Knowledgebase-Contractors Licensing Law and Its Application


Information Product

Title:Contractors Licensing Law and Its Application
Summary:MTAS was asked whether the city building inspector should issue a building permit
for the construction of a certain restaurant in the city.
Original Author:Hemsley, Sid
Co-Author:
Product Create Date:11/13/92
Last Reviewed on::12/19/2016
Subject:Building permits; Licenses and permits
Type:Legal Opinion
Legal Opinion:

Reference Documents:

Text of Document: November 13, 1992

Your question is, should the city building inspector issue a building permit for the construction of a certain restaurant in the city? In my opinion, the answer is yes.

The pertinent facts are these: the applicant for the building permit owns the land upon which the restaurant is to be built, plans himself to do the necessary earth work and to build the building shell, and plans to subcontract out the electrical and other work to complete the building. The applicant says his part of the work will cost around $16,000. The total cost of the building is not known; however, it will undoubtedly exceed $25,000. The application doesn't have a contractor's license. Your city's county has a population of 46,315 according to the 1990 census.

The Contractor's Licensing Law codified at Tennessee Code Annotated, 62-6-101 provides that a "contractor" means:

undertaking for a fixed price, fee, commission, or gain of whatever nature, to construct, erect, alter repair or supervise, superintend, oversee, direct, or in any manner assume charge of the construction, erection, alteration, or repair of part or all of any structure, or private work or utility work of any nature or character whatsoever...where the cost of the completed work, or of different projects under a single contract, equals or exceeds twenty-five thousand dollars ($25,000)...

It also provides that a "contractor" means "any person, firm or corporation who engages or offers to engage in contracting."

Based upon those definitions and the interpretation of the term "general contractor" in Santi v. Crabb, 574 S.W.2d 732 (1978), the person in question doesn't fall within the meaning of the statute and is not required to obtain a contractor's license. In Santi, the Tennessee Supreme Court held that the owner of property upon which he is building a premise is not converted into a "general contractor" within the meaning of the Contractor's Licensing Law as it stood in 1978. The fact that Santi relied on the definition of "general contractor" rather than the present law's definition of "contractor" and of "contracting," is a distinction without a difference. A close reading of the Contractor's Licensing Law, particularly of the substance of its definition of "contractor" and "contracting" suggests that case still applies to the set of facts in your case.

Under that set of facts, the owner of the property in question is not a person who "engages or offers to engage in contracting," which is the "undertaking for a fixed price, fee, commission or gain of whatever nature" the construction of a public or private structure or the oversight of the same. He is a property owner building a restaurant on his own property, subcontracting out various phases of the job, except for those phases he himself is completing. I initially thought that because he was building a restaurant certain exceptions in the law didn't apply to him, but because of the definitions of "contractor" and "contracting" in the law, and Santi, one doesn't even have to reach those exceptions.

If I can help you further in this or any other matter, please let me know.

Sincerely,

Sidney D. Hemsley
Senior Law Consultant
SDH/

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.