be additional requirements for specialty contractors depending on the job. If hired by a general contractor or subcontractor at a price of $50,000 or more, you must have a “subcontractor license” as well. Working without one is walking a tightrope without a safety net.
Licensed electrical contractor performs work without a subcontractor license
The case in question is Construction Services Group, LLC v. MS Electric, LLC, decided in June 2019.
- Owner: Alabama Public School & College Authority (APSCA)
- General Contractor: Construction Services Group, LLC (CSG)
- Subcontractor: MS Electric, LLC (MS Electric)
CSG was hired as a general contractor by APSCA to make additions and alterations to Montevallo Middle School. MS Electric had submitted a $198,831.10 bid to perform the electrical work on the project, which was accepted.
Contract was declared illegal
MS Electric immediately began working on the project. No later than 12 days in, the $23,650 worth of work performed went unpaid. So MS Electric filed a lawsuit against CSG for breach of contract. However, at trial, the claim was dismissed due to illegality of the contract.
Why? Well, MS Electric was licensed as an electrical contractor. But the Alabama Licensing Board for Contractors requires an additional “subcontractor” license for any job over $50,000. The trial court judge did allow MS Electric to amend their complaint, which they did. The new claim was based on unjust enrichment, which was successful. CSG appealed.
Illegally performed work bars any action for recovery
On appeal, CSG contended that “if a party is precluded from maintaining a breach-of-contract claim because the claim is based on an illegal contract, the party may not circumvent the law precluding him, her, or it from maintaining a breach-of-contract claim by stating a different claim based on another theory of recovery.”
It is undisputed that MS Electric didn’t have the proper licensure when it submitted the bid and performed the work. Therefore, not only was a the contract illegal, but so was the work performed.
The court stated that “current Alabama law does not recognize any exceptions to the rule that public policy will not permit recovery by an unlicensed contractor regardless of the the conduct of the other party.”
Accordingly, the appeals court reversed the trial court decision, declaring that Alabama law prohibits any and all means of recovery when dealing with work that was illegally performed.
Never perform unlicensed contractor work in Alabama
Having a contractor license in Alabama isn’t enough — the appropriate licenses can change depending on the project you’re working on. As you can see from this case, Alabama has unique licensing requirements.
Specialty contractors may have a license to perform the specific type of work. But if working as a sub and the contract is over $50,000, a subcontractor license is also required. This is a necessity not only for mechanics lien rights, but for any rights to recovery under a construction contract.
Contractors working without proper licensing in Alabama are essentially at the mercy of their customer. If the customer decides not to pay, there’s nothing to compel them.
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