September 24, 2022

Volume XII, Number 267

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North Carolina Licensing for General Contractors: Licensure of Joint Ventures

Joint ventures are a common method of undertaking construction projects in North Carolina.

Through a joint venture, two companies can pool their resources and expertise to complete a project.  Joint ventures are unincorporated associations.  The parties to a joint venture should be cognizant of North Carolina's licensing requirements to avoid the regulatory and legal pitfalls that accompany practicing general contracting in the State of North Carolina without a valid license. 

In North Carolina, any firm or corporation that undertakes to bid upon or to construct a building or other improvement where the cost of the undertaking is $30,000.00 or more must be properly licensed by the North Carolina Licensing Board for General Contractors. 

Questions can arise as to how to properly license a joint venture or which parties to a joint venture must be licensed.  For instance, are the license requirements met if an out-of-state contractor (which is not licensed in North Carolina) enters into a joint venture with a local, licensed general contractor?  What if an unlicensed developer wants to enter into a joint venture with a licensed general contractor for the purpose of constructing a project?

When analyzing licensure requirements, the critical question is: who is entering into the construction contract with the project owner?  The entity that signs the construction contract with the owner must be validly licensed, whether it is a corporation, a limited liability company, a partnership, or a joint venture.

There is no statute in North Carolina that recognizes a joint venture as a distinct business entity like there are for corporations and limited liability companies.  Joint ventures are akin to general partnerships and that is how they are typically treated from a legal perspective. 

The default rule for the licensing of partnerships is that the partnership itself must hold its own license in the partnership's name. The license must be in the name of the partnership. Thus, if parties A and B form partnership AB Construction, the license must be in the name of AB Construction.  A partnership is not considered to be validly licensed just because one or more of the partners holds its own general contractors license.

There is an exemption to that general rule for joint ventures in North Carolina.  Consistent with the general rule, a joint venture may still practice general contracting in North Carolina if it holds the appropriate license in its own name.  However, a joint venture may also practice general contracting in North Carolina without obtaining its own license if every principal or member of the joint venture is licensed to practice general contracting in North Carolina with the appropriate classification and at least one principal has the appropriate limitation.  The only qualification to that is if one of the joint venturers is a limited liability company.  If that is the case, all members and managers of that limited liability company have to be licensed to practice general contracting in North Carolina with the appropriate classification and limitation. 

It is important to comply with these licensing requirements at the inception of a project before any contract for the work is entered into.  In addition to regulatory action that the licensing board may take, including reprimands or license suspensions, an unlicensed general contractor cannot enforce its contract with the project owner.  That means it cannot legally enforce its contract to collect amounts that may be owed.  This is a defect that cannot be cured by subsequently complying with the licensing requirements after the contract is signed. 

© 2022 Ward and Smith, P.A.. All Rights Reserved.National Law Review, Volume XII, Number 96
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About this Author

E. Bradley Evans, Ward Smith, Litigation lawyer, mediations, arbitrations, jury trials, and appeals

Brad is one of the firm's Managing Directors.  His experience encompasses various areas of civil litigation in both the federal and state courts.  He has experience in all aspects of civil litigation, including depositions, hearings, mediations, arbitrations, jury trials, and appeals.  Brad advises clients and litigates cases involving all forms of commercial, business, estate, and intellectual property disputes.  He regularly represents contractors, subcontractors, and suppliers in construction litigation in state and federal courts.  He has litigated numerous matters...

252-215-4025
Evan Musselwhite Construction Litigator Ward & Smith
Construction Litigator

Evan is a litigator who works predominantly in the area of construction law. He represents and advises contractors, subcontractors, owners, and design professionals in all stages of the construction and development process. His experience includes drafting and negotiating construction, design, and design/build contracts. Additionally, he represents owners, contractors, and subcontractors in a variety of civil litigation matters.

Evan, a Lumberton, North Carolina-native, earned his bachelor's degree in Construction Engineering and Management from North Carolina State University. He...

919.277.9196
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