Knowledgebase-Municipal Licensing of Contractors


Information Product

Title:Municipal Licensing of Contractors
Summary:MTAS was asked whether the City can impose certain licensing requirements
upon contractors who perform jobs that do not equal or exceed the sum of $25,000.
Original Author:Bingham, Pamela
Co-Author:
Product Create Date:03/30/2001
Last Reviewed on::03/19/2010
Subject:Contractors; Contractors--Licenses and permits; Licenses and permits; Public works--Construction
Type:Legal Opinion
Legal Opinion: Municipal Licensing of Contractors Public.doc

Reference Documents:

Text of Document: March 30, 2001

You have posed a question as to whether the City can impose certain licensing requirements upon contractors who perform jobs that do not equal or exceed the sum of $25,000. In my view that the answer to your question is a qualified yes. There are definite limitations to this authority, as will be explained infra.

As a preliminary matter, the general rule with respect to contractors is if the cost of the completed work, (or of different projects under a single contract,) equals or exceeds twenty-five thousand dollars ($25,000), the contractor is required to be licensed in accordance with by state law. See generally T.C.A. 62-6-102 et seq. As set forth in T.C.A. 62-6-102(3)(A), "Contractor" is defined as any person or entity who undertakes or 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 for which the total cost of the same is twenty-five thousand dollars ($25,000) or more.” See also T.C.A. 62-6-111 [license and examination].

One of the statutes that discusses local regulation of contractors is T.C.A. 62-37-105. That statute provides that a local government may not require additional licensing for contracting with respect to home improvements. Note that the same law does permit a municipality to require permits or licenses for other types of work and specialities. It provides as follows:

Additional authorization or licenses -- Local regulation -- Damages.

(a) No county or municipality of this state may require that any person obtain an additional authorization or license to transact home improvement business in such county or city. Nothing contained herein prohibits counties, municipalities or metropolitan governments from requiring licenses for persons performing plumbing work, electrical work or gas and mechanical work.

(b) A license issued pursuant to this chapter may not be construed to authorize the licensee to perform any particular type of work or kind of business which is reserved to qualified licensees under separate provisions of state or local law.

(c) Nothing in this chapter may be construed to limit or restrict the power of a municipality or county to regulate the quality, performance, or character of work of contractors, including a system of permits and inspections which are designed to secure compliance with and aid in the enforcement of applicable state and local building laws, or to enforce other laws necessary for the protection of the public health and safety. Nothing in this chapter limits the power of a municipality or county to adopt any system of permits requiring submission to and approval by the municipality or county of plans and specifications for an installation prior to the commencement of construction of theinstallation or of inspection of work done; provided, that nothing in this section may be construed as authorizing a municipality or county to enact ordinances or regulations relating to the qualifications necessary to engage in the home improvement business. Nothing contained herein prohibits counties, municipalities or metropolitan governments from requiring licenses for persons performing plumbing work, electrical work or gas and mechanical work. (emphasis added) Note, however, that T.C.A. 62-37-107 then specifically exempts from local governments’ contractors licensing powers a number of types of specialities, including plumbers and electricians who are required by state or local law to attain certain standards of competency, and as set forth in subsection (a)(4), any residential or commercial contractor who holds a valid license issued pursuant to the state Contractors Licensing Act Law.

(d) Except for a permit for any home improvement work to be performed by the owner of property, a municipality or county may not issue a permit for any home improvement work unless the permit lists each contractor's home improvement license number.

(e) Any person subject to the provisions of this chapter who engages in construction or the home improvement business without a license shall, in any tort action arising out of such construction or home improvement business, be subject to the awarding of treble damages. T.C.A. 62-37-105

Subsection (6)(A) defines "home improvement" to means the repair, replacement, remodeling, alteration, conversion, modernization, improvement, or addition to any land or building. It also applies to any portion which is used or designed to be used as a residence or dwelling unit for one to four dwelling units. It also includes the construction, replacement, or
improvement of driveways, swimming pools, porches, garages, landscaping, fences, fall-out shelters, roofing, painting and other improvements to structures. In addition, "home improvement" consists of the installation of central heating or air-conditioning systems, storm windows and awnings. Home improvement does not include the construction of a new home or work done by a contractor in compliance with a guarantee of completion of a new building
project,. See generally T.C.A. 62-37-103.

In looking at the Legislature’s purpose in enacting the "Home Improvement Licensing Act,." which contains the above-cited laws, it is said that the intention of the Act is to safeguard and protect the homeowner against abuses by home improvement contractors through regulating the home improvement business, as well as by licensing persons engaged in such business. Thus, the General Assembly has exercised its plenary powers in “occupying” this field, and cities may not supplant or supplement such authority. See T.C.A. 62-37-104 [state requirements for home improvement contractors license].

In Op. Tenn. Atty. Gen No. 94-093, the question posed was whether a city could adopt the Home Improvement Licensing Act (T.C.A. 62- 37-101 et seq.) even if the county legislative body has not done so (as is permitted by T.C.A. 62-37-126(b)). The Attorney General opined that such an action was not authorized. That office reasoned that: “county legislative bodies only can vote to adopt the Home Improvement Licensing Act. They cannot delegate to cities the power to adopt the Home Improvement Licensing Act. Thus, a city cannot adopt the Home Improvement Licensing Act unless the power to adopt has been granted by statute. T.C.A. 62-37-126(c) does not grant the power to adopt the Home Improvement Licensing Act to cities.”

There is another statutory provision in a separate title of the Code that authorizes municipalities (and counties) to license building contractors, including contractors for commercial buildings. See T.C.A. 7-62-103. However, in that same chapter, another statute then restricts the city’s authority to require licensing of specified contractors. Precisely, T.C.A. 7-62-104(7), just like T.C.A. 62-37-107(a)(4), exempts contractors licensed and qualified under the state contractor's licensing laws from a local government’s licensing powers. In sum, residential or commercial contractors who hold valid licenses issued pursuant to the state Contractors Licensing Act may not be required to obtain an additional license from a local government.

What then, are the parameters of a city’s powers with respecting to licensing contractors? In reading all the relevant statutes in pari materia, it appears that a city may require licensing of those contractors who are not already licensed by the state, or those specialists who have not been required by state or local law to “attain standards of competency or experience as a prerequisite to engaging in such craft or profession.” T.C.A. 62-37-107(a)(2).

Finally, T.C.A. 62-37-105(c) provides that:

Nothing in this chapter may be construed to limit or restrict the power of a municipality or county to regulate the quality, performance, or character of work of contracts, including a system of permits and inspections.

Thus while the city may not require duplication of licensing for many of the contractors working within its corporate boundaries, it may oversee the quality of work performed, require permits and collect fees for such.

Please let me know if you have any more questions with respect to this matter.


Very truly yours,


Pamela M.M. Bingham
Legal Consultant

Please remember that these legal opinions were written based on the facts of a given city at a certain time. The laws referenced in any opinion may have changed or may not be applicable to your city or circumstances.

Always consult with your city attorney or an MTAS consultant before taking any action based on information contained in this database.