Alabama Contractor License

Written by: Nik Ventouris

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Alabama Contractor License

An Alabama General Contractor License is necessary for anyone starting or expanding a construction business in the state.

Unlike some states that offer a universal license for general contractors, Alabama’s licensing requirements are more complicated. They differ based on whether you’re a residential or non-residential contractor, the scope of your projects, and other specific criteria.

This guide will help you understand the contractor requirements for Alabama. It also lists the steps to get licensed and provides helpful resources to make the process easier.

Tip: If you’re planning to work as a general contractor in Alabama, we recommend forming an LLC. This is an affordable business structure that protects your personal assets against debt and/or lawsuits.

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Who Needs an Alabama Contractor License

It is illegal to perform construction work in Alabama without a contractor license, making it essential for businesses in Alabama to be licensed to work. Working without a license can lead to serious legal consequences. The state enforces strict rules against unlicensed contractor work.

Contractors operating without a license also risk losing their right to secure payment through mechanics liens.

Different Types of Contractor Licenses in Alabama

Alabama has distinct licensing boards for residential and non-residential contractors, and the type of work you intend to perform dictates which license you’ll need:

  • Residential Contractors: Managed by the Home Builders Licensure Board (HBLB), a Home Builders License is necessary for projects over $10,000 on residential buildings under four stories. The HBLB offers various license classifications, including Unlimited, Limited, and Roofers licenses
  • Non-residential Contractors: The Alabama Licensing Board for General Contractors (LBGC) licenses contractors working on commercial or public contracts over $50,000, or swimming pool projects over $5,000. The LBGC provides six license classifications, including Building Construction, Highways & Streets, and more

Recommended

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Exceptions

In Alabama, there are several key exemptions to the requirement for a contractor license, encompassing a range of scenarios:

  • Government Projects: Work undertaken by representatives of the US government, State of Alabama, or local governments, supervised by licensed architects or engineers, is exempt
  • Private Residences and Owner-Constructed Property: Construction of private dwellings by homeowners is exempt. This also includes homeowners who build or improve their own properties, with the condition that any outsourced work must meet general contractor standards. Local municipalities cannot impose restrictions on this exemption
  • Emergency and Routine Utility Work: Utility-related emergency repairs and routine maintenance, covering areas like electric power, natural gas, and telecommunications, are exempt when under the supervision of a licensed architect or engineer
  • Specialized Technological Processes: The board may exempt routine maintenance, repair, replacement, or reinstallation of specialized technological equipment or systems
  • Swimming Pool Construction: Homeowners constructing swimming pools on their own property are exempt, but this does not apply to professional swimming pool contractors

Additional Exemptions:

  • Subcontractors and Professionals: Subcontractors employed by licensed contractors, and professionals like real estate licensees, engineers, and architects working within their field are exempt. This also extends to general contractors who were licensed before January 1, 1992
  • Mobile Homes and Agricultural Buildings: Work on mobile homes or agricultural buildings is generally exempt

It’s important to note that selling a property within a year of completion can void these exemptions, as it implies construction for sale. Additionally, subcontractors hired directly by homeowners need a license for projects exceeding $10,000.

These exemptions are outlined in detail on the Alabama Home Builders Licensure Board’s website on exemptions and the legal code.

Which Alabama Contractor License Do You Need?

To determine the Alabama contractor license you need, it’s important to understand the two main licensing boards and their jurisdictions:

  • Alabama Licensing Board for General Contractors (LBGC): This board licenses non-residential contractors for projects exceeding $50,000. These can be commercial buildings, industrial facilities, infrastructure projects, etc. They offer various specialty licenses like electrical, plumbing, roofing, etc., alongside a general contractor license
  • Home Builders Licensure Board (HBLB): This board licenses residential contractors for projects exceeding $10,000 on single-family or multi-family buildings (up to three stories and four units). Types of licenses include Home Builders, Home Improvement Contractors, and Specialty Home Improvement Contractors

Here’s a quick breakdown to help you choose:

Project TypeCostLicense Board
Commercial, industrial, infrastructureOver $50,000LBGC
Residential (single-family or multi-family up to three stories and four units)Over $10,000HBLB
Minor home repairs under $10,000Typically no license required (check local municipality regulations)N/A

LBGC License Types

The LBGC oversees projects other than home building, including commercial or public contracts over $50,000, or swimming pool construction worth over $5,000. Their six license classifications are:

  • Building Construction: For general building projects
  • Building Construction Under Four Stories (BCU4): For buildings not exceeding three stories in height
  • Highways & Streets: For the construction of roads, streets, and related infrastructure.
  • Municipal & Utility: For municipal and utility-related projects
  • Heavy & Railroad Construction: For heavy construction projects, including railroads
  • Specialty Construction: For specialized construction work requiring specific skills or trades

HBLB License Types

The HBLB oversees residential contractors for projects over $10,000 on single-family or multi-family buildings (up to three stories and four units). The three types of licenses offered are:

  • Unlimited License: Allows contractors to perform construction, remodeling, repair, improvement, or re-improvement on residential properties
  • Limited License: Restricts contractors from repairing, improving, or re-improving a residential property
  • Roofers License: Limits contractors to install or repair the external covering of a residence or structure

Additional Factors to Consider:

Now that you have a general sense of the license you need, realize there are other requirements to consider:

  • Project complexity: Even for projects within HBLB jurisdiction, complex renovations might require specific HBLB specialty licenses or even require LBGC licensure depending on scope
  • Local requirements: Some municipalities might have additional licensing requirements for contractors, so check with your local building department
  • Subcontractors: If you plan to hire subcontractors, ensure they also possess the necessary licenses depending on their work type and value

For further guidance, contact the relevant licensing board or consult with a construction professional in your area. They can provide specific advice based on your project details and local regulations.

