What are the Classifications for Tennessee’s Contractor Licensing
Contractor licensing in Tennessee is essential for the protection of homeowners, tenants, businesses, and the general public. In Tennessee, contractors are officially supervised and regulated by the Department of Commerce and Insurance and specifically the Board for Licensing Contractors. Tennessee’s licensing laws apply to a broad range of entities, ranging from tree trimmers to large plant managers.
Tennessee requires three distinct licenses for a person or company engaging in construction work in Tennessee. For any project that will cost greater than $25,000, a contractor must possess an appropriate "contractor" license from the state and the appropriate business entity license from the Secretary of State.
The contractor license is broken down into 7 different classifications:
Home improvement contractors must also comply with the state’s home improvement licensing law found in Tennessee Code Annotated 62-6-103. Under that law , a home improvement is defined as any work performed on residential property, that is not new construction, which costs the homeowner $3,000 or more, and which is not included in the scope of work permitted under the license classification of that contractor. Home improvement contractors must also obtain a bond for at least $10,000.
As you would expect, there are a lot of other rules and requirements that also apply, including financial eligibility requirements, examination requirements, etc. However, those are not addressed here and you can read about those at the following resources:
Top Level Classifications
The state of Tennessee has a number of different primary license classifications. Contractors may have a Residential, Limited, General or an Inactive license in the state of Tennessee.
The Residential license is regulated by the Department of Commerce and Insurance and is for work performed on Residential homes that have 4 Units or less. The primary classifications of this license are:
• a license that allows for work on a total $25,000 or $50,000 or an unlimited amount to be spent in any given year
• they also have an electrical lock
• a plumbing lock
• and a mechanical lock which allows for four months of HVAC schooling and four months as a registered apprentice.
The Limited License The Limited license allows entry level contractors to be taken under a mentor to be taught the skills to pass their contractor exam by way of the Limited license. This is issued by the Department of Revenue.
General Contractors In addition to being able to get licenses through the Department of Revenue, there are also general contractors who have to be licensed through the Tennessee Board for Licensing Contractors. This is the board that oversees residential and general contractors. To gain this license, the applicant must pass a test for their specific area. The three different tests being residential, commercial, and dual. In Tennessee it is common for a contractor to have two different classifications; the Residential license and their General license.
This is a vital subject to review when starting your business. This will give you a good idea on how the classifications are operated and what type of classifications are out there.
Specialized Contractor Classifications
Many businesses in the construction industry do not perform work within the scope of the two general construction classifications. To provide a pathway for those contractors that do not work in building or highways, Tennessee offers seven other classifications which are referred to as "specialty contractors," and they are as follows:
The contractors that fall within these specialty classifications must pass a portion of the examination specific to their trade. For example, a mechanical contractor that applies for the appropriate specialty license classification will be required to take an additional test covering heating, ventilating and air conditioning (HVAC). An exception to this requirement however is that a master plumber qualify to take an exam that will transfer his qualifications from the plumbing contractor’s exam to the mechanical contractor’s exam. A specialty contractor can then take the exam for a second specialty classification if he wishes.
Licensure Examinations and Applications
During the application process, you must show proof of your experience and submit a written exam application as well as a business and law application for a Tennessee contractor license. Once the applications are approved you are issued an authorization to test letter. You will be required to take the following tests depending on your business structure.
After passing the required exams , you will need to submit a $350 payment to the Board along with the final application. The fee is due prior to license issuance – there are no payment plans. If your application package is incomplete it could take up to 90 days to get the application approved. Fingerprint cards and back ground check fees are $51.30 for individuals and $51.30 per person for partners.
Renewal and Maintenance
In most circumstances, a Tennessee contractor license must be renewed every two years. In order to renew, the licensee must: 1) confirm that the license is in active status; and 2) pay the renewal fee. A contractor license is in "active status" if the license was current on its own accord when it was in effect. Except for a six-month grace period at the expiration of the license period (during which the licensee may reinstate the license), all licenses after their expiration date are considered inactive until they are reinstated.
At the time of renewal, the licensee should confirm that all continuing education requirements have been satisfied. To maintain licensure, all licensees (except for residential and small commercial contractors) have a continuing education requirement of eight hours every two years. Residential and small commercial contractors have a four-hour requirement every two years, except for new licensees and those that reach licensure by meeting the exam/experience requirement who are exempt from the continuing education requirement for the first two years of licensure. Many courses are offered online.
Current licensees may also be subject to compliance audits. Licensees who are found to be non-compliant with business and financial status requirements will need to submit supporting information to the Board to confirm compliance and/or re-establish the license within 60 days of the audit notification. Licensees who fail to re-establish business and financial status may also be subject to penalties.
Advantages of Proper Licensure
For consumers, holding a proper contractor license means assurance of the abilities of the business providing services to them. The registry allows the ability to verify the license status of an appropriate contractor. Proper licensing can also be an ideal quality indicator as certain license classes require professional experience and successful examination . For contractors, proper license classification may afford greater opportunities for their company to obtain larger and more lucrative remodeling jobs. Proper licensure may also be a qualifying factor in bidding situations when general contractors or owners are reviewing bids submitted by subcontractors.