Is A Home Improvement License Needed To Recover From A Contractor

Under home improvement licensing regulations, a contractor who was unlicensed at the time a contract was executed or work performed may not maintain any kind of cause of action against the homeowner to recover for the work. B & F Bldg. Corp. v Liebig, 76 NY2d 689, 693 [1990]. Many unlicensed home improvement firms have not done the work or made the home improvement contract with the homeowner, but did the work for a general contractor who made the contract with the homeowner. These unlicensed home improvement firms were always allowed to bring a lawsuit against the general contractor to recover for unpaid work. Corcoran Marble Co., Inc. v. Clark Construction Corp., 155 Misc. 2d 49, App. Term, First Dept.[1993]; Parker v. Vista Constr. Concepts, 134 Misc. 2d 1, App. Term, Second Dept. [1986]. The reasoning was that the home improvement regulations were enacted to safeguard and protect the home owner, not a contractor.

That is no longer the case. A Second Department Appellate Division opinion changed that. The Second Department governs all of downstate New York except for Manhattan and the Bronx. In CMC Quality Concrete III, LLC v Indriolo, 95 A.D.3d 924, Second Dept. [2012], the Second Department barred recovery to the subcontractor. The opinion stated:

“Here, the general contractor established, prima facie, that the plaintiff sought to recover damages for breach of a contract to perform home improvement services which required it to obtain a home improvement contractor license and that the plaintiff did not comply with that licensing requirement”.

The subsequent Suffolk County opinion of DML Interiors, Inc. v Wenmar Contr. Corp., 2015 NY Slip Op 31019(U) confirmed that the opinion of CMC Quality Concrete III, LLC v Indriolo, required dismissal of a subcontractor’s claim against a general contractor where the subcontractor did not have the home improvement license. The DML Interiors opinion expressly recognized that the home improvement law had previously been that no license was needed in order to recover from the general contractor but that the CMC Quality Concrete opinion changed that and was the opinion that courts in Suffolk County, which is in the Second Department, had to follow.

It is not clear which direction the law will take. In Marraccini v Ryan, 17 NY3d 83 [2011], a home improvement firm had two companies, one licensed, one unlicensed, and had furnished a home improvement under a contract by the unlicensed company. It claimed that this was a mistake. The Court of Appeals granted relief, its opinion stating: “The County Code does not, however, say that a violator is barred from bringing suit under a contract entered into under the wrong name. The question here is whether New York common law imposes such a sanction. We conclude that it does not. The forfeiture of the right to be paid for work done is an excessive penalty for what seems to have been an inadvertent and harmless violation of the County Code. The case would be different if Marraccini had no license at all.”