The title of this post says it all. No need for a catchy story about my kids or a play on words. In what had been an often debated issue in trial courts across Tennessee, the Court of Appeals recently weighed in on the issue of whether an underlicensed contractor (one who contracts beyond the monetary limitation of its license) can form the basis of a claim under the Tennessee Consumer Protection Act (“TCPA”), Tenn. Code Ann. §§ 47-18-101 et seq.
The Setup. In Zelenik v. Crowell Homebuilding LLC, (Aug. 14, 2025), the Court held that a contractor that exceeds its monetary licensing limit at the time of contracting violates the Contractor’s Licensing Act (“CLA”), Tenn. Code Ann. §§ 62-6-101 to -139 (2019 & Supp. 2024). The Court went on to hold that the trial court properly held that a violation of the CLA, in turn, constituted a violation of the TCPA.
The Licensing Dispute. In Zelenik, the parties agreed that the monetary limit associated with the contractor’s license was insufficient for the homeowner’s project. However, the contractor argued that the CLA only protects against unlicensed contractors, as opposed to underlicensed contractors.
But the CLA expressly provides: “It is unlawful … to engage … in contracting …, unless, at the time of such engagement …, the person, firm, or corporation has been duly licensed with a monetary limitation sufficient to allow the person, firm, or corporation to engage … in such contracting project.” Tenn. Code Ann. § 62-6-103(a)(1).
What the Court Decided. The Court succinctly outlined the prior version of the statute, as well as the prior case law, addressing this issue:
A contractor must be “duly licensed with a monetary limitation sufficient to allow the person, firm, or corporation to engage in or offer to engage in such contracting project.” In determining the Act’s applicability, this Court has previously found a significant “distinction between unlicensed contractors and contractors bidding above the monetary amount of their license.” Anchor Pipe Co. v. Sweeney-Bronze Dev., LLC . . . . But we were interpreting an earlier version of the Act, which applied to “[a]ny unlicensed contractor.” At the time these parties contracted, the Act expressly required sufficient monetary limits, which Crowell Homebuilding did not possess.
Notably, the Court held that the insufficient license was not a breach of contract—it was a statutory violation. Here, the construction contract in this case imposed no obligation regarding licensure. However, there were other facts justifying the trial court’s conclusion that the contractor first materially breached the contract.
Ultimately, the Court affirmed the trial court’s decision that the contractor’s actions constituted a violation of the TCPA, which also supported an award of attorney’s fees to the homeowner.
So What? The most important lesson from Zelenik is that underlicensing is just as dangerous as unlicensing. If you contract for work above your monetary limit, you risk losing payment rights and facing liability under the Tennessee Consumer Protection Act. Contractors must know and respect the dollar limits of their license before bidding or signing any agreement. In short, staying within your license limit is not just a technicality … it is the foundation for protecting your right to get paid and avoiding costly litigation.