What the unlicensed contractor loses
O.C.G.A. 43-41-17(b) covers a contract for work that requires a residential or general contractor license, entered into by a contractor who is not licensed. Two things are lost by that contractor:
- The contract cannot be enforced in law or in equity by the unlicensed contractor.
- The contractor has no lien or bond claim for labor, services or materials under the contract.
The trap is thinking the lien right survives while the contract right is lost. The statute removes lien and bond claims too.
What everyone else keeps
The penalty falls only on the unlicensed contractor.
- Other parties, including the owner, keep their contract, lien and bond remedies. Saying the owner also loses its remedies is wrong.
- The surety stays bound. That its principal is unlicensed is no defense to a bond or indemnity claim. A statement that the surety may deny a claim because its principal was unlicensed is false.
The date licensure is tested
43-41-17(b) tests licensure on one date, chosen in a fixed order:
- First, the effective date of the original contract, if stated.
- Otherwise, the date the last party signed, if stated.
- Otherwise, the first date the contractor provided labor, services or materials.
The completion date is never the test date, so getting licensed before the job ends does not help. The license issue date is not one of the statute's dates.
Worked example
A contract states no effective date. The last party signed on March 3. The contractor got its license on March 5, first delivered materials on March 10 and finished on June 1.
- No effective date, so move to the signing date: March 3.
- The license came March 5, after the test date, so the contractor was unlicensed on March 3.
- March 10 would be used only if neither an effective date nor a signing date were stated.
- June 1 is irrelevant.