Contractor License - Summary

 

A license as a "Contractor" is required prior to bidding or offering a price, for projects $25,000 and up, as a prime contractor (bidding directly to the owner). There are various types of contractor licenses and classifications are assigned to each license, determining the types of projects a contractor may perform, such as: Building for commercial, residential and industrical (BC); Plumbing (CMC-A); Electrical (CE); etc. Many "BC" classified contractors are referred to as the "general contractor" which is typcially the one with a commercial classification; bids directly to the owner; and performs or oversees an entire job.

Some "subcontractors" (those who bid directly to a licensed prime contractor), are required to obtain a contractor's license in order to bid or perform: electrical, mechanical, plumbing and HVAC; they are required to have a contractor's license to operate as a prime or subcontractor. Contractor licenses are also assigned a monetary limit, which determines the size of a project they may bid or the contract price. The monetary limit is based upon their financial statement and experience. Licenses are issued to an individual or entity providing the financial statement (license is issued in the exact name as provided on the financial statement); and the entity may be a sole proprietor; partnership; corporation; or LLC. The person passing the exams (Qualifying Agent) may be the owner or full time employee; however, the license belongs to the entity providing the financial statement. A bond is not required to obtain a license, however, it may be required to bid projects or obtain permits with local government. Proof of insurance is needed for general liability and workers compensation (out of state contractors may use their own insurance agency). In addition, only licensed contractors may bid as a joint venture.

 

License issuance requires full Board approval. The Board meets every other month (see Calendar) to approve issuance of these licenses, therefore, the process takes approximately six (6) weeks. The summary of information has been compiled to explain the contractor's license, however, the application also provides all the details and instructions needed. More information and resources are available below.

 

In order to obtain a contractor's license, the following is the "application package" information:

 

APPLICATION PACKAGE

Contractor's License Application (Contains all instructions) [pdf]

Exam Information (PSI's Candidate Information Bulletin) [pdf]

Business & Law Reference Manual for Exam Order Information

2009 Laws, Rules and Regulations - Updates [pdf]

 

Optional Information

Secretary of State (Registration of Corporations, LLC, Partnerships)

Department of Revenue (Obtaining a Tax ID/FEIN)

One-Stop Business Resource (TN.gov)

Insurance Information [pdf]

Forms and Downloads

Contractor Classifications Outline [pdf]

WHO NEEDS A LICENSE

 

A state "Contractor's" license is required by any person or entity as a prime contractor, (those bidding directly to the owner), and must be licensed BEFORE offering a price, bidding or contracting projects, where the the amount is $25,000 or more. In addition, Subcontractors, bidding to a licensed contractor, are not required to obtain a contractor's license, unless it is *Electrical, **Plumbing, HVAC, or Mechanical. The definition of contracting is under TCA 62-6-102(2), and states in part to: construct, alter, repair, improve, move, put up, tear down, demolish, or furnish labor to install material or equipment. Bidding law requires name as licensed, classification and expiration date to be listed on the outside of the bid envelope. (If you already have a contractor's license and need a license revision, see the "Forms and Downloads" section three (3) for revisions to raise the limit, add a classification or change the mode of operation.)

 

*See "Electrical" Licensing Resources (includes license information for projects less than $25,000)

**See "Plumbing" Licensing Resources (includes license information for projects less than $25,000)

 

Contracting is defined as performs or causes to be performed activities,  undertaking to, attempts to, or submits a price or bid or offers to construct, supervise, superintend, oversee, schedule, direct, or in any manner assume charge of the construction, alteration, repair, improvement, movement, demolition, putting up, tearing down, or furnishing labor to install material or equipment for any building, highway, road, railroad, sewer, grading, excavation, pipeline, public utility structure, project development, housing, housing development, improvement, or any other construction undertaking. (See Law, Rules and Regulations section.)

 

Types of prime contractors needing a license include the following: Building (Residential, Commercial, Industrial); Electrical (including Low Voltage, Computer Cabling, Audio Visual; Alarm (see also "Alarm Systems Board"); Mechanical - Plumbing, HVAC (including geothermal well drillers), and Fire Sprinklers; Highway, Railroad & Airport (also see TDOT); Municipal Utility; Environmental; Specialties (Equipment Installation; Cell Towers; Playground Equipment Installation; Solar Panel Installations; etc.); and over 33 subcategories: Landscaping; Excavation; Painting; Demolition; etc. (*See compiled list of license classifications.) For those acting as "Design/Build contractors, make sure you comply with the license laws of the Architects and Engineers.

