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UNLICENSED CONTRACTING - IMPACT ON CONTRACT ENFORCEMENT

By Alan E. Tannenbaum

Florida Statute 489.128 provides that contracts entered into by an unlicensed contractor are not enforceable by the unlicensed contractor.  Importantly, this statute was amended in 2009 to clarify that the term "unlicensed" means the failure to secure a state license (as opposed to a local license).  Florida Statute 489.532(1)(a) further clarifies that if a state license is not required for a scope of work to be performed under a contract, the individual performing the work is not considered unlicensed.

Three recent appellate decisions addressed the application of F.S. 489.128.

In MGM Construction Services Coro. v. Travelers, 36 Fla. L. Weekly D462a, (3d DCA 2011), the trial court denied relief to a stucco sub-contractor who liened a project for non-payment.  The trial court dismissed the sub-contractor's suit on the basis that the sub-contractor could not enforce its contract with the general contractor because it did not possess a specialty contractor's license as required by county ordinance.  The appellate court ruled that F.S. 489.128 did not render the contract unenforceable because there was no state licensing requirement for stucco sub-contractors.  The appellate court then looked at whether the trial court could nonetheless deny contract enforcement because of the lack of the county license.  The county ordinance in question did not render contracts unenforceable if licensing was not secured.  Despite this, the appellate court determined that the trial court on remand could still rule the contract unenforceable, but had to weigh public policy concerns against possible inequities in reaching its determination.

In Earth Trade, Inc. v. T & G Corporation, 42 So.3d 929 (Fla. 5th DCA 2010), a site contractor without the required state license performed site work for a parking garage.  The work was defective and the general contractor sued the site contractor for breach of contract.  The general contractor prevailed at trial.  On appeal, the site contractor  and its surety contended that the general contractor could not enforce the contract because it knew that the site contractor was unlicensed.  The appellate court rejected this argument citing the clear language of F.S. 489.128 rendering a contract by an unlicensed contractor unenforceable only where the unlicensed contractor is attempting to enforce the contract.

Finally, in MMII, Inc. v. Silvester, 42 So.2d 876 (Fla. 4th DCA 2010), the trial court rejected a breach of contract claim by a seller/installer of audio entertainment systems on the basis that the seller/installer did not have a state general contractor nor state electrical sub-contractor license.  The appellate court reversed, finding that electrical work was only incidental to the installation of audio entertainment systems and thus the installation of such systems did not require a state license.    

Full post as published by Florida Community Association Construction Law Blog on March 21, 2011 (boomark / email).