Hiring an unlicensed contractor in North Carolina

When a license is required

Anyone who bids on or undertakes construction where the total cost of the undertaking is $40,000 or more must hold a North Carolina general contractor license (G.S. 87-1). The threshold is the whole project, not one trade's share of it, and it applies to building, remodeling, additions and new homes alike. Electrical, plumbing, heating and air-conditioning work requires its own state license at any dollar amount, regardless of the general contractor rule.

Practicing general contracting without a license is a Class 2 misdemeanor (G.S. 87-13). The Licensing Board also obtains court injunctions against unlicensed contractors: each quarter it publishes consent orders entered in Wake County Superior Court against people and companies who took jobs above the threshold, often after the homeowner complained.

What it means for the homeowner

• The contractor cannot enforce the contract. North Carolina courts have long refused to let an unlicensed contractor sue to collect on a contract that required a license. That cuts both ways: you have leverage over an unfinished job, and you also have no licensed, Board-answerable party behind the work.
• No recovery fund. North Carolina has no state fund that reimburses homeowners for a general contractor's bad work. Your remedies are the contract, the courts and the contractor's insurance, if any.
• Permits expose it. A permit application for work of $40,000 or more must carry the contractor's license number (G.S. 87-14). An unlicensed contractor who asks you to pull the permit in your own name is making you the contractor of record, responsible for the work and its inspections.
• Owner-builder is legal, with limits. You may build or remodel your own residence without a license and pull your own permit, with an affidavit that you will not sell it within a set period. Hiring someone else to run the job and signing the affidavit anyway is the pattern the Board's injunctions describe most often.

Can you hire one for a small job?

Below $40,000, no general contractor license is required, so a handyman, painter, flooring installer or roofer can legally take the work on their own. Electrical, plumbing and HVAC still require the trade license at any amount. Whatever the size, a written contract, a certificate of insurance and a permit where one is required protect you more than the license question does.

How to tell

• Ask for the license number and look it up. Licensed contractors expect the question.
• Check that the name on the license is the company you are contracting with, or its registered trade name, not a relative or a former employer.
• Check the classification covers the job (a Residential license cannot take commercial work) and the limitation covers the price.
• Be wary of a contractor who wants cash only, refuses a written contract, or suggests splitting one project into pieces to stay under the threshold.

How to report an unlicensed contractor

1. The Licensing Board. File a complaint through the Board's complaint page or email complaints@nclbgc.org (919-571-4183). Include the contract, payments, the address and photographs. The Board investigates unlicensed practice as well as licensees.
2. The permit office. If work is under way without a permit, the county or town inspections department can stop it. Find yours on our county building-permit pages.
3. Consumer protection. For deposits taken and work never started, the NC Attorney General's consumer protection division takes complaints, and small claims court handles amounts up to $10,000.