 

Types of subcontractors needing a contractor's license, include the following: Electrical, Plumbing, Mechanical and HVAC, for projects $25,000 or more.

 

Once the license is approved for an individual or entity, they must operate and contract in the exact name and mode of operation as licensed. For example, an owner of an LLC, licensed as "Doe Construction, LLC" could not contract in their individual name, "John Doe" as a sole proprietor or add " DBA Doe Construction, LLC". If a contractor has different divisions under the licensed entity or parent company for accounting purposes, they cannot contract in the names of these divisions unless they have obtained a separate license for each.

 

The license process requires Board approval for issuance and is approximately a four to six week process, depending when the application was submitted for the next Board review meeting. (Refer to the Board calendar for meeting dates). The application fee is $250.00; and the deadline date to submit an application for the next scheduled meeting is the 20th of the month (prior to the board meeting). If the 20th is not a week day or is a holiday, it would be the next business day. Hardship criteria allows a license to be issued prior to the Board meeting. Always allow 5 to 7 business days for mail delivery. Overnight and express mail takes two (2) business days to reach our office (delivered to the Cashier's Office first).

 

Contractors must list the type of license and the monetary limit they are needing on their license application, as they are assigned classifications and monetary limits (based upon financial statement and experience) on their license. More information relative to the monetary limit is listed in the application, however, the limit should cover the total project; contracts may not be split on a project to circumvent the monetary limit law and rules. Classification should cover 60% of the total project. Always contract in the exact name as licensed!   (More information is available in the Laws, Rules and Regulations.)

 

Note: State contractor license requirements do not exempt local government regulations or other state agency requirements; always check with the local municipalities for their permit and inspection requirements.  Some areas may not have a permit or local license agency for inspections, however, the state licensing law requirements still apply. In addition, you may need licenses and/or certifications from other **agencies.  Please also see our "Valuable Resources" section on the web for more guidance.

 

**OTHER AGENCIES

Design/Build Contractors - Must comply with requirements established by the Architect and Engineer's Board.

Fire Sprinkler contractors must also obtain a license with the Fire Marshal's office.

Excavation and hazardous waste contractors, may need permit from Environment and Conservation (TDEC).

HVAC contractors bidding Geothermal projects need to list their TDEC license classification information on the outside of the bid envelope for their Well Driller.

Alarm system contractors may be exempt from a contractor's license, but must register with the "Alarm Systems Contractors Board"

Highway contractors may only need to prequalify with Department of Transportation (TDOT).

Lead abatement contractors must be certified with Environment and Conservation (TDEC).

Statewide code adoptions and ADA requirements are with the Fire Marshal's office.

Always check with local government for their codes, permit and inspection requirements.

CONTRACTOR'S LICENSE APPLICATION

 

The law requires a contractor's license application to be completed for a new license by the following: (1) Contractors applying for a new license; (2) When obtaining a second or additional license (when you have more than one business entity); (3) *Reinstatement of an expired license (over 12 months, cannot renew); (4) *Change in ownership (partnership dissolved, new stockholders, etc.); and (5) *Reorganization of the licensed entity due to bankruptcy.

 

*(Note: For those filing an application for reasons other than a new or additional license, contractors retain their license I.D. number. The exams are not required, as long as the qualifying agent remains with the entity, and the license has not been expired for more than 24 months. In cases where the license has been expired over two years, the contractor may submit a waiver request in writing with their application, and supply evidence where they have been active in the trade/industry, and the Board will review to consider approving without re-examination. The Board staff cannot make a ruling to waive the exam.)

 

More information is available in the instructions of the "Contractor License Application".

 

Licensees may apply for "Revision" to their license, such as increasing the monetary limit; adding a classification; changing their name on the license; or if they need to change the mode of operation. (Licenses are issued to the legal entity supplying the financial statement and is in the name and mode of operation in which the CPA prepared the opinion letter.) Note: Do not contract in the revised until revision has been approved.

