A Class B contractor in Virginia completed $850,000 worth of work in the current license period and has contracts totaling $1,200,000 for the next period. What action must the contractor take?
Correct Answer
B) Apply for a Class A license before starting new contracts
Class B contractors are limited to $1,000,000 in total contracts. Exceeding this limit requires upgrading to a Class A license before undertaking additional work.
Why This Is the Correct Answer
In Virginia, Class B contractors have a monetary limit of $1,000,000 for total contracts. With $1,200,000 in contracts for the next period, this contractor exceeds the Class B limit by $200,000. Virginia law requires contractors to upgrade to a Class A license before undertaking work that would exceed their current license classification limits. The contractor must apply for and obtain the Class A license before starting any new contracts that would put them over the $1,000,000 threshold.
Why the Other Options Are Wrong
Option A: Pay additional fees to increase Class B limits
There is no provision in Virginia contractor licensing law to simply pay additional fees to increase Class B monetary limits. The license classifications have fixed thresholds, and exceeding them requires upgrading to the appropriate higher license class, not paying supplemental fees.
Option C: Continue operating under Class B license
Continuing to operate under a Class B license would be a violation of Virginia contractor licensing law since the contractor's total contracts ($1,200,000) exceed the Class B limit of $1,000,000. Operating beyond license limits can result in penalties and license suspension.
Option D: Partner with a Class A contractor for the excess work
While partnering with a Class A contractor might be a business strategy, it doesn't address the legal requirement. The contractor with $1,200,000 in contracts must personally hold the appropriate license classification for the work they're undertaking, regardless of partnerships.
Memory Technique
Remember 'B for Below a Million' - Class B contractors must stay below $1,000,000. When you go 'Above a Million, you need class A'.
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Under Virginia law (Title 54.1), what is the minimum net worth requirement for a Class A contractor license?
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