Whenever a project has a value of more than $25,000, contractors in Tennessee are required to obtain a license. Read on for more information on the different situations and why it’s important that you stick to those rules, and why it’s important for homeowners to also only hire contractors that work within the rules.
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Tennessee Contractor’s License
The tornadoes that wreaked havoc on the state of Tennessee last 2012 brought upon a major issue that needs to be resolved – the unlicensed contractors that take advantage of the vulnerable. That year saw a lot of homeowners falling victim to these dodgy contractors. They pay these contractors good money, only to be left hanging with substandard or worse, no work at all.
Fast forward to today and it’s still a major problem. Fortunately, you can now check if the contractors that you’re considering are licensed by the state.
Importance of Hiring a Contractor with a License
A contractor’s license will tell you a lot of things. It shows that they’re a legitimate business. It also shows that they will try their best to do good work because their name is on the line. It can also help weed out the fly-by-night companies. This is why it’s a good idea to ask for a license.
Here are the more specific benefits:
- You know that they have the competent skillsets.
They have to undergo a process that weeds out incompetent contractors from the competent ones. It shows that they passed the basic competency requirements if they have a valid license.
- They’re insured and bonded.
These are requirements for them to be licensed. They have to show proof to the licensing body.
- They can apply for building permits for you.
You wouldn’t want to be the one to pull the permits for your own project.
- You can file a proper dispute.
The TN Board for Licensing Contractors takes disputes seriously. They have a good, although lengthy system in place. You can file a complaint online, although it’s recommended that you send in your complaint via snail mail, fax or email. You just have to print out the complaint form and send it to the address that you’ll see on the form. You can also send it via fax to (615) 532-286 or you can also email it to [email protected]
Contractor License Search and Lookup in the State of Tennessee
You can use the TN contractor license search feature of the database of the Tennessee State Government. It makes it very easy to lookup contractor licenses. All you need to do is to go to http://verify.tn.gov/. You’ll land on the License Search and Verification page. After a short process to verify that you’re human, you’ll gain access to a form that will ask for the following information:
- Firm or Last Name
- First Name
- Middle Name
- City, State and Zip Code
- License #
NOTE: This form is used for all industries, so you should see professions not related to the contractor industry.
Click on search and there you go. You should be able to verify whether they’re licensed or not. The status should show as “Active – Fully Licensed”. There should also be a current expiration date.
TIP: The quickest way is to ask for the license # of the contractors that you’re considering. If results show up, you can then verify whether the details are consistent with the details that they’ve provided. You can also ask for their pocket card to see the needed details.
Alternatively, if you can’t access the TN license lookup, you can contact them at 800-544-7693 or send them at email at [email protected].
Also known as a prime contractor, a general contractor bids or contracts directly with the project owner. This professional is responsible for overseeing the construction project, dealing with subcontractors and tradesmen, and serving as a bridge of communication across all involved parties.
In the state of TN, licensing requirements are handled by the TN Board for Licensing Contractors.
About the Tennessee Board for Licensing Contractors
The board was established last 1931. Through the years, it continues to provide a steadying link between contractors and clients. They aim to ensure quality and fairness in the construction field, thereby protecting the consumers.
You can contact them via the following contact details:
- 500 James Robertson Pkwy, Nashville, TN 37243, USA
- 615-741-8307 or 800-544-7693
- [email protected]
Tennessee Contractor License Requirement
Although technically speaking in the state as per the Board for Licensing Contractors, a Tennessee contractor license is only required for projects that amount to $25,000 and more. This license is required before a company can even bid on a project.
Contractors are classified into several classifications and have different exam requirements as per the Tennessee Board for Licensing Contractors Classification Outline with Trade Exam Requirements:
- Building construction
- Heavy construction
- Construction of airports, railroads and highways
- Construction of utility lines at the municipal level
- Mechanical contracting
- Electrical contracting
- Medical gas piping
For projects less than $25,000, the following applies:
- A home improvement license for projects $3,000 up to $24,999 in these counties – Haywood, Bradley, Knox, Davidson, Rutherford, Shelby, Hamilton and Robertson.
- A limited licensed electrician is required for electricians.
- A limited licensed plumber is required for plumbers.
Go here for more details – https://www.tn.gov/content/tn/commerce/regboards/contractors/licenses.html.
Should You Get a License?
Some contractors feel that getting one is unnecessary. Needless to say, it requires a lot of time, effort and money. But if you really want to succeed as one and you’re in this for the long term, you really need to go through the process and get licensed.
Of course, you need to consider where you are right now. If you’re just starting, then there’s a good chance that you won’t be able to bid on projects over $25,000. This means that you don’t really need one.