 

You may refer to our main website for other licenses to perform work "less than $25,000" such as  remodeling (Home Improvement); electrical (Limited Licensed Electrician (LLE); and plumbing (Limited Licensed Plumber (LLP).  Fire Sprinkler and Alarm Systems licensing is also regulated with other divisions.

 

HOW TO BECOME A LICENSED CONTRACTOR

 

(Detailed steps are in the "Contractor License Application" and may be downloaded from our website at:  [Forms & Downloads]

 

In order to become a licensed contractor, you must complete the Board's application process, which entails the following steps:

• Exam Score(s) - Contractor license applicants must supply exam scores with their application. The "Business and Law" is required and also many license classifications require a Trade examination (see "Classification" outline). (See also, "Step 1")
• Exam Registration - Our exam vendor is PSI Services, LLC and they encourage online registration to make an appointment to take the exam at their various sites located nationally. However, you may also contact them by phone and their contact information is in the "Candidate Information Bulletin (CIB)". Please review the CIB for study references, site locations, registration information, and items you may bring into the exam. Note: If you experience more than a 14 day wait to take the exam at a site closest to you, please contact the Board office at: Email. The exam vendor offers special accommodations to those with disabilities. The Tennessee exam may be taken at sites in other states, by completing PSI's special accommodation request form in the CIB. Due to the nature of the exam, these are not offered online and your qualifying agent (QA) must personally take the test at one of sites.
• Pre-approval to take the exam is only required for those taking the plumbing CMC-A or CMC exam.
• Exam Waiver (Trade) - If you are licensed in one of the reciprocating states, Alabama (building, HVAC and electrical); Arkansas; Louisiana; Mississippi; North Carolina (residential and commercial, only); or South Carolina;' the trade exam may be waived. (These are the only states in which Tennessee has an exam waiver agreement.) More information is available on the "Reciprocation" section on our website.
• Contractors applying for a restricted residential license (BC-A/r) may submit their course certificate in lieu of the exam scores. The person designated to take the exam on behalf of the license is called the "Qualifying Agent (QA)".
• Financial Statement - Contact a Certified Public Accountant (CPA or PA) to prepare a financial statement in the required format.  A "Review" is required for limits of $1,500,000 or less; an "Audit" is required for limits exceeding $1,500,000. You may check with the Accountancy Board to see if your accountant is properly licensed. The financial statement's net worth and working capital, in addition to experience, determine the monetary limit assigned to the license. Information as to the calculation of assets and liabilities is located in the application. (See also "Step 2")
• Reference - Provide a "Reference" letter from a past client, employer, or  codes official (form is in application);
• Secretary of State Registration - Corporations, Partnerships and Limited Liability Companies (LLC) must register their charter  with the Tennessee Secretary of State, who may be contacted at (615) 741-2286 or information available at:  tn.gov/sos/forms/corp-fillin.pdf
• Insurance - Workers Compensation Insurance is required for contractors with one (1) or more employees; must also provide proof of General Liability Insurance (Insurance Information with coverage amount is also listed in the application instructions). The workers compensation laws are governed by the Department of Labor and Workforce.
• Application - Complete the contractor license application and attach exam scores, financial statement, reference, proof of insurance and mail to the Board office, by the deadline date of the next Board meeting, with the $250.00 fee;
• Board Review - The Board reviews all applications to consider for license issuance approval. A personal interview with the Board may be required in some cases, such as, if the qualifying agent is not an owner (only a full time employee) and has not submitted proof of employment of more than 6 months. For a personal interview to be waived, please provide evidence or proof of employment (W-2 tax forms; check stub, etc.) of the QA, only if they are NOT a majority owner.
• In addition, those who have complaints, felony convictions, bankruptcies, lack of experience, or those applying for a restricted (BC-A/r) license, will be scheduled for an interview.
• If your interview is not waived, you will be notified in writing of date, time and location. These meetings are held during the months of January (Nashville), March (Nashville), May (Memphis), July (Nashville), September (Knoxville) and in November (Nashville).  
• Please note, those applicants qualifying to have the interview waived, will be notified, however, the license is not issued or granted until after the Board meeting (they must vote for approval).
• Hardship License Review - This is where the license process may be expedited, should it cause an undue hardship to an owner (not the contractor applying for the license), to wait until the Board's next scheduled meeting, and where it would be in the best interest of the public, safety and welfare. Should this be the case, the contractor may apply for a hardship license review to be approved to bid or contract, prior to the next board meeting, after fulfilling all application requirements. However, contractors with complaints or who have violated the law, cannot be considered and must interview with the Board at their next scheduled meeting.
• Receipt Confirmation - A letter acknowledging receipt of the application is mailed to all applicants, however, state mail takes 5 to 7 business days. You may check the "License Roster Search" to confirm receipt. However, do not contract until you have received a license certificate in the mail with the ID number, classification, monetary limit, and expiration date, which are issued after the Board meeting. If additional information is needed, the Board will send you a letter requesting additional information, with another deadline date, in order to be reviewed at the current meeting.

