Note: This article was originally published in 2011 and was updated with new information in 2018.
Short Answer: It depends.
In some states, unlicensed contractors are forbidden from filing a lien. In other states, it’s allowed. Consult your state’s lien laws to find out if you can file a mechanics lien.
Get Licensed If It’s Required… Regardless of the Lien Laws
The first thing to say about this subject is that if you’re doing work that requires a license without having that license, you’re treading in dangerous water regardless of your state’s laws. While some states are more liberal and allow unlicensed parties to collect amounts owed to them, it is very rare that the unlicensed contractor is not penalized in some way. Therefore, if you’re unlicensed and doing construction work that requires a license….get licensed!
The issue we’re really talking about here is: what happens if a contractor ends up having a payment issue on a project when they did not have a license (for whatever reason).
And like so many other aspects of mechanics lien laws and requirements, the answer to this question is, “it depends on the state.”
A State-by-State Issue
In some states such as New York, the answer to this question is an unequivocal, “NO.” In other states like Colorado, the answer is a clear, “YES.” Then there are several states such as California, Florida, and Georgia where the answer is neither yes nor no. In these states, the answer is usually much more complicated and depends on several other factors.
Scenario 1: Unlicensed Contractors Have No Recovery Options
The question here is whether you can file a mechanics lien if you’re unlicensed. Unfortunately for unlicensed contractors, this question may be just the tip of the iceberg. In reality, unlicensed construction participants must ask a more significant question: can they recover payment for their work at all?
I’ll discuss the laws in California and Washington, and then in Louisiana, to compare how the answer to this question may vary by state.
In California and Washington, the laws against unlicensed contractors are very strict — unlicensed contractors have no recovery whatsoever. This means they cannot file a lien, or a lawsuit, or anything at all. If an unlicensed contractor provided $1,000,000 of work, and a party refused to pay them, the contractor would be without a remedy to collect the payment.
Scenario 2: Unlicensed Contractors are Penalized, But Can File a Mechanics Lien
Is it fair to strip unlicensed contractors of all collections tools?
There are two schools of thought on this. In Washington and California, the legislature considers it more important to regulate the unlicensed contractor market than to ensure that unlicensed contractors get paid. States like Louisiana take a different approach. In Louisiana, the unlicensed contractor is still penalized (i.e. he can get penalized by the licensing board, his contract is declared null and void, and he can only recover the “minimum value” of his work), but he is still allowed to recover some sort of compensation for the work he performed… and that means, an unlicensed contractor in Louisiana can file a mechanics lien.
If you’re doing work in California or Washington and are unlicensed, you’re really out of luck. If you’re in Louisiana, you have some legal ground. Elsewhere, it’s really important to examine that state’s liens laws to determine if it is possible for unlicensed contractors file a mechanics lien.
A Free Resource to Help
We have a free resource available for to help just about anyone in the construction company figure out whether they’ll lose their lien rights on a project if they don’t have their license.
Click on the button (below) to download our free guide, “I Don’t Have a License – Can I File a Mechanics Lien,” which has information for all 50 states.
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If you’re having trouble getting paid on a project, we might be able to help. Let’s talk about getting you paid.