Unlicensed contractor: no contract, no lien, no bond claim
Under O.C.G.A. 43-41-17(b), for contracts entered into on or after July 1, 2008, an unlicensed contractor doing non-exempt work cannot enforce the contract in law or in equity. It has no lien or bond claim for labor, services or materials under that contract.
- "May lien but may not sue" is wrong.
- Equity is closed too, so there is no materials-only recovery under the contract.
- The owner and other parties keep their contract, lien and bond remedies.
The surety cannot hide behind the missing license
The surety's obligations are not affected, and the principal's lack of a license is not a defense to a bond or indemnity claim. The bond is not void, and $2,500 is the warranty threshold, not a surety cap.
Residential warranty: over $2,500
Ga. Comp. R. & Regs. 553-7-.01 requires a residential contractor to offer a written warranty on single-family residence contracts where the total value of the work or the contractor's compensation exceeds $2,500.00.
- The trap is "$2,500 or more": a contract of exactly $2,500 does not exceed the threshold.
- $25,000 is the residential net worth requirement, not this threshold.
Warranty standards are the current edition of the NAHB Residential Construction Performance Guidelines. The IRC only defines a single-family residence as a one- or two-family dwelling.
False "everyone is paid" statements
Under Rule 553-9-.01(o), after notice and a hearing under the Georgia Administrative Procedure Act, the Board may discipline a contractor who knowingly and falsely states in writing to the owner that all subcontracted work, labor and materials have been paid for, where the owner reasonably relied on it and suffered an actual financial loss. No subcontractor lien filing, criminal conviction or notarization is required.
Where to look in the book
In the NASCLA guide (Georgia 3rd Edition), lien law is in Part 3 (administrative functions), with financial management and tax basics. Part 1 is business planning and startup. Looking in Part 2, which covers operations such as estimating, scheduling and project management, is the common error.