TN Dept of Commerce & Insurance encourages caution in hiring contractors for home repair

Verify licenses of potential home contractors with
State provides guidance on selecting contractors
NASHVILLE, TN – In light of the historic flooding that has devastated parts of Tennessee, the Department of Commerce and Insurance (TDCI) is encouraging homeowners to verify the licensure of contractors they hire to repair their homes by using
“It’s important for residents to not fall prey to fraud artists posing as legitimate, licensed home contractors,” says TDCI Commissioner Leslie A. Newman. “Taking the time to make sure someone is licensed with the state is the fundamental first step when selecting a contractor to work on your home. By all means, use to see whether the person you’re considering is a licensed contractor.”
When selecting a contractor, it is also important to:
Get several bids. It’s best to get at least three bids and check references.
Get a written contract that includes the company’s name, address and telephone number. The contract should also include an anticipated start and completion date.
Take your time and do not get rushed into signing a contract.
Never pay more than 1/3 down and do not let the payments get ahead of the work.
Ask for proof of general liability insurance.
Make sure the contractor obtains the local permits for inspections.
Tennesseans can also check the Department’s monthly Disciplinary Action Reports to see if contractors have engaged in unlicensed activity or have incurred administrative action taken against them by the Department.
Licensing for contractors also carries parameters that govern the types of jobs different licensees are permitted to perform.
The Department of Commerce and Insurance works to protect consumers while ensuring fair competition for industries and professionals who do business in Tennessee.

TELEPHONE: 800-544-7693 OR (615) 741-8307
E-mail: Contractors.Home-Improvement@TN.Gov

Finding and Selecting Licensed Contractors
The Tennessee Board for Licensing Contractors warns recent victims of flooding to use caution when hiring a contractor to repair or rebuild their homes. Unscrupulous, unlicensed contractors often prey on victims of natural disasters. The Board has found in the past where some contractors take advantage of homeowners who are anxious to rebuild. Take your time and protect yourself against con artists who will take your money and run, or from incompetent contractors who will perform shoddy work. Hire only licensed contractors and check them out with the Board.
The following is a list of tips to hiring a contractor; explanation of when a license is required by law; how to verify whether a contractor is properly licensed and if they have a history of complaints.
The Board urges consumers to follow these tips when dealing with contractors:
Hire only licensed contractors – Ask for their Tennessee license ID number or to see their pocket card; and verify their license status at the “License Search” at: or by contacting the Board’s office at 800-544-7693 where you may also check their complaint history. (Review our Brochure to see a sample of a license pocket card.)

Check out the contractor – Don’t hire the first contractor who comes along. It’s best to get at least three (3) bids, and check references (don’t rush into repairs, no matter how badly they’re needed). Be skeptical of solicitations from those with out-of-state license plates or if you are rushed by the contractor to agree to let them perform the work.
Get a written contract – Make sure the contractor’s name, address and telephone number on the contract is legitimate (not a P.O. Box address or phone answering services). Contract should include an anticipated start and completion date.
Proof of insurance – Workers’ Compensation is required by those with one (1) employee or more; also check for general liability insurance coverage.
Payment – never pay cash – Don’t pay more than 1/3 down and don’t let the payments get ahead of the work.
Permit and Inspections – Make sure the contractor obtains the local permits for inspections. The homeowner should never obtain the permit in place of the contractor! This is one of the best steps, as these code officials diligently make sure the contractors are properly licensed before releasing the permit, and in some municipalities, require bonding or code inspections. (Some local codes offices are waiving permit fees during this crisis!)
It is good to know, a license is required by law before a contractor may even make an offer or contract. Those contracting directly with the homeowner are typically called the general (prime) contractor; a subcontractor is one who contracts directly with the licensed contractor, and not the owner. The following describes the type of license required by law:

A “Contractor’s” license is required for projects where the total cost or contract price is $25,000 or more;
A “Home Improvement” license is required for projects $3,000 to $24,999, in the following eight (8) counties: Bradley, Davidson, Hamilton, Haywood, Knox, Robertson, Rutherford and Shelby.
Electrical, Plumbing and HVAC Trades – Check with local government requirements, as these trades typically require a minimum of a local license and permit for inspections, regardless of the cost. (A Limited License for Electricians (LLE) and Plumbers (LLP) are issued by the State in most areas without a code office). A license is required by these trades for both a prime and subcontractor.

It is important to know if the contractor is properly licensed with the correct classification and monetary limit to perform work on a project.
Verify the license at the Board’s website
Active Status – Click onto or “License Search” to check a contractor’s status to ensure that they have both an “Active – Fully Licensed” status and current expiration date.
License # or Name Search – Check the license by their lD # or name as licensed. If unsure, enter part of the name in the “Name” field, only, with the percentage sign, such as “ %Jones “ and it will bring up all licenses with this as part of the name.
Classification and Limit – All “contractor” licensees have a monetary limit and classification designated on their license.
Click onto “Details” by their licensed ID # to review the next page, and scroll down to see their license classification and monetary limit.
The acceptable classification for residential building and repair would be within one of the “BC” building categories such as: BC-A (Residential); BC (Residential, Commercial and Industrial).
See the Board’s website a complete “Classification Outline” for more details.
Monetary limit is the amount the contractor is approved to contract, plus 10%) is assigned to the contractor’s license based upon their financial statement and experience.
Consumers may also verify a license status and complaint history by calling our office toll-free at 800-544-7693.
The “Disciplinary Action” reports and “Problem Contractor” list will only disclose “closed” complaints. Those cases which are still open and pending an investigation or disciplinary hearing, are not listed and you would need to check with our Board on their complaint history. The Board’s website has “Consumer Resources” with links to the Division of Consumer Affairs; Better Business Bureau (BBB); Federal Emergency Management Agency (FEMA); and also check with the “Division of Insurance” for more relative information.
Following these tips may prevent a natural disaster from further resulting into a man-made one.
Due to the current conditions of the building industry, several licensed contractors are available and offer competitive price estimates.
Should you encounter problems while rebuilding or wish to report an unlicensed contractor, you may do so by completing a complaint form from the website or contacting the Board’s office.
Telephone: 800-544-7693
Better Business Bureau (BBB) – Check complaint history and tips to prevent scam artists.
Local Government Officials
Tennessee Emergency Management Agency (TEMA) – Disaster Assistance Information
Tennessee Department of Environment and Conservation – Mold Tips
Tennessee Department of Heath – Flood and Safety Tips

About Daryl Phillips, CEcD

I am a professional economic developer. I presently work for communities and companies in developing and implementing workforce and economic development solutions as CEO of Phillips Economic Development Solutions (Phi EDS). Prior to September 2017, I was the economic development professional who served a community team of elected officials, business people, community leaders and dedicated stakeholders for economic development in Cheatham County, Tennessee (pop. 39,880) and its four towns. During my five-year tenure, I served the team as Cheatham County grew over 1,700 jobs, turned around population declines at the start of this decade into healthy population growth, increased tourism expenditures 20.3% and local tax revenue from tourism 25.4%, grew sales tax revenue 36%, focused on developing the local workforce and was recognized by SmartAsset as having the 9th highest Incoming Investment Index of all the 95 counties in Tennessee. I am a member of International Economic Development Council, Southern Economic Development Council, Tennessee Economic Development Council and International Council of Shopping Centers. I have earned the designation of Certified Economic Developer (CEcD) from International Economic Development Council (IEDC), the Economic Development Finance Professional (EDFP) certification from National Development Council and hold a Master of Business Administration from Tennessee Technological University.
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