How to check a Minnesota contractor's license before you hire

Minnesota licenses residential building contractors through the Department of Labor and Industry (DLI). Checking a license takes a few minutes, and it tells you more than whether the contractor is legal. It also tells you whether the state's Contractor Recovery Fund could ever come into play.

Who needs a license

Minnesota Statutes section 326B.802 defines a "residential building contractor" as a person in the business of building residential real estate, or contracting or offering to contract with an owner to build it, by providing two or more "special skills." A residential building contractor may also contract to improve existing homes. A "residential remodeler" does the same kind of work on existing homes only.

"Residential real estate" means a new or existing building for one to four families, and it includes detached garages.

The law lists eight special skills:

excavation
masonry and concrete
carpentry
interior finishing
exterior finishing
drywall and plaster
residential roofing
general installation specialties, which include asphalt paving and seal coating

Under section 326B.805, anyone who meets the residential building contractor definition must be licensed, and no one required to be licensed may act or hold themselves out as a residential building contractor for pay without a license.

The same section lists exemptions. Among them:

employees of a licensee doing work for the licensee
owners building or improving a home they live in or will keep as a rental (not one built to resell)
people whose gross annual receipts for this work don't exceed $15,000, if they hold a certificate of exemption from DLI
plumbers, electricians and others licensed statewide, when doing their licensed trade
specialty contractors who provide only one special skill

That last point matters for single-trade work like concrete or excavation. A contractor who offers only one special skill doesn't need this license, though the law allows them to get one. That can be perfectly legal, but it affects the protections covered below.

Green house behind autumn maple trees — The license law covers buildings for one to four families, including detached garages.

Where the license number has to appear

Section 326B.87 is specific about where a licensee's number goes:

on all building permits and permit applications
on all business cards and all contracts for work that requires a license
in any advertising, including signs, vehicles, published display ads, flyers, brochures, websites and internet ads

Contracts with a licensee must state that the contractor is licensed and give the license number. If a residential contractor's truck, website or contract has no number on it, ask for one.

How to look up a license

DLI's license and registration lookup page sends you to iMS, the department's licensing system. You don't need an account. DLI's instructions:

Go to the lookup page and open iMS.
Select "Continue as guest."
Enter the complete license number in the search box at the top of the page.

There's also a "Search License/Registration holders" button for searching by other details, such as business name. DLI says iMS shows a license's status and whether there are enforcement actions against it. In DLI's downloadable license data, current, active licenses show a status of "Issued."

A few things to look at when you search:

The prefix. DLI says license numbers begin with BC (residential building contractor), CR (residential remodeler) or RR (residential roofer).
IR numbers are not licenses. DLI says registration numbers always begin with IR, and that registered contractors aren't required to provide proof of insurance or bonding and don't contribute to the Contractor Recovery Fund.
The name. Make sure the license belongs to the business you're actually signing with.

You can also call DLI at 651-284-5069 or 800-342-5354 to verify a license and ask about disciplinary history. Our license is BC810393, and you can look it up the same way.

DLI says a license means a principal of the company has passed an exam and the company carries liability and property damage insurance, and that licensed contractors complete continuing education each year.

The Contractor Recovery Fund

Section 326B.89 sets up a fund to compensate homeowners and residential tenants who lose money because of a licensed residential building contractor or remodeler. The main conditions in the statute and on DLI's page:

You need a final judgment in court against the licensee, based on fraudulent, deceptive or dishonest practices, conversion of funds, or failure of performance.
The judgment has to come from a contract directly between you and the licensee, for a home in Minnesota.
DLI says the contractor must have held an active license both when you signed the contract and when the work was done.
The application has to be filed within two years after the judgment became final.
The fund pays actual, direct out-of-pocket loss. It doesn't cover attorney fees, litigation costs or interest.

The statute caps payments at $100,000 per owner or tenant for each licensee, and $550,000 in total per licensee. DLI adds that the fund can't pay more than your judgment, and that it doesn't cover items that aren't part of the residential structure, such as landscaping, fences, driveways, pools or accessory buildings.

Two practical takeaways. DLI says that if you hire an unlicensed contractor, you won't have access to the fund. And because of that list of exclusions, the fund won't cover a driveway, fence or landscaping job even when the contractor is licensed.

Before you sign

DLI's tips for hiring a contractor also suggest:

getting a Minnesota business address, not just a post office box, and a local phone number
checking the contractor's litigation history on the state court system's website
getting a written contract that spells out the work, materials, price, payment schedule and timeline, with changes made by signed written change orders
being wary of contractors who want full or substantial payment before work starts, won't give a written estimate or contract, or won't give a Minnesota license number

Planning a project in or around Montgomery? Estevez Construction does concrete, excavation, demolition, paving and structural steel work for residential and commercial customers. Call us at (612) 601-3995 or request a free estimate.