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You Just Signed A Construction Contract That’s In Excess of Your Limited General Contractor’s License; Can You Still Compel The Owner To Pay You?

Yes, but only up to a point.  Specifically, once the statutory limit of the license is reached, no additional contract balance above that limit may be recovered.

Our analysis begins with the N.C. General Statutes, specifically Chapter 87-10, which states, in pertinent part, that “the holder of a limited license shall be entitled to act as general contractor for any single project with a value of up to five hundred thousand dollars ($500,000)[.]”  We also need to bear in mind that in 1983, the North Carolina Supreme Court adopted the rule that “a contract illegally entered into by an unlicensed general construction contractor is unenforceable by the contractor.  It cannot be validated by the contractor’s subsequent procurement of a license.”  Brady v. Fulghum, 309 N.C. 580, 586, 308 S.E.2d 327, 331 (1983).

Based solely on the cited language of Chapter 87-10 and the general rule expressed in the Brady decision, it would be tempting to conclude that a contract entered into in excess of the statutory limit is illegal, void and therefore unenforceable in a court of law as of the moment the contract is signed.  Fortunately, however, that is not how subsequent appellate decisions have handled the situation.

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