Bass, Berry & Sims attorney Brian Dobbs authored an article for the Nashville Business Journal highlighting two key laws that contractors in Tennessee must consider amid the current development boom: retainage and licensing. While many may believe that only general contractors and those performing physical construction must be licensed, Tennessee law defines “contractor” more broadly as any person or entity that supervises, oversees, schedules, directs or assumes charge of a project valued at $25,000 or greater. This could even include project owners who don’t have a license, and contracting without a license is subject to fines and penalties by the licensing board – not to mention a potential suspension of the project.
Retainage is another issue that requires compliance and could lead to misdemeanor charges and even a fine of $3,000 for each day of noncompliance – as well as a $300 per day civil penalty. Retainage is an amount withheld form a contract price to ensure completion of a project, and in Tennessee, that fee may not exceed five percent of the contract price. For projects where the prime contract is more than $500,000, retainage must be deposited into a separate, interest bearing escrow account with a third party
The full article, “Consider these Laws Before Building,” was published online and in the print editions of the Nashville Business Journal on November 17, 2017. You may use the link to access the online version of the content.