§ 43-07-02 — License required - Construction fraud - Penalty

1. A person may not engage in the business nor act in the capacity of a contractor within
this state when the cost, value, or price per job exceeds the sum of four thousand
dollars nor may that person maintain any claim, action, suit, or proceeding in any court
of this state related to the person's business or capacity as a contractor without first
having a license as provided in this chapter.
2. Any person acting in the capacity of a contractor without a license is guilty of a class A
misdemeanor. Regardless of whether a person is subjected to criminal prosecution
under this subsection, and in addition to the license fee that may be assessed when
the person applies for a license, the person may be assessed a civil penalty by the
registrar, following written notice to the person of an intent to assess the penalty, in an
amount not to exceed three times the amount set forth in section 43-07-07. Any civil
penalty must be assessed and collected before a person is issued a license. The
assessment of a civil penalty may be appealed in the same manner as appeals under
section 43-07-04.
3. A person commits construction fraud if:
a. The person receives payment for a construction project by intentionally using
deception as defined in section 12.1-23-10.
b. The person receives payment for the purchase of materials or supplies and
willfully fails to pay the supplier for the goods received.
c. The person willfully abandons a construction project after receiving payment for
services or materials. Abandonment under this subdivision arises if:
(1) A contractor fails substantially to commence any work agreed upon:
(a) Within sixty days of a starting date agreed upon in writing; or
(b) Within ninety days of the contract date if no starting date is agreed
upon in writing; or

(2) A contractor fails to complete any work agreed upon in writing within
ninety days of a completion date agreed upon in writing, or within one
hundred eighty days of the contract date if no completion date is agreed
upon in writing.
4. It is a defense to prosecution under subsection 3 if:
a. The person returned all of the payment received for work not performed or
materials not supplied. If the person provided materials to the jobsite but did
not pay suppliers for those materials, this defense does not apply. This
defense is only valid if the payment was provided before criminal charges
were filed.
b. The person had a legitimate legal excuse for nonperformance.
c. The person was not able to begin or complete the project because there were
factors outside of the person's control and the person made substantial efforts
to resolve any dispute.
5. The grade of the offense for violating subsection 3 is based on the amount of
payment received. Payment of under ten thousand dollars is a class C felony;
more than ten thousand dollars but not more than fifty thousand dollars is a class B
felony; and more than fifty thousand dollars is a class A felony.