Beware local licensing laws – until July 1, 2023
As most industry participants are aware, unlicensed contractors do not have any contract, lien, or bond rights. Fla. Stat. § 489.128. Florida state law provides that “if a state license if not required for the scope of work to be performed under the contract, the individual performing that work is not considered unlicensed.” Fla. Stat. § 489.128(1)(a). However, even if a state license is not required, a contractor can be considered unlicensed if local laws require a license.
This was the case in ABA Interior, Inc. v. The Owen Group Corp., a 4th DCA case decided February 9, 2022. In that case, a contractor and subcontractor entered into a subcontract for the interior improvement of a commercial project in Palm Beach County. The subcontractor’s scope included acoustical ceiling work, flooring work, and millwork. Like many subcontracts, the subcontract required the subcontractor to comply with all federal, state, and local laws relating to its scope of work. The Palm Beach County Construction Industry Licensing Board Standard for Certified Categories specifies forty-one categories of specialty contractor standards, including, without limitation, acoustical/suspended acoustical ceiling contractors, carpentry-finish contractors, and wood flooring contractors.
The subcontractor completed the project and sued the general contractor for nonpayment. One of the general contractor’s affirmative defenses was that the subcontractor was unlicensed, and the general contractor sought to recover all prior payments made to the subcontractor.
The trial court ruled that the subcontractor could not litigate the case because it did not have the required local licenses. The trial court also ruled that the subcontractor’s failure to obtain and maintain the required local licenses was a material breach of the construction contract.
The appellate court agreed that the subcontractor’s failure to satisfy the local licensing requirements prevented it from acting as a litigant and were a material breach of the subcontract, but reversed the trial court’s orders because the (1) trial court did not expressly find that all of the subcontractor’s work required local licensing and (2) the trial court did not expressly rule on whether the subcontractor’s failure to obtain and maintain the required local licensing negated any obligation for payment, even for work that did not require such licensure.
Fla. Stat. § 163.211, enacted last year, provides that the State’s Department of Business and Professional Regulation’s regulation of contractor licensing pre-empts local licensing requirements, and provides that local licensing requirements adopted before January 1, 2021, are still effective until July 1, 2023.
Bottom Line: For contractors that do not have State issued certified contractor licenses, it is vital to your bottom line to research, analyze, and comply fully with any local licensing requirements – until July 1, 2023.