By Bruce Jervis

Contractors performing work without proper state licenses are in great jeopardy. Under the statutes and/or case law in many states, unlicensed contractors cannot enforce the construction contract. To be blunt, they are not legally entitled to payment for their work, no matter how outstanding that work may have been.

What of the parties who do business with unlicensed contractors? In theory, they are the ones being protected against the shoddy work of the unlicensed. Sometimes, however, parties knowingly contract with the unlicensed. Can they accept the benefit of the bargain, construction work performed at considerable cost, and then refuse to pay on the grounds the contractor lacked a license?

The Florida Supreme Court recently addressed this question and concluded that under the statutes of that state the answer is yes. A party can knowingly contract with an unlicensed contractor, enforce the contract against that contractor, and then refuse to pay for the work. The court said, “To avoid the draconian effects of the statute, the unlicensed contractor need only comply with the law.”

It should be cautioned that this ruling was based on the wording of a specific statute. It applies only in Florida, where there are civil sanctions, such as fines and cease-and-desist orders, for those contracting with unlicensed contractors. But the issue arises in all states. What is your opinion? Should a party be allowed to knowingly contract with an unlicensed contractor, accept the benefit of the work, and then refuse to pay on the grounds the contractor lacked a license? I welcome your comments.