2012 North Dakota Century Code Title 43 Occupations and Professions Chapter 43-07 Contractors
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CHAPTER 43-07
CONTRACTORS
43-07-01. Definitions.
In this chapter, unless the context or subject matter otherwise requires:
1. "Contractor" means any person engaged in the business of construction, repair,
alteration, dismantling, or demolition of bridges, highways, roads, streets, buildings,
airports, dams, drainage or irrigation ditches, sewers, water or gas mains, water filters,
tanks, towers, oil, gas, or water pipelines, and every other type of structure, project,
development, or improvement coming within the definition of real or personal property,
including the construction, alteration, or repair of property to be held either for sale or
rental, and shall include subcontractor, public contractor, and nonresident contractor.
2. "Nonresident contractor" means any contractor who has not an established and
maintained place of business within this state, or who has not made reports to North
Dakota workforce safety and insurance within the previous year of employees within
this state, and who has not made contributions to the North Dakota workforce safety
and insurance fund accordingly, or who, during a like period has not made an income
tax return in this state.
3. "Person" includes any individual, firm, copartnership, association, corporation, limited
liability company, or other group or combination thereof acting as a unit, and the plural
as well as the singular number, unless the intent to give a more limited meaning is
disclosed clearly by the context thereof.
4. "Public contract" means a contract with the state of North Dakota or any board,
commission, or department thereof, or with any board of county commissioners, or
with any city council or board of city commissioners, board of township supervisors,
school board, or with any state or municipal agency, or with any other public board,
body, commission, or agency authorized to let or award contracts for the construction
or reconstruction of public work when the contract cost, value, or price exceeds the
sum of two thousand dollars and includes subcontracts undertaken to perform work
covered by the original contract or any part thereof when the contract cost, value, or
price of the work included in such subcontract exceeds the sum of two thousand
dollars.
5. "Registrar" means the secretary of state of the state of North Dakota.
43-07-02. License required.
A person may not engage in the business nor act in the capacity of a contractor within this
state when the cost, value, or price per job exceeds the sum of two thousand dollars nor may
that person maintain any claim, action, suit, or proceeding in any court of this state related to the
person's business or capacity as a contractor without first having a license as provided in this
chapter.
43-07-03. Registrar designated.
The secretary of state as registrar has authority to employ such assistance and procure
such records, supplies, and equipment as may be necessary to carry out the provisions of this
chapter.
43-07-04. License - How obtained - Failure to grant - Revocation.
1. To obtain a license under this chapter, an applicant who is eighteen years of age or
older shall submit, on forms the registrar prescribes, an application under oath
containing a statement of the applicant's experience and qualifications as a contractor.
A copy of a certificate of liability insurance must be filed with the application and the
contractor shall submit a statement from North Dakota workforce safety and insurance
that the contractor has secured workforce safety and insurance coverage satisfactory
to workforce safety and insurance. If the registrar deems it appropriate or necessary,
the registrar may also require any other information to assist the registrar in
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determining the applicant's fitness to act in the capacity of a contractor, including, at
the expense of the applicant, criminal history record information of the applicant or the
officers, members, or partners of the applicant which is held or maintained by the
bureau of criminal investigation or a similar entity in another state. The application
must contain a statement that the applicant desires the issuance of a license under
this chapter and must specify the class of license sought.
The registrar may refuse to grant a license if the registrar determines the application
contains false, misleading, or incomplete information; the applicant fails or refuses to
authorize or pay for criminal history information requested by the registrar; or as
otherwise provided in sections 12.1-33-02.1 and 43-07-04.1. The registrar shall notify
the applicant in writing if the registrar does not grant the license and shall provide the
applicant an opportunity to respond to or cure the defect in the application for a period
of ten days from the date of the written notification. An applicant aggrieved by a
decision of the registrar not to grant the license may appeal the decision to the district
court of the applicant's county of residence or Burleigh County.
