Arizona Contractor License: Types & Requirements

Licensing is a huge part of the construction world, and a key consideration when you're getting a construction business started, moving, or expanding your business to a new state. Each state has its own requirements for contractors licenses, and contracting without a license can lead to serious consequences.

Let's look at exactly who needs an Arizona contractor's license, and how to get one.

Who needs an Arizona contractor license?

Arizona contractors conduct all their licensing needs through the Arizona Registrar of Contractors (AROC). According to the AROC website, a license is required for any person or business that “contracts or offers to contract to build, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, development or improvement.”

This applies to any construction job in Arizona where labor and material costs exceed $1,000.

Like with many states, there are different levels for which a different Arizona contractor's license is required.

Types of Arizona contractor licenses

Arizona has three main classifications of contractor licenses:

• General Commercial Contractors (B-1): Allows you to take on jobs of any size, from large commercial projects to small home remodeling jobs.
• General Small Contractors (B-2): Allows you to work on pretty much any job, except the project cannot exceed $750,000 for labor and costs
• General Residential Contractors: Only permits work on residential jobs, regardless of if it's construction, remodeling, or repair. This type of license also covers specialized licenses:

There are some other classifications, though. Read AROC's helpful breakdown of license classifications.

Arizona license requirements

The basic requirements to file for a contractor license are as follows:

• Be 18+ years old
• Have four or more years of work experience
• Score 70% or higher on two exams:

Handyman exemption

As stated above, Arizona requires a license for any project over $1,000. But if the labor and costs are less than $1,000, you may fall under the “minor work” or "handyman" exception. However, the law states that the work performed must be of a casual or minor nature. Also, if the work requires any local building permits, a licensed contractor must be used.

Penalties

Violating Arizona license requirements comes with some harsh penalties. Importantly, unlicensed contractors cannot file a mechanics lien. Not only that, but unlicensed contractors are also precluded from filing any action for collecting compensation for work performed that required a license. 

There are also criminal penalties that may be imposed. In Arizona, it is a class 1 misdemeanor for a person not licensed as a contractor to:

• Act in the capacity of a contractor (even merely bidding on a project)
• Advertise that they are able to perform any service or contract for compensation

A first offense comes with a fine of no less than $1,000, plus the possibility of six months jail time. For any subsequent offenses, the contractor can be fined up to $2,500.

A defendant may also have to pay all taxes associated with the money they were paid for the work, even if they have to refund the money they were paid. Civil penalties under consumer fraud may come into play, too. This could also lead to fines of up to $10,000 for each act of illegal contracting.

AROC keeps a database of all licensed contractors in the state, and owners and GCs should refer to that database before hiring. Plus, on residential jobs, using a licensed contractor makes owners eligible for up to $30,000 compensation if something goes awry. When a licensed contractor provides faulty work on a residential property, the owner may be entitled to as much as $30,000 from AROC's Residential Recovery Fund. It's a special fund that all licensed Arizona contractors pay into, and it provides a helpful safety net for owners.

Performing work without a license can have a serious impact on your business. Regardless of whether you agree with the licensure rules, it's important to maintain your Arizona contractor's license.

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