Idaho Contractors Registration
For contractors and suppliers working in Idaho, a recent decision from the Idaho Supreme Court regarding Idaho’s contractor registration statute provides one of the first cases giving a perspective of how Idaho Courts are going to treat the requirement for contractor registration.
In Idaho, contractors are required to be registered with the State. If contractors fail to register they lose the right to file liens. Recently, in Stonebrook Construction LLC v. Chase Home Finance, LLC, 227 P 3d 374 (Idaho 2012), the Idaho Supreme Court concluded that even though an individual owner of a construction company had been a registered contractor, when the company converted from a partnership to an LLC, the owners were required to register the LLC. Since the LLC was never a registered “contractor”, the individual owner’s registration did not count. Therefore, lien right was denied.
Stonebrook tried to get around the registration requirement by arguing the registration statute was intended to protect property owners and not banks. While this type of an exception exists in some states, such as Utah, the Idaho Supreme Court declined to conclude that only property owners can raise lack of registration as a defense.
The important thing for contractors and suppliers working in Idaho to learn from this case, is that Idaho courts will be very strict in applying the contractor registration requirement. Which means unregistered contractors will not have lien rights. Additionally since Idaho law prohibits lien rights to suppliers who knowingly sell to an unregistered contractor, those suppliers doing work in Idaho should be very careful to track their customer’s registration and make reasonable efforts to sell only to registered contractors. Failure to do so could result in a loss of lien rights for suppliers.