You also have to consider what services you’d like to offer. A license may get in the way of you offering a wide variety of services, so that’s definitely something that you’d want to consider when you’re getting started.
It’s a good idea that you get started as an all-around handyman first. Use this chance to gain experience and business acumen. You should also take this chance to gain bidding experience so you’ll know how to bid correctly. The last thing that you’d want to happen is to bid too low on a job.
Once you have the experience and you feel that you’re ready for the big jobs, these benefits should entice you to get a contractor’s license in Tennessee:
- You gain credibility.
Most clients (especially those with big jobs) feel better dealing with someone who is licensed. A license gives you credibility.
- It gives you confidence.
Let’s say that there’s a $30,000 project. Will you be confident enough to bid on this project if you don’t have a license? No, because you know that there’s a very good chance that they’ll ask for one and you want to spare yourself from the embarrassment of saying that you don’t have it.
On the other hand, having a license gives you the confidence to send a bid, knowing that you qualify from this standpoint.
- You open yourself up to more potential for earning.
Working on $1,000 jobs is different from working on $25,000 jobs and your bank account will show the difference. Simply put, being licensed gives you access to these higher-paying jobs.
How to Get a Contractor’s License in TN
There are 8 steps to getting a contractor’s license in Tennessee:
- Take the exams.
You need to take and pass 2 exams – Business and Law and Trade. The Business and Law exam ($55) is an open book one. Get the NASCLA Contractors Guide to Business, Law and Project Management manual for this.
The Trade exam ($55) will be dependent on your profession. You need to take it if your profession falls on the following:
- Fire Sprinkler
- Full Mechanical
- Licensed Masonry Contractor if the project amount reaches $100,000
- Residential/Small Commercial
You can check out and download this Contractor’s License Application Package for more details.
You can request for a trade exam waiver if you have an active license with the states that fall under the Tennessee Contractor’s license reciprocity agreement.
- Prepare a financial statement.
This is needed because each contractor will have a monetary limit attached to their license. You need to hire a licensed or certified public accountant to prepare an audited or reviewed financial statement for you. The statement should be under the name that you wish to be licensed, so make sure to check for the name availability first at http://verify.tn.gov/. You can also use that link to make sure that the CPA is indeed licensed to prepare the financial statement for you.
The financial statement should be current (within 12 months) and should follow the guidelines under the Generally Accepted Accounting Principles. You only need a reviewed financial statement, if the monetary limit is $1,500,000 or below. You’d need an audited one if it’s over that.
- Get a reference letter and proof of insurance.
You only need one reference letter. It can be from anyone (except a member of the family) that can vouch for your work. It can be from an employer, client or better yet, a code official who has done an inspection of your work.
You need 2 types of insurance – General Liability and Workers’ Compensation. If you have proof of exception, you can provide that.
- Register with the TN Secretary of State.
You need to show proof that you’re registered and chartered to the office of the TN Secretary of State if you’re a corporation registered in the state. If you’re registered outside of the state of Tennessee, you’re considered to be a foreign corporation and as such, you also need to add a Certificate of Authority.
On the other hand, Limited Liability Companies must provide Articles of Incorporation along with proof of registration or filing with the office of the Secretary of State. This also applies to foreign corporations described above. For Limited Partnerships, you should be registered with the Secretary of State.
It’s important to note that the name on your license should be unique and as such, should be verified at http://verify.tn.gov/. If your name includes “Doing Business As” or DBA, the full name including the DBA should be included in the certificate and the financial statement.
- Complete the application.
Make sure that all fields of the Tennessee Contractor’s License Application are filled out. If a question doesn’t apply to you, explain in the provided field why. You need to provide a comprehensive list of experience and details about supplemental licenses, if any. You also need to disclose complaints that you received, along with judgments or felonies. If you fail to disclose any of these details, it could lead to a delay in issuing your license.
You will need to sign the contractor’s affidavit. This has to be notarized.
- Submit the application and the non-refundable fee.
You need to submit the application before the 20th of the specific month before the licensing board meets:
- January, March, July and November for Nashville
- May for West Tennessee
- September for East Tennessee
The non-refundable fee is $250. Payment has to be done by check (personal, company or cashier’s) and made payable to State of Tennessee. Mail the check together with the application to this address:
Tennessee Board for Licensing Contractors
500 James Robertson Parkway
Nashville, TN 37243-1150
You will receive a notification via snail mail, fax and/or email if more information is required.
