Unlicensed Contracting in North Carolina

Contracting for or bidding on work covered by G.S. 87-1 without a license is a Class 2 misdemeanor under G.S. 87-13 — but G.S. 87-1(b) puts three kinds of work outside that Article altogether, including an owner building on their own land for their own occupancy. Outside those exceptions the trigger is the same $40,000 as the licensing requirement.

Who G.S. 87-13 does not reach

The exceptions are part of the offense, not a footnote to it, because G.S. 87-13 has no scope of its own — it penalizes work on “the projects or works enumerated in G.S. 87-1”, so whatever G.S. 87-1(b) removes from that list is outside the misdemeanor entirely. Three exceptions sit in G.S. 87-1(b):

• Industrial and power plant equipment, radial brick chimneys, monuments. Firms furnishing or erecting these are outside G.S. 87-1, so G.S. 87-13 does not reach that work (G.S. 87-1(b)(1)).
• An owner building or altering on their own land. This limb of G.S. 87-1(b)(2) requires both that the building is “intended solely for occupancy by that person and his family, firm, or corporation after completion” and that the owner “complies with G.S. 87-14”. If it is not occupied solely by them for at least 12 months after completion, the statute presumes it was never so intended. Relying on this exception without the G.S. 87-14 limb is how it fails.
• A farmer constructing on their own land, for their own use in farming, is outside G.S. 87-1 and so outside G.S. 87-13 (G.S. 87-1(b)(3)).

The exceptions are set out with the threshold on the licensing requirement page.

What G.S. 87-13 actually covers

The section reaches more than working without a license. Each of the following is a Class 2 misdemeanor under G.S. 87-13 when done by any person, firm or corporation:

• Contracting for or bidding upon covered work. Contracting for or bidding upon any of the projects enumerated in G.S. 87-1 without first complying with the Article, or otherwise attempting to practice general contracting in the state, is a Class 2 misdemeanor under G.S. 87-13.
• Filing another’s license as your own. Presenting or attempting to file as one’s own the licensed certificate of another is a Class 2 misdemeanor under G.S. 87-13.
• Giving false or forged evidence. Giving false or forged evidence of any kind to the Board, or to any member of it, in maintaining a certificate of license is a Class 2 misdemeanor under G.S. 87-13.
• Falsely impersonating another. Falsely impersonating another is a Class 2 misdemeanor under G.S. 87-13.
• Using an expired or revoked license. Using an expired or revoked certificate of license is a Class 2 misdemeanor under G.S. 87-13.
• Falsely claiming to be licensed. Falsely claiming or suggesting, in connection with any business activity the Board regulates, that a person, firm or corporation is licensed under the Chapter is a Class 2 misdemeanor under G.S. 87-13.

The Board may use its funds to defray the expense, legal or otherwise, of prosecuting violations.

The limb that catches design professionals

One provision reaches people who never pick up a tool. Under G.S. 87-13 an architect or engineer who recommends to a project owner the award of a contract to anyone not properly licensed commits the same Class 2 misdemeanor.

There is a defense in the same section, and it is narrow: G.S. 87-13 provides that no architect or engineer is guilty where the recommendation was made in reliance on “current written information received by him from the appropriate Contractor Licensing Board of this State” which “erroneously indicates that the contractor being recommended for contract award is properly licensed”. It turns on the Board’s own written record at the time of the recommendation — which is what the license lookup reflects.

Bidding counts, not just building

G.S. 87-13 reaches anyone who undertakes to “contract for or bid upon” covered work — the bidding limb is the one most often overlooked. Submitting a bid on covered work without holding the license is itself the offense under that section; work need not have started.

Related, G.S. 87-15 requires architects and engineers preparing plans and specifications to include a copy of the Article, or the necessary portions, in invitations to bidders — so that bidders resident or not, licensed or not, know a license must be evidenced before a bid is considered.

What the Board can and cannot do

Can: investigate complaints, hold administrative hearings, and act against the license and against a qualifier’s examination credential. Under G.S. 87-13.1 the Board “may apply to the superior court for a restraining order and injunction to restrain the violation”, and the superior courts have jurisdiction to grant it “irrespective of whether or not criminal prosecution has been instituted or administrative sanctions imposed”. The same section awards the Board its reasonable attorney’s fee, capped at $5,000, plus costs, where it prevails.

Cannot: impose civil fines or penalties. The Board’s own contractor FAQ puts it directly — “Can the Board impose a fine or a penalty? No, the Board has no specific authority to impose civil fines or penalties.” The financial consequences that do exist are the criminal penalty for the Class 2 misdemeanor, which the courts impose under G.S. 87-13, and the attorney’s fee G.S. 87-13.1 awards the Board when it prevails on an injunction.

The posture of a complaint follows from that. When the Board opens one it is an administrative matter between the Board and its licensee or qualifier. The person who complained is not a named party — they are a witness for the Board in its investigation and at any hearing. A Board proceeding is therefore a disciplinary process, not a mechanism for recovering money; the Recovery Fund below is a separate statutory route with its own conditions.

The Homeowners Recovery Fund

A homeowner whose loss was caused by a licensed contractor rather than an unlicensed one may be looking at a different mechanism entirely. North Carolina operates a Homeowners Recovery Fund, administered by the Board, which reimburses a loss resulting from “dishonest or incompetent conduct by a general contractor in constructing or altering a single-family residential dwelling unit” where that loss is not met by the contractor, a bond, a surety agreement or an insurance contract (G.S. 87-15.5).

Note the limit that matters on this page: the definition turns on conduct by a general contractor, so the Fund is not a route against someone who was never licensed at all. Its eligibility test, the exhaustion requirement, the discretionary character of payment and the cap on what an approved claim may receive are set out at the Homeowners Recovery Fund.

If you are checking on a contractor

Verify the license before signing, not after. The Board’s public search is the authoritative record — see check a license, and how a license is obtained from the bidder’s side. The statute’s threshold is work of $40,000 or more; whether a particular project and a particular contractor fall inside G.S. 87-1 is a question about specific facts, and that is the point at which this page stops being useful.

This page sets out what the law says. It is not advice about your own project or dispute, and what to do in a specific situation is a question for a lawyer.