Limited License (Residential Restricted) BC-A/r

 

Contractors may apply for a Limited License with a BC-A/r classification, which restricts residential contractors to building in the amount of $70,000 or less. In lieu of the exams, they may attend a course at a community college. All other application requirements must be fulfilled, including a personal board interview.

 

Note: The Board is in the process of developing rules for the limited license to be changed for issuance of four (4) years; (issued for two years and may renew once); and prior to the second renewal, the limited contractor would be required to revise their classification to a BC-A, by supplying experience and revised financial documentation.

 

More information is also available at "BC-A/r" on the Forms and Applications section of the web. In Chattanooga, see information from "Chattanooga State".

 

ADDITIONAL INFORMATION AND RESOURCES

 

A Contractor's license is needed for the following, prior to bidding, contracting, offering or negotiating a price:

• $25,000 or more for the total project
• Subcontractors who perform $25,000 or more in electrical, mechanical, plumbing and HVAC
• Construction Management of any kind, where the value of the project exceeds $25,000

*(Please contact the local county/city permit offices for their license requirements)*

 

• License Classification and Monetary Limit involves designating a "limit" or amount a contractor is approved to contract and a "classification" or type of  license such as:  residential, commercial, industrial or building subcategories, demolition, carpentry, masonry, landscaping, etc., or electrical; mechanical; plumbing; HVAC; municipal utility; highway, railroad or airport (HRA); environmental specialties; and specialties for installation of equipment, computer audio/video cables; or specialties for mowing, tree triming, etc. (see Rule 0680.1-.16).

 

• Bidding requirements are defined in TCA §62-6-119, which states the contractor must list their name as licensed, license ID#, classification, expiration date, and list the same information for their electrical, plumbing, mechanical or HVAC subcontractors. Geothermal license information must also be listed on the outside of the bid envelope.

 

• Subcontractors:  A contractor’s license is NOT required for subcontractors, those bidding directly to a licensed contractor and not the owner, for projects such as:  painting, masonry, roofing, etc., UNLESS, the subcontractors are performing mechanical, plumbing, HVAC and electrical, as these trades are required to obtain a "Contractor" license for projects $25,000 or more. (See "bidding" requirements for subcontractors.)

 

• Joint Ventures: All contractors must be licensed to contract as a joint venture and may combine their monetary limit to bid a project. However, they must have the classification on their license which is incidential and an essential part of the total project. It is advised to always include the license information of all parties on a joint venture; must be in the exact names as licensed. Joint Venture rule is 0680-1-.11 and may be reviewed from the Laws, Rules and Regulations section of the website.

 

• Federal Projects: A state license is not required for 100% federal projects (all federally funded and on federal land), unless required by the federal government awarding authority. See AG opinion 92-39 .

 

• Violations: A contractor who contracts, offers to engage or obtains a permit without a license or proper classification and monetary limit is in violation of T.C.A. §62-6-120. Therefore, would be ineligible to be awarded the project, may not receive a license for six months, cannot participate in any re-bidding of the project, and subject to civil penalties. Bidding requirements entail listing the license name, number, expiration date and the classification pertaining to bid, on the outside of the bid envelope. (Refer to T.C.A. §62-6-119.)

 

• Deadline Dates for Board Meeting - Calendar:  The Board is required to approve all contractor license applications and requests for revisions at their regularly scheduled meetings, which is during the months of January, March, May, July, September and November; deadline to submit a contractor license application is the 20th day of the month prior to the Board meeting. The deadline date to submit a Revision to an existing license, is the last day of the month prior to the Board meeting. For example, to have your application reviewed at the November 17th board meeting, the board office must receive by October 20th. (See Rule 0680-1-02 (2) and 0680-1-.14(1) at the Laws, Rules and Regulations section of the website.)

