It starts innocently enough. A business colleague approaches you and offers an arrangement to pay you a “fee” for each permit you pull for various projects on behalf of the business. This is extra money on the side and sounds like a great deal, right?
This scenario is very common and can put your license and your business at risk. Just don’t do it. It is important to remember that as a contractor, you will be assuming the responsibility for the supervision and financial liability for the project which is putting your license on the line should something go wrong.
The Florida Legislature enacted Chapter 489 of the Florida Statutes with the intent to protect public health, safety and welfare by requiring that all construction projects be performed by licensed contractors. Construction work must be completed by a licensed professional to ensure that structures are built safely and efficiently.
Pursuant to Chapter 489, contractors are prohibited from “renting” their license to others and is considered “aiding and abetting unlicensed contractors”. Violations can open the contractor up to disciplinary action and criminal prosecution. The first offense is classified as a misdemeanor, and a second offense is a felony. The Construction Industry Licensing Board can also level numerous additional violations against you.
The penalties for violating Chapter 489 can include fines and costs exceeding $10,000, probation, license suspension, and/or revocation.
What You Can Do Instead
If you are approached with this scenario, there are other options. One alternative is to become a qualifying agent of the business. In order to do this, you will need to complete a list of procedures outlined in Section 489.119(2), which includes the requirement that you become a W-2 employee or a 20% shareholder of the business.
It is important to note that a qualifier is not only expected to supervise work but is also required to be responsible for the financial affairs of the company (not just the project in question). As a qualifier, you are agreeing to become responsible for the business as well as supervision of each project. This means that your reputation is on the line, and you will ultimately be responsible for any damages, defects or injuries that could result.
Another option is to have the unlicensed contractor cancel their contract and have the client contract directly with you instead.
Borrowing or renting licenses has gone on for many years, and can often have disastrous results. What initially appears to be a simple transaction can snowball into a major expense, liability, and ultimately can cost you your license.
If you have a construction and or professional licensing related legal issue, please contact us. We will ensure your rights are protected at every stage of the process. BLG Partner Michelle B. Kane was appointed by Florida’s Governor as a Board Member on the Construction Industry Licensing Board for eleven years, and served as past Chairman of the Board and is here to help. Call us today at 407-734-4559.