The Importance of Qualifying Agents in Construction Contracting

What is a “qualifying agent” and why does it matter?

If you are thinking about starting a construction contracting company, or are the present owner of such a company, you will need a “qualifying agent” in order to operate your business. Unless a contractor falls under one of the exemptions under Florida Statute Section 489.103(1), it must be licensed and, if it is a corporate contractor, it must have a “qualifying agent.” There are two types of qualifying agents:

A “secondary qualifying agent” is someone who:

• Has the responsibility to supervise, direct, manage, and control construction activities on a job for which he or she has obtained the building permit; and
• Whose technical and personal qualifications have been determined by investigation and examination as provided in this part, as attested by the department.

A “primary qualifying agent” has the same responsibilities as a “secondary qualifying agent” but with the added responsibility to “supervise, direct, manage, and control the contracting activities of the business organization with which he or she is connected.”

When is a qualifying agent required?

Florida Statute Section 489.119(2) requires corporations proposing to engage in construction contracting to be qualified by an individual holding a valid contractor’s license. (Note that joint ventures must also be separately qualified, even if composed of qualified business organizations).

While it is not uncommon for corporate contractors to experience turnover in their qualifying agents, Florida Statutes require a corporate contractor to obtain a new qualifying agent 60 days following the termination of a previous qualifying agent. Specifically, it prohibits an entity from doing the following:

Operate a business organization engaged in contracting after 60 days following the termination of its only qualifying agent without designating another primary qualifying agent, except as provided in ss. 489.119 and 489.1195; . . . .

Why is this important?

This requirement is particularly important when a construction contracting company is presently engaging in a lengthy construction project. The reason being, if the corporation fails to designate another primary qualifying agent within 60 days, the corporation is essentially operating in an unlicensed capacity, which is strictly prohibited and punishable under statute.

Importantly, any contracts with an unlicensed contractor are unenforceable by the unlicensed contractor (but this does not affect the rights of the individuals the unlicensed contractor contracted with). Consequently, the unlicensed contractor will have no ability to enforce the contract, lien or bond remedies on a construction project.

In sum, the presence of qualifying agents is required for corporate contractors to do business in the state of Florida, and is essential for a corporation to maintain its status as a “licensed” contractor. A qualifying agent directly impacts a contractor’s business affairs and a contractor’s ability to maintain its rights to enforce contracts, liens or bond remedies. As experienced Miami construction law and business litigation attorneys we can advise you on the best way to enforce a construction contract and seek remedies from contractors.