Interested in getting started? Kick-start the preparation for your contractor licensing exams today with comprehensive study courses and learning materials.

How to Get a Contractor License in Alabama

Here’s how to get a contractor license in Alabama, tailored to the state’s specific processes and requirements.

1. Register the Business With the Alabama Secretary of State

It’s legally required for any business operating in Alabama to register with the state. This first step establishes your business’s legal structure and ensures compliance with state regulations.

2. Obtain Insurance Coverage

Insurance is a critical aspect of your business’s risk management. It protects you, your employees, and your clients in case of accidents or damages.

  • Secure general liability insurance coverage
  • If hiring employees, worker’s compensation insurance is also required
  • Submit proof of insurance with your license application

3. Gather Required Documents

Proper documentation substantiates your financial stability and experience in the field, which are key criteria for licensing.

  • Financial Records:
    • Residential contractors need a business-related credit report from a credit agency
    • Roofers require a $10,000 license bond
    • Non-residential contractors must provide financial statements prepared by a certified public accountant (CPA), showing a minimum net worth and working capital of at least $10,000
  • Proof of Experience:
    • Residential contractors should attach a business or occupational license issued by a local authority in Alabama
    • Non-residential contractors need to show evidence of completed projects for each classification applied for

    4. Submit Application and Fee

    The application is your formal request for licensure, and the fee covers the administrative costs of processing your application.

    • Ensure the application is complete and notarized
    • Pay the relevant application fee (varies for residential and non-residential contractors)
    • Apply at least 30 days before the quarterly Board meeting

    5. Pass Required Exams

    Exams assess your knowledge and skills in construction, business, and law, ensuring you’re qualified to undertake contractor responsibilities.

    • Residential Contractors (applying for residential home builders license):
    • Non-residential Contractors (for commercial or industrial projects):
      • Must pass a trade exam (for commercial projects) and a business and law exam
    • Licensing tests in Alabama are conducted by PSI Exams

    All applications must be signed and notarized, and any incomplete applications will be rejected.

    The approval of your application allows you to sit for the required exams.

    For more detailed information and resources, you can consult the Alabama Secretary of State’s website and the respective licensing boards’ official websites: HBLB or LBGC.

    Other Licenses You May Need

    In addition to acquiring a general contractor’s license in Alabama, you may require various other licenses and permits, depending on your construction business activities and the nature of your projects in Alabama:

    Specialty Contractor Licenses

    As a licensed general contractor in Alabama, if you specialize in specific areas like electrical, plumbing, HVAC, or roofing, you might need a specialty subcontractor license. Ensure to research and apply for the specialty licenses which align with your area of expertise, as part of obtaining a general contractor’s license.

    Local Municipality Licenses

    Some cities or counties in Alabama may have additional requirements, necessitating a local business license or a subcontractor license. As part of the process to become a general contractor, check with local government offices in areas where you plan to operate for any additional licensing requirements.

    Business Licenses

    Beyond state-level registration, operating as a general contractor in Alabama might require a separate business license in certain locales. Make sure to obtain this as part of your contractor license application, especially if your business location or working area mandates it.

    Environmental Permits

    For general contractors in Alabama, environmental permits might be necessary if your projects involve significant land disturbance. As part of your responsibilities, apply for these permits if your project includes altering landscapes, impacting waterways, or handling hazardous materials.

    Building Permits

    Each construction project undertaken by Alabama general contractors must typically have a building permit, ensuring compliance with local building codes and regulations. Part of the process to get your general contractor’s license involves understanding how to obtain these permits for each project, usually by submitting project plans to local authorities.

    Occupational Licenses

    Certain roles in your construction business, like architects or engineers, might require professional occupational licenses. As a prime contractor, ensure that any professionals you employ are properly licensed in their respective fields.

    Health and Safety Certifications

    Compliance with Occupational Safety and Health Administration (OSHA) standards is crucial for Alabama general contractors, and certain certifications might be necessary. Part of the process to get your general contractor’s license should include obtaining necessary health and safety certifications, like OSHA training for you and your employees.

    Understanding and acquiring these additional licenses and permits is essential for the legal and successful operation of general contracting in Alabama. Continually stay informed about the changing regulations and requirements in your area of operation and expertise, as outlined in the Alabama licensing guide.