No sooner than twenty days after sending written notice to a contractor at the
contractor's last-known address, the registrar shall classify as not in good standing the
license of any contractor who fails to:
a. Maintain liability insurance coverage required by this section or by section
43-07-10;
b. File, renew, or properly amend any fictitious name certificate required by
chapter 45-11;
c. Maintain an active status of a corporation or registration as a foreign corporation;
d. Maintain an active status of a limited liability company or registration as a foreign
limited liability company;
e. File or renew a trade name registration as required by chapter 47-25;
f. Maintain a limited liability partnership registration or foreign limited liability
partnership registration as required by chapter 45-22; or
g. Maintain a limited partnership certificate of limited partnership or foreign limited
partnership certificate of authority.
Any contractor who has been notified by the registrar that the contractor's license is
not in good standing shall cease soliciting or entering new contract projects. If the
contractor fails to correct the deficiency specified in the notice by evidence satisfactory
to the registrar within thirty days of the date of the notice or if the contractor solicits or
enters new contract projects while the contractor's license is not in good standing, the
registrar shall use the procedures of chapter 28-32 to revoke the license of the
contractor.
43-07-04.1. Conviction not bar to licensure - Exceptions.
Conviction of an offense does not disqualify a person from licensure under this chapter
unless the secretary of state determines that the offense has a direct bearing upon a person's
ability to serve the public as a contractor or that, following conviction of any offense, the person
is not sufficiently rehabilitated under section 12.1-33-02.1.
43-07-05. Classes of licenses.
Four classes of licenses must be issued under this chapter, which must be designated as
class A, B, C, and D licenses. The holders of such licenses are entitled to engage in the
contracting business within this state subject to the following limitations:
1. The holder of a class A license is subject to no limitation as to the value of any single
contract project.
2. The holder of a class B license is not entitled to engage in the construction of any
single contract project of a value in excess of two hundred fifty thousand dollars.
3. The holder of a class C license is not entitled to engage in the construction of any
single contract project of a value in excess of one hundred twenty thousand dollars.
4. The holder of a class D license is not entitled to engage in the construction of any
single contract project of a value in excess of fifty thousand dollars.
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43-07-06. Administrative and governing bodies may impose requirements.
Any administrative body or governing body, agency, or commission having power to enter
into public contracts may impose reasonable requirements and conditions as conditions
precedent to the awarding of a contract for the construction or reconstruction of public works in
addition to the requirements imposed by this chapter.
43-07-07. License fees.
At the time of making application for a license as described and required in this chapter, the
applicant shall pay to the registrar the following fees:
1. For a class A license, the sum of three hundred dollars.
2. For a class B license, the sum of two hundred dollars.
3. For a class C license, the sum of one hundred fifty dollars.
4. For a class D license, the sum of fifty dollars.
All moneys collected by the registrar under this chapter must be deposited by the registrar with
the state treasurer, who shall credit them to the general fund of the state.
43-07-08. Exceptions.
This chapter does not apply to:
1. Any authorized representative or representatives of the United States government, the
state of North Dakota, or any county, municipality, irrigation district, reclamation district,
or other political corporation.
2. Any person who furnishes any fabricated or finished product, material, or article of
merchandise which is not incorporated into or attached to real property by such person
so as to become affixed thereto.
43-07-09. Duty of registrar - Expiration of license.
Within fifteen days from the date of application, the registrar may investigate and determine
each applicant's fitness to act in the capacity of contractor as defined in this chapter, and no
license may be issued to such applicant until the registrar receives all documentation necessary
to obtain a license and the appropriate fee. The license issued on an original application entitles
the licensee to act as a contractor within this state, subject to the limitations of such license,
until the expiration of the then current fiscal year ending March first, except that an initial license
issued to a licensee in January or February is valid until March first of the subsequent year.
43-07-09.1. Name changes.
