Varying State Contractor Licensing Rules

Most states have some kind of licensing procedures in place for professions like lawyers, physicians and real estate agents. You expect to go through some state approval processes when entering into any of these professions, however, when it comes to construction contractors- whose practice involves not only their own safety, but the safety of the general public- there is little state to state licensing uniformity.


How Licensing Rules Vary:

Licensing laws run the full spectrum throughout the country. In states like Florida and California, which are prone to natural disasters like earthquakes and hurricanes, licensing is required by the state for many trades, from pool maintenance technicians to drywall hangers and bridge builders. Along with extensive business and trade knowledge testing, both states have strict financial requirements. Both states also collect fingerprints and run background checks on all contractors. The reason for such strict licensing requirements is mother nature. With extreme weather events come the predatory contractors who take the money and run, so states are trying to protect consumers.

On the other end of the spectrum are states like Texas and Illinois. Neither have state-level contractor licensing systems, with the exception of trades that are considered tied to public safety, such as roofing, fire protection, asbestos and electrical.

From state to state, there isn’t one agency that is responsible for contractor licensing. In some states, it might be the fire marshal’s office, a public health agency or a financial services office.


What is the impact?

Like the licensing laws, the impact varies. In states where there are extensive financial requirements, it helps to weed out those who are not prepared to run a construction business from a financial perspective. For instance, the additional paperwork and expense restrictions do not limit a contractor’s ability to run their company.

The impact of having a license does not necessarily guarantee the quality of the work. This is because the licensee is not usually the one performing the work. Instead, there are layers of employees, subcontractors and independent contractors completeing the actual construction.

However, holding a license does send a positive message to customers. Having the ability to check if a contractor’s license is in good standing empowers the customer, and does provide incentive to the contractor to follow rules and regulations in order to remain in good standing. Your contractor should be able to procure a license and be proud to carry it.


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Katie Craven
Katie Craven is Marketing, Communication and Brand Manager at Watchdog Real Estate Project Managers, a real-estate consulting firm that provides owner’s representation and project management services. More about Watchdog Real Estate Project Managers as well as additional blog posts can be found here.
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