On July 16, 2025, the North Carolina Court of Appeals overturned, in part, the trial court’s grant of summary judgment in AC Developments, LLC v. Edwards. Notably, the Court evaluated whether a general contractor of a residential home was entitled to recover all amounts he was allegedly owed by homeowners based on his general contractor licensing levels. This case therefore provides important insights into the need for general contractors to:
- Employ the use of careful wording in their contracts
- Ensure that their licensure is appropriate for any given project
Who Was the Contractor?
In this case, the homeowners asked Shawn Anderson to serve as their general contractor when constructing their residential home located in Hendersonville, North Carolina. Mr. Anderson agreed to do so under his business, Anderson Construction, which was licensed. However, he indicated that his other business, AC Developments, would officially take over the project, once that separate entity received the appropriate unlimited license.
Unfortunately for Mr. Anderson, his contract language was unclear. In some places the contract referred to the general contractor as “Contractor, Anderson Construction by Shawn Anderson,” but in others it seemed like Mr. Anderson (and not just his business entities) was individually a party to the contract. Additionally, the contract was unclear as to the role of “AC Developments,” as compared to “Anderson Construction” or Mr. Anderson individually.
Licensing Levels Can Be Updated Mid-Project
Importantly, the Court noted that while a contractor is only allowed to recover for work performed up to the limitation on its contracting license, the general contractor may increase its license limitation during the course of a project and still remain in compliance with the licensing requirements, so long as the license limitation is increased before the value of work performed exceeds the current license limitation. In other words, if the licensing limitation defect is cured before the contractor performs any work that exceeds in value the limitation amount of its license, then the contractor may still enforce the contract’s full value and seek full payment for its work. However, the contract in this case was unclear about who was serving as the general contractor on the project, which caused the Court to determine that additional litigation was necessary before it could determine how much (and who) should be paid the alleged outstanding amounts owed for work performed on the project.
Takeaways for General Contractors
While the specific facts of this case may not have bearing on all residential or commercial construction disputes, the North Carolina Court of Appeals’ opinion does send an important message to general contractors: your licensing levels and contract language matter!
To the extent you are prepared to begin working on-site as a general contractor, it is crucial that you make sure your licensing meets the appropriate standard before performing work on that specific project. Further, if you are currently working on a project where your license level might be exceeded, before the value of the work performed reaches your current license limitation amount, you should consider upping your license limitation asap. Additionally, a word to the wise: make sure your contract is crystal clear about which entity you are operating under and be sure that the entity you name in the contract is, in fact, appropriately licensed.
JAH Can Help
The experienced litigators at Johnston Allison Hord regularly counsel general contractors and construction companies on navigating licensing requirements and ensuring their contracts hold up to scrutiny. To the extent you have questions or concerns about your specific contract language and/or a project you are working on, please feel free to reach out to our firm to discuss potential representation.
Please note that the above JAH article does not constitute legal advice nor does it create an attorney-client relationship. Should you be in need of legal services regarding a particular matter, please reach out directly to one of our attorneys. Click here for our full website disclaimer.