 

• Public Information - Files with the Board are considered public information, with the exception of the "Financial Statement" and it is considered confidential by law T.C.A. 62-6-124; the "Guaranty Agreement" may be released if it is active (used to obtain the monetary limit upon first obtaining the license or was required by the Board in order to renew). "Social Security" numbers are redacted and not released. License applicants are required to provide their Social Security Number (SSN) to be used for identification purposes, only, and will not be a part of public record. This is under the authority of 42 U.S.C. 666.

OTHER LICENSES REGULATED

 

The following are other licenses issued by our office and most do not require Board approval. Issuance takes usually less than a few weeks.

 

Home Improvement - This license is required in the following counties:  Bradley, Davidson, Hamilton, Haywood, Knox, Robertson, Rutherford and Shelby, for remodeling projects from $3,000 to less than $25,000.  For more information, contact the Home Improvement section at (615) 532-3994 or 1-800-544-7693, or review information on Remodeling. (Note: An entity with a "Contractor's" license with a residential classification (BC-A) is exempt from obtaining the Home Improvement license.)

 

Limited Licensed Electrician (LLE) license is required in counties who do not perform their own inspections and licensing for electrical wiring projects less than $25,000.  Contact our LLE licensing section at 1-800-568-0649 or (615) 253-2144, or download application. (Note: An entity with a "Contractor's" license, with an electrical classification (CE or E) is exempt from obtaining an LLE license.)

 

 

Limited Licensed Plumber (LLP) license is required for projects less than $25,000 (as of January 1, 2006).  Must also obtain local permits and adhere to their licensing requirements, such as exams and fees.  Contact our LLP licensing section at 1-800-544-7693 or (615) 532-3994. (Note: An entity with a "Contractor's" license, with a plumbing classification (CMC or CMC-A) is exempt from the LLP license.)

 

 

HVAC - Check with your local codes office. There is not a specific license for small projects with our Board, for HVAC projects, less than $25,000. Projects $25,000 or more must obtain a contractor's license with the CMC or CMC-C classification, as a prime or subcontractor. If operating in a county requiring a Home Improvement license, check to see if a trade specific license is also required.

 

 

Pre-Licensing Contractor Exam Providers

Schools or Pre-Licensing Contractor Exam Provider must be licensed as an approved provider by the Contractors Board, before offering prep courses online or workshops.

 

Note: If you take any class and notice the provider is violating the law, please contact us. Violations of the law include: providing exact questions and answers from the exam; guaranteeing passing the exams, encouraging to take exams for licenses not needed or in an area not experienced (in a means to sell more books); refer you to a CPA or assit in preparing your financial statement; or if they are not listed on the approved provider list, please contact us, as they may be in violation of the law.

 

Applicants are not required to take an exam prep class. The accepted contractor exams are only offered by PSI.

VALUABLE RESOURCES

 

For information relative to the construction industry, please see the "Valuable Resources" compiled on our website.

 

 

CONTRACTOR'S RENEWAL AND REVISIONS

 

Licenses are issued for two (2) years and renewals are mailed out 90 days prior to expiration date; renewal is due 30 days prior to expiration to the expiration date to prevent contracting unlicensed, which is a violation. If you do not receive a renewal in the mail, you may download from our website. Online renewal process is not available. Contractors are required to submit proof of insurance, an affidavit, and a financial statement to support their current monetary limit. However, the financial statement may be prepared by the contractor, and does not have to be prepared by a CPA, if their limit is $1,500,000 or less. For those with a limit in excess of $1,500,000, a reviewed CPA financial statement is acceptable for renewal instead of an audit. To check the status of a renewal or revision, you may login at the "License Search".

 

Revisions to change the name on the license, mode of operation, increase the monetary limit or add a classification may be requested by completing revision forms from the "Forms and Download " of the website, which includes instructions.

 

Reciprocation and other state licensing information may be obtained from our "Valuable Resources" website or you may order a directory from NASCLA for all states information..

