North Carolina’s joint ventures are a common way to undertake construction projects. Two companies can work together to create a joint venture. Joint ventures can be considered unincorporated associations. To avoid legal and regulatory pitfalls, joint venture parties should be aware of North Carolina’s licensing requirements.
North Carolina law requires that any company or firm that proposes or constructs a building or improvement costing $30,000.00 or more be licensed by the North Carolina Licensing Board of General Contractors.
There are many questions about how to license a joint enterprise or which partners must be licensed. Is it possible to meet the licensing requirements if an outside contractor enters into a joint venture with a licensed general contractor in North Carolina? What happens if an unlicensed developer wishes to form a joint venture with licensed general contractors for the purpose of building a project?
The key question when analyzing licensure requirements is who enters into the construction contract? The entity signing the contract must be licensed. It can be a corporation, limited liability company, or partnership.
North Carolina does not recognize a joint venture in the same way that it is recognized as a separate business entity by statutes. Joint ventures can be compared to general partnerships, and this is how they are usually treated legally.
For licensing partnerships, the default rule is that each partner must have its own license. The license must be in the partnership’s name. If parties A and B form AB Construction partnership, the license must be in AB Construction’s name. The fact that one or more partners hold a general contractor license does not make a partnership validly licensed.
Joint ventures in North Carolina are exempt from the general rule. A joint venture can still practice general contracting within North Carolina, provided it has the appropriate license. A joint venture can practice general contractor in North Carolina, but it must have its own license. This is if each principal or member of the joint enterprise has the appropriate classification and the required limitation. One exception to this is if one joint venture is a limited liability business. If this is the case, the limited liability company’s members and managers must be licensed to practice general contracting in North Carolina.
Before any work contract is signed, it is crucial to follow these licensing requirements from the beginning of a project. An unlicensed general contractor can’t enforce the contract it has with the project owner, in addition to any regulatory action the licensing board might take (including reprimands and license suspensions). It cannot enforce its contract legally to collect any amounts that may be due. This defect cannot be fixed by complying with licensing requirements after signing the contract.
from lawyers.buzz https://lawyers.buzz/north-carolina-licensing-for-general-contractors-licensure-of-joint-ventures/1272/
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