Joint Ventures and Contractor Licensing – Not A Simple Topic

On August 24, 2010 by

You’re looking to work on a construction project…but you don’t have a license.   Surprisingly, this happens quite often.

Perhaps you’re to the industry, or a company trying to work in a neighboring state to take advantage of an opportunity there.   Before you prepare a bid or sign a contract, the first order of business is getting legal.    And depending on where you are, that usually means becoming a licensed contractor.

When our office is approached with these types of situations, we’re frequently asked if a “joint venture” with a licensed contractor can resolve any licensing deficiencies with the unlicensed party.   The answer to this question depends on where you are, and the circumstances of the project.

In the past, we’ve highlighted Mike Purdy’s Public Contracting Blog (it’s an excellent resource on prevailing wage and public contracting issues – previous posts here).   Last week, Mike discussed this interesting and popular question on the contractor licensing requirements for joint ventures.

His post focuses on Washington law.    In Washington, RCW 18.27.065 provides as follows:

A partnership or joint venture shall be deemed registered under this chapter if any one of the general partners or venturers whose name appears in the name under which the partnership or venture does business is registered.

The key here, as Mike points out in his well-written blog post, is whether the registered member of the venture is in the JV’s name.

Louisiana’s contractor licensing law treats this situation exactly opposite from Washington.    Here is a snippet from the Louisiana State Board of Contractor’s website, on their FAQ page:

I want to do a joint venture with a licensed Louisiana contractor. How does that work?

All parties in a joint venture are required to be licensed at the time the bid is submitted. Each party to the joint venture may only perform within the applicable classifications of the work of which he is properly classified to perform (Section 1103 of the Rules and Regulations of the Board).

So indeed, where you are is critical to the question of whether you can or cannot by-pass contractor licensing or registration requirements by partnering with a registered company.

And this becomes another example of how working on a construction project in one state can be legally much different than working in another state.   What are some of the other examples?    How state laws treat Pay When Paid Clauses, and the different requirements for Mechanic Liens and Preliminary Notices.

On Aug 24, 2010

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  • Can you tell me what the requirements for a joint venture are in Washington, DC? It has been very frustrating to try and determine if a Joint Venture needs to be licensed or just the parties to the joint venture

  • Absolutely, They would have told the difference of it. Neither they should have been more capable of doing those.

  • Being licensed ensures that the roofing company has met the requirements for that state to properly install your roof. Some states don’t require a roofing company to be licensed. This means that they could have just recently become a roofing company without the experience required to properly replace your roof.