As a construction company from outside of Virginia that wants to work here in the Commonwealth, there are numerous “hoops” that you need to jump through to be able to perform work and most importantly get paid.  Among these are obtaining a Virginia contractors license, find a registered agent here in Virginia, hopefully find a local construction lawyer to help with your contracts, and (the subject of this post), register with the Virginia State Corporation Commission for the authority to do business in the Commonwealth of Virginia.

Aside from it being a requirement of state law, the real world consequence of failing to register to do business is that, while you could file a lawsuit to enforce a claim (such as a mechanic’s lien), failure to register could cost you the ability to enforce or obtain any judgment on that lien.  In other words, you could go through the costly litigation process, “win” and then be barred from any recovery simply because you did not follow this step.

As an example of the real world consequences of this statute, a recent case from the Virginia Supreme Court, World Telecom Exchange Comm. LLC v. Sidya, the Court vacated a $2.35 million dollar damage award for the plaintiff because it failed to obtain a certificate of authority to transact business prior to the entry of the final judgment.  While this case involves the telecom industry and does not factually relate to construction, the same principal applies.  Namely, if you are a construction contractor from a neighboring state to Virginia, failing to take the relatively simple steps necessary to obtain such a certificate of authority can have serious consequences.

As always, I welcome your comments below.  Please subscribe to keep up with this and other Construction Law Musings.