Misrepresentation of Licensed Contractor Status in Tennessee Can Cause Significant Liability

Tennessee law is clear that any person, firm or corporation who misrepresents that they are a licensed contractor is subject to significant penalties.  It is also against Tennessee law to act in the capacity of a “contractor” in Tennessee when one is not properly licensed.  Specifically, T.C.A. § 62-6-136 discusses this issue in subsection (A) as follows:

(a) It is unlawful for any person, firm or corporation to represent itself as a licensed contractor or to act in the capacity of a “contractor” as defined in §§ 62-6-102, or 62-37-103, and related rules and regulations of this state, or any similar statutes, rules and regulations of another state, while not licensed, unless such person, firm or corporation has been duly licensed under § 62-6-103 or § 62-37-104.

A licensed contractor is specifically defined in this statute.  This is a rather lengthy statute, but the key part is the provision that licensure is required for projects beyond $25,000.00.  The complete definition is found in T.C.A. § 62-6-102 which defines a contractor as follows:

(4)(A)(i) “Contractor” means any person or entity that undertakes to, attempts to or submits a price or bid or offers to construct, supervise, superintend, oversee, schedule, direct or in any manner assume charge of the construction, alteration, repair, improvement, movement, demolition, putting up, tearing down or furnishing labor to install material or equipment for any building, highway, road, railroad, sewer, grading, excavation, pipeline, public utility structure, project development, housing, housing development, improvement or any other construction undertaking for which the total cost is twenty-five thousand dollars ($25,000) or more; provided, however, with respect to a licensed masonry contractor, such term means and includes the masonry portion of the construction project, the total cost of which exceeds one hundred thousand dollars ($100,000), materials and labor;

(ii) “Contractor” includes, but is not limited to, a prime contractor, electrical contractor, electrical subcontractor, mechanical contractor, mechanical subcontractor, plumbing contractor and plumbing subcontractor, masonry contractor, and roofing subcontractor where the total cost of the roofing portion of the construction project is twenty-five thousand dollars ($25,000) or more;

(iii) If the cost of a project exceeds twenty-five thousand dollars ($25,000), “contractor” also includes a construction manager of any kind, including, but not limited to, a residential construction manager, construction consultant, architect or engineer who conducts or provides any activity or service described in this subdivision (4) other than normal architectural and engineering services;

(B) As used in subdivision (4)(A)(iii), “normal architectural and engineering services” means:

(i) The preparation of bids, proposals, plans, specifications or other contract documents or the evaluation of contractors, subcontractors or suppliers;

(ii) The approval of shop drawings, submittals, substitutions, pay requests or other certifications required by contract documents;

(iii) Conducting representative reviews for progress and quality of construction on behalf of the owner;

(iv) Interpretations and clarifications of contract documents;

(v) Preparation and approval of changes in construction; and

(vi) Preparation of as-built drawings and operation and maintenance manuals;

(C) “Contractor” does not include an engineer licensed in accordance with chapter 2 of this title who is:

(i) Managing and supervising the removal, remediation or clean up of pollutants or wastes from the environment;

(ii) Serving as a corrective action contractor, as defined by the rules and regulations of the department of environment and conservation;

(iii) Conducting subsurface investigation or testing, or both, by drilling or boring to determine subsurface conditions;

(iv) Conducting geophysical or chemical testing of soil, rock, ground water or residues; or

(v) Installing of monitoring detection wells or plezometers for evaluating soil or ground water characteristics;

(D) “Contractor” does not include:

(i) Any undertaking, as described in former subdivision (3)(D)(i) for the department of transportation; or

(ii) Subcontractors other than electrical subcontractors, licensed masonry contractors, and roofing subcontractors where the total cost of the roofing portion of the construction project is twenty-five thousand dollars ($25,000) or more, mechanical subcontractors and plumbing subcontractors defined as a contractor pursuant to subdivision (4)(A);

(E) No contractor shall be authorized to perform contracting work as a licensed masonry contractor unless the contractor is licensed as a masonry contractor in accordance with this part.

A violation of T.C.A § 62-6-136 constitutes an unfair deceptive act and is therefore a violation of Tennessee Consumer Protection Act.  Individuals who are injured by such actions, of an unlicensed contractor, can sue under the Tennessee Consumer Protection Act and receive significant awards including compensatory damages, punitive damages or treble damages and attorney’s fees for any action. 

Further, this statute provides that any individual who violates this section, but has a limited liability company or corporation, is actually personally liable under this statute for the violation of this statute.  Therefore, an individual cannot hide behind their LLC or Corporation to shield their personal assets.  T.C.A. § 62-6-136(c) provides the following:

(c) An individual who violates this section and would, but for this section, have limited liability as owner of an entity having limited liability protection, including, but not limited to, a corporation, is personally liable for the individual's own representations, acts or omissions to the same extent as if that individual rendered the representations, acts or omissions as an individual.

This can obviously cause a significant award against the personal assets of those who misrepresent their status as a licensed contractor in Tennessee.  So anyone who is involved in contracting needs to be fully aware of these Tennessee laws on licensure status.  Also, anyone who has been impacted by a non-licensed contractor doing faulty or defective work, needs to immediately contact an attorney to determine how to handle this situation.