More On Nationwide Monitoring And License Requirements / Unlicensed Contractors With Unenforceable Contracts - September 3, 2015

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MORE ON NATIONWIDE MONITORING AND LICENSE REQUIREMENTS FROM AUGUST 21, 2015 ARTICLE  
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Ken
    With regard to unlicensed companies using contracts and enforcement.  What auto insurance company will fully cover you to illegally drive if you don't have a valid driver's license?   Common sense (which is in short supply) says that if you are illegally performing any licensed trade work requiring a license, any contract should be null and void.  Many states have monitory protection laws for the consumer.
    There are unlicensed people (in all trades) that feel they can hide behind a contract and  expect the contract to excuse criminal activity.
John W. Yusza, Jr
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Ken,
    The statute regarding licensing enforcement in Florida is:

489.532 Contracts entered into by unlicensed contractors unenforceable.—
(1) As a matter of public policy, contracts entered into on or after October 1, 1990, by an unlicensed contractor shall be unenforceable in law or in equity by the unlicensed contractor.

    I doubt that a judge would side with any contractor who was unlicensed and uphold a contract to protect it when it's evident that Florida has a law requiring licensing.  And that licensing law requires background checks, testing, qualifications, appearing before a board to be questioned, and so on.bRoy Pollack, CPP SET
Director of Licensing & Training Compliance
Comcast / Xfinity Home
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RESPONSE
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    A literal and strict reading of the Florida statute [see below] supports the harsh result suggested by Roy, that an unlicensed contractor cannot enforce its contract.  This statute does not appear to limit its application to actions brought by the unlicensed contractor to collect money [which I think was the intention of the legislation] and clearly provides that the contract enforcement will be unavaliable to the unlicensed contractor.  This means that when sued by the subscriber for breach of contract or negligence the unlicensed contractor will not be permitted to enforce the protective provisions of the agreement or any part of the agreement.  That seems particularly harsh if the subscriber is relying on that very agreement to impose a contractual duty on the contractor.
    In jurisdictions where there are licenses a contactor will be required to plead the license and license identification in its collection complaint and failing to plead the license is fatal to the collection cause of action.  I am not aware of any cases where an unlicensed alarm contractor was unable to use the contract to avoid or limit liability.  That doesn't mean there aren't any cases, and if anyone knows of any such case let us know.
    Certainly the prudent, perhaps only, approach from a legal perspective is to take the position advanced by Roy, no license, no contract protection.   You won't be able to use the contract as a sword for collection or a shield for defense.  
    John raises an entirely different issue and problem for the unlicensed contractor.  When you filled out your application for insurance you were no doubt asked if you are licensed to perform the work you perform.  If it turns out you were not licensed, especially if you are subject to this Florida statute or one like it, your insurance carrier is very likely to take the position that a material misrepresentation was made in the application and therefore the insurance coverage is void.

489.128. Contracts entered into by unlicensed contractors unenforceable
Currentness

(1) As a matter of public policy, contracts entered into on or after October 1, 1990, by an unlicensed contractor shall be unenforceable in law or in equity by the unlicensed contractor.
(a) For purposes of this section, an individual is unlicensed if the individual does not have a license required by this part concerning the scope of the work to be performed under the contract. A business organization is unlicensed if the business organization does not have a primary or secondary qualifying agent in accordance with this part concerning the scope of the work to be performed under the contract. For purposes of this section, if a state license is not required for the scope of work to be performed under the contract, the individual performing that work is not considered unlicensed.
(b) For purposes of this section, an individual or business organization may not be considered unlicensed for failing to have a business tax receipt issued under the authority of chapter 205.
(c) For purposes of this section, a contractor shall be considered unlicensed only if the contractor was unlicensed on the effective date of the original contract for the work, if stated therein, or, if not stated, the date the last party to the contract executed it, if stated therein. If the contract does not establish such a date, the contractor shall be considered unlicensed only if the contractor was unlicensed on the first date upon which the contractor provided labor, services, or materials under the contract.
(2) Notwithstanding any other provision of law to the contrary, if a contract is rendered unenforceable under this section, no lien or bond claim shall exist in favor of the unlicensed contractor for any labor, services, or materials provided under the contract or any amendment thereto.
(3) This section shall not affect the rights of parties other than the unlicensed contractor to enforce contract, lien, or bond remedies. This section shall not affect the obligations of a surety that has provided a bond on behalf of an unlicensed contractor. It shall not be a defense to any claim on a bond or indemnity agreement that the principal or indemnitor is unlicensed for purposes of this section.