Licenses and Licensing; Licenses and Permits; General Contractors

Subject:

Licenses and Licensing; Licenses and Permits; General Contractors

Requested By:

James M. Wells, Jr. Secretary-Treasurer General Contractors’ Licensing Board

Question:

1. Is a builder required to have a general contractor’s license under the provisions of G.S. 87-1 et. seq. where pursuant to a contract with a purchaser, he constructs a building on the builder’s land for a contract price of $30,000 or more?

2. Is a builder required to have a general contractor’s license under the provisions of G.S. 87-1 et seq. where a purchaser pursuant to a contract conveys a lot to the builder to construct a house for the purchaser for a price of $30,000 or more?

3. Is a person employed by an owner for the overall supervision and control of the construction of a building costing in excess of $30,000 required to be licensed?

Conclusion:

1. and 2. Yes.

In each case where a builder contracts to build a house for another party at a contract price in excess of $30,000, he is required to have a general contractor’s license regardless of the ownership of the land upon which it is built.

3. Yes.

A person employed by the owner for the overall supervision and control of the construction of a building costing in excess of $30,000 is required to have a general contractor’s license.

A clarification of the requirement for a general contractor’s license was requested in the case where a builder enters into a contract with a purchaser to construct a building on the builder’s land for a contract price of $30,000 or more. A further clarification was requested for the requirement of a license of a builder in the case where a purchaser, pursuant to a contract with a builder, conveys a lot to a builder to construct a home for the purchaser for a price of $30,000 or more.

Article 1 of Chapter 87 of the General Statutes prohibits any contractor who has not passed the examination and secured a license as therein provided from undertaking to construct a building costing $30,000 or more. G.S. 87-1 provides that ". . . one who for a fixed price, commission, fee or wage, undertakes . . . to construct any building . . . where the cost of the undertaking is $30,000 or more" is a general contractor and required to be licensed. G.S. 87-13 provides that any person, firm or corporation not being duly licensed who shall contract for or bid upon the construction of any of the projects or works enumerated in G.S. 87-1 shall be guilty of a misdemeanor.

The statute prohibits the contracting for, or the bidding upon, the construction for a fixed price, commission, fee or wage without a license. The purpose of the licensing requirement is to protect the public from incompetent builders. Vogel v. Supply Company, 277 N.C. 119, 120. The statute does not qualify the definition of a general contractor by ownership of the land on which the improvement is undertaken. Therefore, it is the opinion of this Office that in each of these cases it is a violation of the provisions of G.S. 87-1 et seq. for the builder to enter into a contract for construction without having the applicable general contractor’s license under Article I of Chapter

87. This Order has on several occasions advised that the licensing statute is not applicable to an individual constructing a building on his own property and he is not required to be licensed. However, we do not believe the cases of inapplicability of the statute to an owner can be extended to cases where there is a contract for the construction of a building for another party for a fixed price, commission, fee or wage.

The secretary of the licensing board further requests a clarification of the licensing requirement in the case where an owner employs an individual for the overall supervision and construction of a building on the owner’s property where the improvements are in excess of $30,000. The prior opinions of this Office have advised that such a person, where employed by the owner on a salary, wage, commission or fixed fee, having overall supervision is required to be licensed. In the case of Helms v. Dawkins, 32 N.C. App. 453, 456, the court said that within the meaning of the contractor’s licensing statute, "the principal characteristic distinguishing a general contractor from . . . a mere employee, . . . is a degree of control to be exercised by the contractor over the construction of the entire project." In the case of Furniture Mart v. Burns, 31 N.C. App. 626, 632, the court indicated that there is no absolute rule requiring a contractor’s license in case of persons employed to act as a construction supervisor. It was indicated by the court in that case that an employee of the owner who undertakes the construction of such a building and has overall authority and control over the construction is a general contractor within the meaning of the licensing statute. Therefore this Office is of the opinion that an employee of an owner who has overall supervision and control of a construction project where the cost is $30,000 or more, is required to have a general contractor’s license.

Rufus L. Edmisten Attorney General

Eugene A. Smith Special Deputy Attorney General