Not later than ten days after the date of a change in a contractor's name, the licensee must
notify the registrar of the name change on a form provided by the registrar. A name change must
be accompanied by a ten dollar fee. A licensee may not change its name if the change is
associated with a change in the legal status other than a change in marital status. A corporation,
limited liability company, limited liability partnership, or limited partnership registered with the
secretary of state is not subject to this section.
43-07-10. Renewal of license - Grounds for nonrenewal - Time requirements Invalidity of license for failure to renew.
1. Any license issued under this chapter may be renewed for each successive fiscal year
by obtaining from the registrar a certificate of renewal. To obtain a certificate of
renewal, the licensee shall file with the registrar an application that includes a listing of
each project, contract, or subcontract completed by the licensee during the preceding
calendar year in this state over the amount of twenty-five thousand dollars and the
nature of the work of each project, contract, or subcontract. The registrar shall within a
reasonable time forward a copy of the list to the state tax commissioner. The applicant
shall include with the application a copy of a certificate of liability insurance unless the
registrar has a current valid certificate of insurance on file, and a certification that the
applicant has submitted all payroll taxes, including North Dakota income tax, workforce
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safety and insurance premiums, and unemployment insurance premiums due at the
time of renewal, which documents need not be notarized.
The registrar may refuse to renew a license if the registrar determines the application
contains false, misleading, or incomplete information or if the contractor's license is not
in good standing for any of the reasons listed in subsection 3 of section 43-07-04. The
registrar shall notify the applicant in writing if the registrar does not grant the license
and shall provide the applicant an opportunity to respond to or cure the defect in the
application for a period of ten days from the date of the written notification. An
applicant aggrieved by a decision of the registrar not to grant the license may appeal
the decision to the district court of the applicant's county of residence or Burleigh
County.
The application for a certificate of renewal must be made to the registrar on or before
the first day of March of each year. At the time of filing the application for a certificate
of renewal, the applicant shall pay to the registrar a renewal fee equal to twenty
percent of the license fee established in section 43-07-07. If any contractor applies for
a renewal under a class different from the license previously issued, the new class
license may be issued upon the payment of the fee required for the issuance of the
license of the class applied for. If any contractor fails to file an application for a
certificate of renewal by the March first deadline, the contractor's license is not in good
standing and the contractor must be deemed to be unlicensed within the meaning of
sections 43-07-02 and 43-07-18. Within sixty days after March first, the contractor
must be notified by mail that the contractor's license is not in good standing. The
contractor then has until June first to renew by paying a penalty fee of seventy-five
percent of the renewal fee, filing an application for a certificate of renewal, and paying
the renewal fee. A contractor who applies for a certificate of renewal before or within
ninety days of the filing deadline is not subject to the investigation authorized in
section 43-07-09. After the June first deadline any licenses not renewed are revoked.
Any application for a certificate of renewal must be fully completed within sixty days of
the date the application is received by the registrar or the registrar shall return the
application to the contractor who then is subject to section 43-07-09. The registrar may
destroy all renewals provided for in this section after they have been on file for six
years.
43-07-11. Contractor's bond - Requirements.
Repealed by S.L. 1995, ch. 397, § 9.
43-07-11.1. Contracts with state.
1. No contractor, resident or nonresident, is eligible to enter into a public contract with
any department of the state of North Dakota, nor any political or governmental
subdivision of the state until satisfactory showing is made that said contractor has paid
all delinquent income, sales or use taxes, if any, owed to the state pursuant to the
provisions of the income, sales or use tax laws, and which have been assessed either
by the filing of an income or sales and use tax return by the contractor, or by an
assessment of additional income, sales or use taxes against the contractor by the
commissioner that has become finally and irrevocably fixed, before the date that the
contract was executed by the parties thereto. "Contractor" and "public contract" have
the same definition for purposes of this section as in chapter 43-07 relating to issuance
of licenses to contractors.
2. A certificate from and by the tax commissioner shall satisfy the requirement of
subsection 1. Upon failure to file such a certificate, such department or political or
governmental subdivision shall refuse to execute said public contract.
