Contract Clauses to Watch Out For in Construction Contracts

6. Business Licenses:

You already know that you are supposed to have a city (or county, whatever the case may be) business license for the city that your shop and/or warehouse is located in.

But, did you know that you must also obtain a business license for every city that you perform work in?

Some general contractors will require that you send them a copy of your business license, for the city the project is located in, as part of your construction contract agreement.

Even if the general contractor does not request the business license, it still is wise to obtain one (if it is required by the city [or county if unincorporated]).

If you do not obtain the required business license and you are caught, not only will you most likely be fined by the city but, you can also cause some serious problems for the general contractor and owner of the project...

Sometimes the certificate of occupancy, issued by the city when the project is complete, will be held back until all subcontractors have a city business license.

This means the owner cannot open and occupy his new business, which means the general contractor will not collect payment and things just get worse from there. Not good if you hold up the certificate of occupancy process!

Some cities you will find do not require business licenses (usually because the city is not incorporated) but most often the license will be required.

I cannot say it enough times, always, always know what your contract requires of you and always adhere to the contract.

Construction Contracts Continued on Page 10