Expired License, Tax Debt, and Two Signed Contracts
A sole proprietor roofing contractor's Hawaii license expired at the end of the last biennial renewal cycle. Seven months later, he is still operating. He signed a $48,000 roof replacement contract and a $12,000 repair contract after the expiration date and has completed most of the work. He did not renew because he owed $6,200 in Hawaii general excise tax. He has now paid the tax and wants to renew. The board sent a notice stating that renewal requires a tax clearance and that late renewal is subject to a penalty. He asks whether he can simply pay the late fee and keep the same license number, and whether the two contracts are enforceable. He has not told the two homeowners that his license lapsed.
1. Can the contractor renew or restore the expired license by paying the late fee and tax? What else must he show?
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The contractor cannot simply pay a late fee and continue as if nothing happened. The board requires a tax clearance before renewal or restoration, so he must resolve the $6,200 GET liability and provide the clearance. If the license is within the board's restoration period, he may be able to restore it by filing a renewal or restoration application, paying the late penalty and fees, and submitting the tax clearance. If the license has been expired beyond the restoration period, he must apply as a new applicant and meet current requirements. He should not assume the same license number continues automatically; the board will confirm the status. He must also stop contracting until the license is valid.
2. What are the consequences of signing and performing the two contracts while the license was expired?
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Signing and performing the $48,000 and $12,000 contracts while the license was expired is unlicensed contracting. The board can discipline the contractor, impose penalties, and require restitution. The contracts are at risk of being unenforceable by the contractor, and the contractor may be barred from suing to collect payment. The homeowners may file complaints with the DCCA and may have claims under Hawaii consumer protection law. The fact that the contractor later pays the tax and restores the license does not retroactively license the earlier work. The contractor should disclose the lapse to the board, cooperate, and avoid further work until licensed.