A Tier I contractor completes a $45,000 addition but the final cost reaches $52,000 due to change orders. What is the potential penalty?
Correct Answer
C) Fine and possible license action
Tier I contractors are limited to $50,000 projects. Exceeding the limit subjects them to fines and possible disciplinary action regardless of change orders.
Why This Is the Correct Answer
SC Tier I contractors are licensed to work on projects up to $50,000. When change orders push the total to $52,000, the contractor has exceeded their license tier limit. South Carolina law subjects such contractors to fines and possible license disciplinary action—regardless of whether the change orders were properly documented.
Why the Other Options Are Wrong
Option A: Warning letter only
A warning letter alone is not the prescribed penalty. Exceeding your license tier is a substantive violation in SC, not merely a procedural one, and it triggers more than just an administrative notice.
Option B: Automatic license suspension
Automatic license suspension is too severe a blanket consequence under SC law for a first or isolated overage. The law imposes fines and possible action, but suspension is not automatic.
Option D: No penalty if change orders were written
Written change orders do not shield a Tier I contractor from penalty when the project total exceeds $50,000. The license tier limit applies to the total contract value, not just the original bid. Documentation of the overage does not legalize it.
Memory Technique
Tier I = '$50K ceiling, no exceptions.' Think of the tier limit as a hard ceiling on a room—change orders don't raise the ceiling, they just push you into it harder.
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