The Alabama Supreme Court's June 18, 2026, decision in Construction Services, LLC v. RAM-Robertsdale Subdivision Partners, LLC, et al., Case No. SC-2025-0774, 2026 WL 1755510, clarifies the standard for compliance with contractor licensing statutes, which could have far-reaching impacts on the industry.
Overview
Alabama's general contractor licensing statute requires any person or entity desiring to do business as a general contractor, as defined by statute, to obtain a license from the Alabama State Licensing Board for General Contractors (the Board). Ala. Code § 34-8-1, -2. Violation of this requirement may result in punishment. Ala. Code § 34-8-6. Alabama courts have held that contracts with an unlicensed general contractor are null and void because they violate the licensing statute's regulatory purpose of protecting public safety; accordingly, an unlicensed contractor may not enforce its contract. See, e.g., Architectural Graphics & Constr. Servs., Inc. v. Pitman, 417 So. 2d 574 (Ala. 1982).
In Construction Services, a general contractor holding an Alabama unlimited general contractor license with a classification for Building Construction (BC) contracted with the owner of real property in Baldwin County, Alabama, to perform work related to the development of a residential subdivision. After consulting with the city engineer and the Board, the general contractor amended its license to add the Municipal and Utility (MU) classification. A dispute then arose between the parties, which led, in relevant part, to the general contractor stopping work, recording a lien, and asserting contract-based claims against the owner in the Circuit Court of Baldwin County, Alabama.
The owner moved for summary judgment on the general contractor's claims on the grounds that the general contractor was unlicensed because its license did not contain the MU classification at the time of the contract between the parties. Accordingly, the owner argued, the contract was null and void as against public policy and therefore not enforceable by the general contractor. The trial court agreed, granting summary judgment in the owner's favor as to the general contractor's claims.
On appeal, the Alabama Supreme Court reversed the trial court's decision. The Court reaffirmed the purpose of its power to declare contracts void in some circumstances: "The importance of the regulatory nature of the [licensing] statute, and the protection it affords the citizens of Alabama, [cannot] be avoided by unlicensed contractors who, through creative schemes, seek to circumvent the requirements of the [licensing statute]." However, the Court found that the policy concerns, though valid, were not present in the instant action.
The Court noted that, contrary to the owner's assertion, contractor "mis-licensure" is not equivalent to contractor "non-licensure," and the general contractor was never unlicensed during the relevant period. The Court relied on McNairy v. Sugar Creek Resort, Inc., in which a contractor was permitted to bring contract-based claims against an owner despite the fact that the contract pre-dated the contractor's licensure because the owner "repeatedly ratified and adopted the parties' initial contract" by making payments and modifying the contract. McNairy, 576 So. 2d 185 (Ala. 1991) ("We hold that the purpose of the statute is not defeated by allowing [the general contractor] to proceed to trial on his claim for monies due him for work and labor done under his agreement with [the owner].").
Citing McNairy, the Court in Construction Services emphasized that "there is a difference between regulatory exactitude and the application of court-imposed public policy." The Court noted that the public protection purpose of the licensing statute was not undermined by enforcement of the contract despite the general contractor's amendment of its license to include the MU classification: "It is unclear to this Court what 'public harms' [the owner] is referring to given that [the general contractor] possessed a general contractor's license with a BC classification for the entire duration of its work on the [project], and [the general contractor] added an MU classification before it began the utility work." In sum, the Court saw "no reason to invoke the public policy of declaring the contract . . . void on the ground that [the general contractor] lacked an MU classification at the time the contract was executed."
Impact
For contractors, the Alabama Supreme Court's decision in Construction Services is a practical one that protects good-faith, substantially compliant contractors. But contractors must still treat licenses and classifications as critical elements of a project, as the Court's decision does not open the door for unlicensed work or creative licensing schemes.
For owners and developers, however, the Court's decision is a reminder that a licensing classification issue may not be an automatic escape hatch from payment obligations or contractor lien claims. Despite the owner's assertion that McNairy "is a 'lonely outlier' that 'Alabama appellate courts have since ignored,'" the Court affirmed that McNairy remains good law and requires only substantial compliance with licensing statutes in order to enforce contracts. Whether this renewed emphasis on substantial compliance carries over into enforcement actions by the Board remains an open question.
As always, participants in the construction industry should take care to understand industry licensing requirements and the risks and impacts of noncompliance.
Baker Donelson's Construction Group regularly advises owners, general contractors, subcontractors, and design professionals on industry licensing compliance, investigations, and related disputes. If you have questions about these topics or about how this Alabama decision impacts your business, please contact Kevin R. Garrison, Katelyn Dodd, or a member of Baker Donelson's Construction Group.