ConstructionPro Week, Volume: Construction Advisor Today - Issue: 93 - 02/04/2011

Does Contractor Licensing Leave Owners Unfairly Exposed

Contractor licensing schemes pose a dilemma. Construction contracts are entered into by corporations, limited liability companies and other forms of business associations. But corporations don’t go to school, sit for exams or obtain licenses. That is a role for individuals. And it is the licensed individual, not the corporation, which pulls the building permit and is responsible for supervising the construction. Owners necessarily rely on the diligence and expertise of the licensed individual. But if something goes wrong, do owners have recourse against that individual? Not necessarily.

 

In Florida recently, a contractor’s licensed “qualifying agent” was sued individually for negligently allowing work which did not comply with the building code. The corporate general contractor had simply failed to appear in response to the suit. And the individual agent escaped without liability. The court expressed frustration that individuals could lend their name and license to corporations which can disappear as soon as there is a claim, leaving owners without recourse. But the court said it was bound by state statute and a ruling by the state’s highest court.

 

Is this fair to project owners? Many states prohibit design professionals such as architects and engineers from using corporate entities as a shield against personal liability for professional negligence. Shouldn’t the same rule apply to licensed individuals acting on behalf of corporate contractors? I welcome your comments.

 

Featured in Next Week’s Construction Claims Advisor:

  • Expert Testimony Not Required to Establish Termination Damages
  • Virginia High Court Distinguishes “Equipment” from “Materials”
  • Contractor Recovers Mistaken Overpayments from Disadvantaged Sub

 

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