- Review of the board
You will also receive correspondence for your interview schedule. The interview itself lasts 30 minutes or less. You’ll be asked about your contracting experience to ensure that the license that will be given to you matches your field of work. You can get your license number during the interview, although it’s not yet approved until the board votes for your license. You can also take this chance to ask questions, if any.
In some cases, you won’t be required to appear for an interview. This is when the application is sent complete with details and the board doesn’t feel that there’s a need for more details. This is why it’s important that you complete the application so you can potentially save the trip to the interview where the waiting time can be more than an hour.
- Issuance of your license.
Once approved after the board meeting, you will receive your license certificate via mail. This should include your license ID number, monetary limit, expiration date and classification. You can double check with http://verify.tn.gov/.
Your license will be good for 2 years. You will be mailed for renewal 90 days before expiration, as it’s required to renew your license 30 days before it expires.
Contractor’s License Reciprocity
You need to pass a trade exam in order to get licensed. However, some states have a reciprocal or trade exam waiver agreement with Tennessee. You can get a TN trade exam waiver if you have a valid license in one of the following states:
- Alabama (Electrical, General, HVAC and Residential)
- Arkansas (Arkansas Contractors Licensing Board)
- Georgia (Commercial Building and Electrical)
- Louisiana (Commercial, Electrical, Mechanical and Residential)
- Mississippi (Commercial, Electrical, Mechanical – Unlimited and Residential)
- North Carolina (Commercial and Residential)
- Ohio (Electrical, HVAC and Plumbing)
- South Carolina (Commercial Contractors Licensing Board)
This agreement also applies to the National Association of State Contractors Licensing Associations.
For this waiver to apply, the state that issued your license should be your home state. You won’t qualify for the waiver if you have an open complaint, undergoing disciplinary actions, or have a felony conviction.
A TN state LLE license is needed if the total project cost (inclusive of materials and labor) is below $25,000. The cost of materials won’t be included if supplied by the client. The cost of materials will be included if supplied by a contractor.
It will also depend on the project’s location. You can check with your local government to see if the LLE license is sufficient or if you need to get a master license. You can check this list for the issue agent information of your specific county. While you’re at it, confirm with the local government if you need a business tax license.
You need to pass two exams in order to get licensed:
- Business and Law Exam (if also applying for a contractor license)
- Trade Exam
Both exams are conducted by PSI Services. You can click that link to find our more details and to register for the exams. Exams are conducted daily, but you have to register first to get an appointment.
The Business and Law exam is 100 questions long that you have to finish within 240 minutes. You need to score 73% or higher in order to pass.
If you’re only looking to get a TN electrical license, you just have to take the Trade exam that is 40 questions long that you have to finish within 120 minutes. You need to get 29 items correct in order to pass.
The requirements are basically the same as the requirements to get a Tennessee electrical license. The same company, PSI Services, will be conducting the exam. This time, the exam is 110 questions long with a time limit of 295 minutes. You need to get at least 73% to pass the exam.
Roofers are considered as subcontractors in the state of Tennessee and as such, they are generally not required to get a contractor’s license since they are contracting with the general contractor and not the owner of the project. But if the roofing work exceeds $25,000, they need to get a contractor’s license.
The Plans Review & Inspections Division handles the licensing, exam and reciprocal procedures in the city of Knoxville. To apply, send an application together with 3 reference letters to:
Plans Review & Inspections Division
City of Knoxville
400 Main St., Rm 505
Knoxville, TN 37902
There is a $30 non-refundable fee to apply. You also need a bond dependent on the license class. You can get the necessary forms here. You can also contact 865-215-4244 or 865-215-2999. Prometric will also provide an exam verification letter. You can contact them at 800-280-3926.
You can also choose to reciprocate if you have an active TN contractor’s license. Submit a copy of the license together with an affidavit.
For Shelby County, the Department of Construction Code Enforcement is the one responsible for registering contractors that have a valid license in the state. They also issue local licenses. In order to get one, you need to have an approved application and you need to pass the exam by the Southern Building Code Congress International and Block and Associates. This local license is needed for the following:
- House moving
Trade licensing applies in the city of Chattanooga. They have different boards of examiners that oversee the trade licensing:
- Electrical examiners
This board handles licensing for electricians. You can download this form if you wish to conduct business in the electrical industry in Chattanooga. The board can be reached at (423) 643-5800.
- Gas examiners
This is the board that will handle your licensing if you wish to engage in the gas piping business. Download the application form here or contact (423) 643-5800 for more details.
- Mechanical examiners
If you wish to engage in installation, repair or modifications of mechanical equipment in this city, download this form or contact (423) 643-5800.
- Plumbing examiners
If you wish to engage in installation, repair or modifications of plumbing, get your application form here or contact (423) 643-580.