 

STEP BY STEP (Licensing Instructions)

 

Steps to obtaining a new contractor's license are also listed below and may be performed in any order. However, do not submit your application unless you have completed all requirements, with the exception of the exam. You may submit the application without the exam scores, if you are scheduled to take the exam after the deadline date. Then send a copy of the exam scores by fax, email or mail, with a letter stating it goes with an application submitted earlier.

 

Click on the following links to review the step-by-step process or you may simply print the application form:   

• Step 1 (Testing)
• Step 2 (Financial Statement)
• Step 3 (Reference Letter/Workers Compensation Insurance)
• Step 4 (Corporations & LLC's)
• Step 5 (Application, Signatures, and Notarize)
• Step 6 (Submit Application & $250 fee)
• Step 7 (Board Review)
• Final Step (Issuance of License)

RESOURCES

 

Applications - Forms & Download Application forms and instructions to obtain a new license; revise a current license (raise limit, add classes, change mode of operation, etc.,) or renew

Architect & Engineer's Design Manual [pdf] (Design/Build Contractor Information)

Bidding Requirements [pdf]

Code Books for Exam (PSI Bookstore)

"Contractors Guide to Business, Law & Project Management" (Tennessee Publication for Exam)

Design/Build Contractors (Architect & Engineers License Board)

Electrician and Inspections

Exam (CIB - Candidate Information Bulletin) [pdf]

Exam (PSI Online Site)

FAQs - Frequently Asked Questions [pdf]

Hardship Requests [pdf]

Insurance Requirements [pdf]

Laws

Legislation Updates (2009) [pdf]

License Classifications [pdf] (Resource to check classification for bidding and exam requirement)

License Search Tips [pdf]

Meeting Schedule

National License Resource (NASCLA)

Reciprocation (Trade Exam Waiver Agreement with States) [pdf]

RECOVERY.gov

Renewal Forms

Retirement of License [pdf]

Revision/Change Request Forms

Rules & Regulations (Chapter 0680)

Schools - Exam Prep

Secretary of State (Corporation, LLC, Partnership Registration)

Valuable Resources (Industry Links, Laws, and General Information)

Workers Compensation Insurance Information and Verification

 

Subcontractors - Electrical, plumbing, HVAC, and mechanical subcontractors are required to obtain a "contractor's" license for projects $25,000 or more.

 

Note: Low Voltage Security Camera /CCTV and Alarm Systems are required to obtain a license with the Alarm Board, regardless of the cost amount! Alarm Systems licensees may be exempt from a contractor's license. (See T.C.A. 62-6-135 of the law and 62-32-307.)

 

 

LEAD ABATEMENT

Lead abatement remodelers are required to be certified through the Department of Environment and Conservation and may be contacted at 1-888-871-5323 or their web site at: http://health.state.tn.us/lead/abatement.htm

 

Quick facts on EPA’s Renovation Repair and Painting (RRP)

Fully effective on April 22, 2010  - Firms must be certified, workers must be trained, and follow specific lead-safe work practices for work performed in pre-1978 homes and child-occupied facilities, if lead paint is disturbed, impacts general contractors, carpenters, painters, electricians, plumbers, “handymen”, window and door replacement crews, etc.

 

Time Line for Lead Abatement Requirements

Now – Contractors that disturb paint in buildings built prior to 1978 must distribute EPA’s new Renovate Right brochure, (Renovate Right is available at www.epa.gov/lead/pubs/renovaterightbrochure.pdf).

Summer 2009 – Appropriate staff can take training course to become certified, once trainers are accredited.

October 2009 – Firms can apply for EPA or state certification.

April 2010 – Businesses engaged in renovation, repair or painting activities in buildings built prior to 1978 must be certified, use trained workers, and follow specific lead-safe work practices to prevent lead contamination.

 

For more information, the Environmental Protection Agency's website is at: http://www.epa.gov/lead/

 

 

Return to the Board for Licensing Contractor's main website

 

Staff Directory

 

FYI

Plans Approval Guidelines (9/2/08) Division of Fire Prevention - Codes Enforcement

 

For information regarding small, minority or woman owned businesses, check with the Governor's Office of Diversity Enterprise!

 

Notice: The Tennessee Department of Commerce and Insurance is committed to principles of equal access and affirmation action. Contact the EEO or ADA Coordinator at (615) 741-2177.