3. The provisions of this section apply only to contracts executed after July 1, 1965.
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43-07-12. Bids to show license issued.
All bids and proposals for the construction of any public contract project subject to the
provisions of this chapter must contain a copy of the license or certificate of renewal thereof
issued by the secretary of state enclosed in the required bid bond envelope. No contract may be
awarded to any contractor unless the contractor is the holder of a license in the class within
which the value of the project falls as hereinbefore provided. A contractor must be the holder of
a license at least ten days prior to the date set for receiving bids, to be a qualified bidder. A bid
submitted without this information properly enclosed in the bid bond envelope may not be read
nor considered and must be returned to the bidder. This section does not apply to bids
submitted:
1. To the department of transportation;
2. For use of municipal, rural, and industrial water supply funds authorized by Public Law
No. 99-294 [100 Stat. 418];
3. To the public service commission; or
4. For use of federal aid highway funds authorized by Public Law No. 85-767 [72 Stat.
885; 23 U.S.C. 101 et seq.].
43-07-13. Records and certified copies thereof.
The registrar shall maintain in the registrar's office, open to public inspection during office
hours, a complete indexed record of all applications, licenses, certificates of renewal,
revocations, and other information maintained on contractors. The registrar may dispose of an
inactive contractor file after two years if no attempts have been made to apply for a new license
or renew the license. Disposal of the license will proceed according to the provisions of chapter
54-46. Before disposal and upon request, the registrar shall furnish a certified copy of any
information maintained upon receipt of the fees prescribed in section 54-09-04. Any certificate or
certified copy issued by the secretary of state under this section has the same force and effect
as provided in section 54-09-02.1.
43-07-14. Complaint for license revocation - Consumer fraud action.
1. Any person may file a duly verified complaint with the registrar charging that the
licensee is guilty of any of the following acts or omissions:
a. Abandonment of any contract without legal excuse after a deposit of money or
other consideration has been provided to the licensee. A rebuttable presumption
of abandonment arises if:
(1) A contractor fails substantially to commence any work agreed upon, unless
the failure is due to circumstances beyond the control of the contractor:
(a) Within sixty days of a starting date agreed upon in writing; or
(b) Within ninety days of the contract date if no starting date is agreed
upon in writing; or
(2) A contractor fails to complete any work agreed upon in writing within ninety
days of a completion date agreed upon in writing, or within one hundred
eighty days of the contract date if no completion date is agreed upon in
writing, unless the failure is due to circumstances beyond the control of the
contractor.
b. Diversion of funds or property received under express agreement for the
prosecution or completion of a specific contract under this chapter, or for a
specified purpose in the prosecution or completion of any contract, and their
application or use for any other contract obligation or purpose to defraud or
deceive creditors or the owner.
c. Engaging in any fraudulent or deceptive acts or practices or misrepresentation as
a contractor in consequence of which one or more persons is injured in a total
amount exceeding three thousand dollars.
d. The making of any false or misleading statement in any application for a license
or renewal or by violating this chapter or being convicted of an offense the
registrar determines has a direct bearing on the applicant's or licensee's ability to
serve the public as a contractor as set out in section 12.1-33-02.1.
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Engaging in work without any trade or professional license as required for the
work pursuant to local, state, or federal law.
f. Failure to refund fully the contracting party's advance payment if a rebuttable
presumption of abandonment has arisen and the contracting party has made a
request to the licensee for a refund.
The complaint must be on a form approved by the registrar and must set forth
sufficient facts upon which a reasonable individual could conclude that any of the acts
or omissions in subsection 1 has been committed.
Any act or omission under this section may also constitute grounds for the attorney
general to bring an action under chapter 51-15 against the licensee or any unlicensed
person engaging in the business or acting in the capacity of a contractor in violation of
section 43-07-02 and subjects the licensee or any such unlicensed person to all
provisions, procedures, remedies, and penalties provided for in chapter 51-15.
43-07-15. Revocation or suspension of license - Restitution - Civil penalties - Appeal Procedure.