    Renewal Requirements for Alabama General Contractor Licenses

    Alabama must ensure that all licensed contractors continuously adhere to professional standards. This includes renewing your license within the designated renewal month to avoid the risk of having an expired or revoked license.

    An expired or revoked license can have severe consequences. For example, anyone with a revoked license will be found guilty of being an unlicensed contractor. This is a Class A misdemeanor in Alabama, which can carry a one-year jail sentence and a $6,000 fine.

    How to Renew Your Alabama Contractor License?

    In Alabama, do not fail to renew your license, as the process for getting your Alabama contractor license renewed is straightforward, but penalties are strict. Depending on contractor classifications, you can get an Alabama home builder’s license renewed online via the licensing board’s portal. For prime and subcontractors, you can print and submit a renewal application.

    This section provides the necessary steps you must take to get and keep your Alabama contractor license active, ensuring you remain compliant and avoid any legal issues.

    Step 1: Verify Your Renewal Month

    Ensure you are aware of your specific renewal month. This is necessary for timely renewal and avoiding penalties associated with an expired or revoked license.

    Step 2: Complete Continuing Education Requirements

    Contractors are required to complete continuing education courses as part of the renewal process. This ensures that you are up-to-date with the latest industry standards and practices.

    Step 3: Update Your Business Information

    If there have been any changes to your business, such as address or contact information, update these details with the Alabama licensing board. This is essential for maintaining accurate records and receiving important notifications.

    Step 4: Submit Renewal Application and Fees

    For Home Builders:

    The Home Builders Licensure Board offers an efficient online renewal service. Key features include:

    • Renewal Period: Begins October 1 and ends December 31
    • Online Renewal Advantages: Accurate and error-free submissions, easier application process available 24/7, and faster processing with immediate database updates
    • Deadlines and Fees: Timely online renewals are accepted until 11:59 p.m. on November 30. Late renewals (December 1- 31) incur a $50 late fee. Post-January 1, the online renewal option is disabled, and licenses are considered expired, attracting a $350 expired license application processing fee
    • Payment Methods: Visa and MasterCard are accepted for online transactions

    Paper renewal applications are available for those unable to renew online. Licensees must either download the form or request a paper package from HBLB.

    For General Contractors and Subcontractors:

    Here’s what you need to know about renewing your prime contractor and subcontractor licenses in Alabama.

    • Renewal Forms: Prime Contractor and Subcontractor renewal forms are available online. Paper forms are no longer mailed
    • Timing: Renewals submitted over 45 days before the license expiration may be returned
    • Renewal Months and Fees: Listed by the first letter of the company name, ranging from $100 to $200
    • Non-renewal Consequences: Failing to renew within a year of expiration requires submitting a new application and retaking the TRADE and business and law examinations

    For any queries, contractors are encouraged to contact their Renewal/Licensing Specialist at the Board.

    Step 5: Meet Additional State Requirements

    Depending on your specific classification, you might need to meet additional requirements. For instance, if you hold a homebuilder license, you must have a minimum amount of practical experience and provide proof of insurance.

    Step 6: Await Confirmation

    Once you have submitted all necessary documentation and fees, await confirmation from the licensing board. This may include a new license or an updated license certificate.

    Note: Contractors looking to obtain a license in other states, such as getting your Tennessee General Contractors Board license or North Carolina State Board of Electrical Contractors license, must follow specific steps unique to those states.

    The process of getting your license in these states may differ, so contractors will need to consult the respective state boards for the most accurate information. This applies to renewals as well.

    We have guides explaining what it will take to get your general contractor license for every state.

    Alabama Contractor License FAQ

    What are the basic requirements for obtaining a general contractor license in Alabama?

    To obtain a general contractor license in Alabama, you must meet several key requirements. These include passing the Alabama Business and Law exam, demonstrating relevant experience, and providing proof of general liability insurance and workers’ compensation insurance. Additionally, the Alabama Board for General Contractors mandates that applicants must submit their license application at least 30 days before the board meeting.

    Is there a reciprocity agreement for general contractors between Alabama and other states?

    Yes, Alabama has reciprocity agreements with certain states, which can simplify the process of obtaining a general contractor license if you are already licensed in one of these states. The states included are Mississippi, Tennessee, Louisiana, and Arkansas. However, it is crucial to confirm current reciprocity arrangements with the Alabama Board for General Contractors, as these agreements can change.

    What steps must I take to get a general contractor license in Alabama?

    To get a general contractor license in Alabama, you must look at the steps outlined by the Alabama Department of Labor. This includes passing the Alabama Business and Law exam, obtaining general liability and workers’ compensation insurance, proving your experience, and submitting your application directly to the board. Additionally, you may need to meet specific financial requirements, such as having a certified public accountant verify your financial statements.

    Can I work in Alabama with a general contractor license from another state?

    Working in Alabama with an out-of-state general contractor license is possible under the reciprocity agreements that Alabama has with certain states. However, you must apply for a reciprocal license through the Alabama Board for General Contractors and meet any specific requirements they have for out-of-state licenses. It’s important to verify the current reciprocity arrangements and ensure your license is not expired or revoked.