A Patchwork Quilt At least 34 states require some licensing or registration of remodeling contractors. Within the holdout states, there are cities, counties, and townships with licensing laws.
Licensing laws vary widely but generally require a company to have liability insurance and workers’ compensation insurance, and to be bonded or to pay in to a recovery fund. The licensee (typically one person holds the license for the company) must also pass an exam covering aspects of the law and building trades.
Beyond the basics, licensing and registration laws vary widely, from how jurisdictions classify remodelers (home improvement companies, general building contractors, residential contractors, etc.) to how aggressively they pursue and prosecute unlicensed contractors. Other variables include fees associated with licensing, the size of jobs that require licenses (from as little as $300 to $30,000-plus), experience and/or education requirements, reciprocity and grandfathering policies, handyman exemptions, criminal background checks, and proof of certifying documents such as credit reports, trade name registration, and articles of incorporation. States may have one licensing category or dozens.
Sources of additional information include What Every Contractor Should Know, a new book by David Kalb (order from www.cutredtape.com). It’s specific to California, Nevada, and Arizona but gives a helpful overview of general licensing issues. The National Contractor License Service ( www.clsi .com) and Contractor’s License Reference Site ( www.contractors-license.org) track current state licensing law and provide links to state licensing agencies.
National Leadership, Local Decisions The two national organizations for professional remodelers, the Remodelors Council of the NAHB and the National Association of the Remodeling Industry (NARI), believe that licensing is a decision best left to the individual states. Even so, last fall NARI adopted a policy position supporting “the licensing of general contractors provided that laws and regulations are fair and equitable for all contractors. Licensing can and should encourage ethical conduct and the demonstration of good business practices and professionalism.”