The registrar shall review each complaint filed under section 43-07-14. If the registrar
determines a written complaint filed under section 43-07-14 provides sufficient facts upon which
a reasonable person could conclude that one or more of the acts or omissions set forth in
section 43-07-14 has been committed, the registrar may initiate an adjudicative proceeding in
accordance with chapter 28-32. If, after an adjudicative proceeding or as part of an informal
disposition under chapter 28-32, the registrar determines that the licensee is guilty of an act or
omission charged or if the licensee admits guilt to an act or omission charged, the registrar may
suspend or revoke the contractor's license, order a civil penalty of not more than one thousand
dollars, order restitution in an amount not more than five thousand dollars, or impose some
lesser sanction or remedy. The registrar may suspend the contractor's license for a period of not
more than sixty months. The registrar may not renew, reinstate, or issue a new license until the
licensee has paid any civil penalty or restitution imposed under this section. The registrar may
bring an action in district court to recover restitution or penalties under this section. A contractor
aggrieved by a decision of the registrar in revoking or suspending the contractor's license or
ordering restitution or penalties may appeal the decision to the district court of that person's
county of residence or Burleigh County. Any licensee may not obtain a license under any name
during the period of revocation or suspension. A "licensee" whose license is revoked or
suspended includes any officer, director, agent, member, or employee of the licensee. The
provisions of chapter 28-32 govern any appeal and proceedings hereunder.
43-07-16. Cancellation of license - Appeal.
Repealed by S.L. 1963, ch. 304, § 16.
43-07-17. Revocation of license - Relicensing.
A licensee whose license has been revoked may not be relicensed for a period of up to five
years.
43-07-18. Penalty.
Any person acting in the capacity of a contractor without a license is guilty of a class A
misdemeanor. Whether a person is subjected to criminal prosecution under this section, and in
addition to the license fee that may be assessed when the person applies for a license, the
person may be assessed a civil penalty by the registrar, following written notice to the person of
an intent to assess the penalty, in an amount not to exceed three times the amount set forth in
section 43-07-07. Any civil penalty must be assessed and collected before a person is issued a
license. The assessment of a civil penalty may be appealed in the same manner as appeals
under section 43-07-04, but only on the basis that the registrar's administrative determination
that the person acted as a contractor when not licensed as a contractor was clearly erroneous.
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43-07-19. Nonresident contractors - Agent for service of process.
Every applicant for a contractor's license who is not a resident of the state of North Dakota,
by signing and filing the application, appoints the secretary of state as the applicant's true and
lawful agent upon whom may be served all lawful process in any action or proceeding against
such nonresident contractor. Such appointment in writing is evidence of the contractor's consent
that any such process against the contractor which is so served upon the secretary of state shall
be of the same legal force and effect as if served upon the contractor personally within this
state. Registered foreign corporations entitled to do business in this state according to chapter
10-19.1, registered foreign limited liability companies entitled to do business in the state
according to chapter 10-32, foreign limited liability partnerships entitled to do business in the
state according to chapter 45-22, and foreign limited partnerships entitled to do business in the
state according to chapter 45-10.2 and having a current registered agent and registered
address on file in the secretary of state's office need not appoint the secretary of state as agent
for service of process under this section. Within ten days after service of the summons upon the
secretary of state, notice of such service with the summons and complaint in the action shall be
sent to the defendant contractor at the defendant contractor's last-known address by registered
or certified mail with return receipt requested and proof of such mailing shall be attached to the
summons. The secretary of state shall keep a record of all process served upon the secretary of
state under this section, showing the day and hour of service. Whenever service of process was
made under this section, the court, before entering a default judgment, or at any stage of the
proceeding, may order such continuance as may be necessary to afford the defendant
contractor reasonable opportunity to defend any action pending against the defendant
contractor.
43-07-20. Employment preference in contract.
In all contracts, except those which involve federal-aid funds and when a preference or
discrimination would be contrary to a federal law or regulation, hereafter let for state, county,
city, school district, or township construction, repair, or maintenance work under any laws of this
state, there shall be inserted a provision by which the contractor must give preference to the
employment of bona fide North Dakota residents, as determined by section 54-01-26, with
preference given first to honorably discharged disabled veterans and veterans of the armed
forces of the United States, as defined in section 37-19.1-01, who are deemed to be qualified in
the performance of that work. The preference shall not apply to engineering, superintendence,
management, or office or clerical work.
No contract shall be let to any person, firm, association, cooperative, corporation, or limited
liability company refusing to execute an agreement containing the aforementioned provisions.
43-07-21. Penalty - Injunction proceedings.
Any person violating any provisions of section 43-07-20 is guilty of a class B misdemeanor.
A repeated violation constitutes legal grounds for a court, on proper application by the labor
commissioner, to grant an injunction without requiring the posting of a bond or undertaking.
43-07-22. Enforcement responsibility.
The labor commissioner has the primary responsibility of enforcing sections 43-07-20 and
43-07-21 and may make reciprocal agreements or arrangements with any other state or territory
exempting the application of sections 43-07-20 through 43-07-22, and may examine records of
employment relative to public contracts for such purposes. However, any person being
adversely affected because of noncompliance with section 43-07-20 may also institute an
appropriate civil action, and any person having knowledge of a violation may file a criminal
complaint with the proper official.
43-07-23. Allowable retention of estimates - Interest on retainage.
Contracts entered between persons for the performance of work to be done by a contractor,
except those contracts subject to section 40-22-37 or 48-01.2-13, or contracts governed by
federal statutes or regulations which require other provisions with respect to retention, are
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subject to a maximum retention on amounts due under the contract as follows: retention of ten
percent of each estimate presented is allowable until such time as the project is fifty percent
complete, with no further retainage on estimates during the continuance of the contract. If the
owner, governing board, or authorized committee invests the retained estimate funds, the
interest earned on those retained funds is payable at the time of final payment on the contract to
the contractor on whose account the moneys were held.
43-07-24. Duty to supply license number when applying for building permit - Display
of number.
When applying for a building permit, a contractor shall supply the permit issuing official that
contractor's license number. That official shall enter those numbers on the permit. A person
performing general contractor's work on that person's own property, even if exempt from the
licensing requirements of this chapter, shall, when applying for a building permit, supply the
building permit issuing official the license number, as soon as available, of each subcontractor
engaged on the project and doing work covered by the permit. That official shall enter each
number so supplied before inspection of the work.
43-07-25. Licensed contractors' list.
On request, the registrar shall provide city and county enforcement officials with a list of
contractors licensed under this chapter. The registrar shall also provide similar information to
persons governed by section 43-07-24. Whenever the registrar obtains information on the
activities of a contractor doing business in this state of which officials of workforce safety and
insurance, job service North Dakota, or tax commissioner may be unaware and that may be
relevant to the duties of those officials, the registrar shall provide any relevant information to
those officials for the purpose of administering their duties.
43-07-26. Warranty repairs - Required notice.
Before undertaking any repair, other than emergency repair, or instituting any action for
breach of warranty in the construction of a one-family or two-family dwelling, or an improvement
with a value exceeding two thousand dollars to a dwelling, the purchaser or owner shall give the
contractor written notice by mail, within six months after knowledge of the defect, advising the
contractor of any defect and giving the contractor a reasonable time to comply with this section.
Within a reasonable time after receiving the notice, the contractor shall inspect the defect and
provide a response to the purchaser or owner, and, if appropriate, remedy the defect within a
reasonable time thereafter. The contractor shall provide the purchaser or owner written notice of
the requirements of this section at the time of closing for the property or, in the case of an
improvement, at the time of completion of the improvement. For the purposes of this section,
"reasonable time" means within thirty business days after the notice is mailed or any shorter
period of time as may be appropriate under the circumstances.
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