HVAC & Mechanical in Tennessee
Tennessee issues the buyer a new license instead of moving yours.
A Tennessee HVAC company's contractor license does not travel with the business. When majority ownership passes to non-stockholders, the Board for Licensing Contractors treats the sale as a change in mode of operation and requires a new license, so the buyer is underwritten from the start: a qualifying agent the Board approves again, a CPA financial statement in the buyer's name, and a monetary limit recomputed from it, generally at ten times net worth or working capital unless the buyer posts a surety bond for half the limit instead. The company then has 90 days to file, and it cannot bid or sign new licensable work until the new license issues. Since July 1, 2026 a wage floor in the state's new non-compete statute has voided covenants below $33.66 an hour, which reaches the field roster and not the commissioned sales side.
Nashville-Davidson–Murfreesboro–Franklin / Memphis / Knoxville / Chattanooga
A change in mode of operation, and the bid freeze behind it
Mechanical licensing runs through a named qualifying individual, and an HVAC company can lose its ability to pull permits the morning after that person leaves. T.C.A. § 62-6-111(e)(2) and Tenn. Comp. R. & Regs. 0680-01-.09(2) provide that on a merger, a purchase by non-stockholders of the majority interest, a reorganization in bankruptcy, or any other change in mode of operation, the entity shall make written application to the Board for Licensing Contractors and obtain a new license before further undertaking contracting. The old license is not suspended and not assigned. The buyer files Form IN0439, the same application a first-time applicant files.
Tennessee does have mandatory transfer provisions, which is what makes them easy to misread. T.C.A. § 62-6-111(f) directs the Board to transfer a dissolved partnership's license to a former partner, and § 62-6-111(g) directs it to transfer a proprietorship's or partnership's license to the corporation it becomes. Those two are the ones the fee schedule prices, at $100 each under Rules 0680-01-.20(4) and (5), and both are the same people in a new wrapper. Neither reaches a third-party buyer. The Board's own mode-change packet, Form IN-1322, says on its face that the form cannot be used to add new owners changing the majority ownership or to transfer a license to another business entity, and sends new ownership to a full application instead.
Rule 0680-01-.09(5) then sets two clocks that get read as one. The entity has 90 days from the change in mode of operation to file, and it may continue working on contracts entered into before the change only if the application goes in inside that window. Separately, it may not bid on or enter into new contracts until the new or revised license has been issued. The 90 days is a filing deadline the parties control. The freeze runs to an issuance date they do not.
What the freeze costs depends on ticket size, because the license requirement reaches work at $25,000 or more, under T.C.A. §§ 62-6-102 and 62-6-103 for a prime and Rule 0680-01-.24(1) for an HVAC subcontractor. Since July 1, 2026 that threshold has been measured in total cost, a term Public Chapter 1039 added to § 62-6-102 to aggregate labor, materials, equipment, subcontracted work, overhead and profit regardless of who pays for them and regardless of whether the work runs under one contract or several. Owner-furnished equipment counts now, and writing the change-out and the ductwork as two contracts no longer puts a job under the line. A commercial or new-construction contractor loses most of its book to the freeze; a residential service company may lose almost none of it.
The default calendar belongs to the Board. It meets in January, March, May, July, September and November, and takes applications by the last day of the month before the meeting. Rule 0680-01-.09(4) expects the qualifying agent or majority stockholder to appear at that meeting unless the requirement is specifically waived, and the mode-change packet asks applicants to allow up to six weeks for processing. The route around it sits in Rule 0680-01-.09(5) itself: such applications may be reviewed and approved consistent with Rule 0680-01-.02. Rule 0680-01-.02(6) lets the executive director approve an application to change ownership of a license ahead of a meeting where the applicant shows that loss of substantial business is imminent, and the evidence the rule names is pending projects that were lawfully bid. The Board's packet calls that a hardship. Wraith represents Tennessee HVAC sellers directly, because the hardship petition and the Board's filing cutoff have to be built into the closing calendar.
The person the license hangs on is the Qualifying Agent, and Rule 0680-01-.02(4) sets that test by entity form. A corporation qualifies through a stockholder owning at least 20%, a proprietorship through its owner, a partnership through a general partner, and a limited liability company through any member or manager, with no ownership percentage stated at all, so the 20% figure buyers quote from the corporate limb does not reach an LLC target. In each case a full-time employee holding a written power of attorney is the alternative, and where a non-owner qualifies, Rule 0680-01-.02(4)(g) requires an owner or officer to appear alongside them for the Board interview, so the buyer's principal sits for it too.
If the seller is the qualifier and leaves, the Board must be notified within 10 days, and the company has 3 months to seat and examine a replacement, failing which the license becomes inactive until a new qualifying agent is appointed. That clock is survivable: the change carries no fee, no revised certificate issues, and the company keeps operating so long as the replacement has passed the exam for its classification. Finding that person is the harder half. Tennessee waives the trade exam by trade rather than by state, and for the mechanical exam the Board's table lists Alabama, Louisiana, Mississippi, Ohio, South Carolina and West Virginia, while Arkansas and North Carolina appear only for building and electrical classifications and Georgia is not on it at all. The waiver covers the trade exam alone, so a qualifier with no prior Tennessee score sits the Tennessee Business and Law exam before the buyer's license can issue, and both exams sit inside the window the freeze is running.
None of this fires in an asset sale. The licensed entity does not change hands, Rule 0680-01-.09 is never triggered, and there is no 90-day clock and no freeze on anyone. What the buyer needs instead is its own CMC or CMC-C license, with a monetary limit large enough for the acquired backlog, on the morning after closing. A newly formed entity has to complete a full application before it can bid anything at $25,000 or more.
The covenant line is $33.66 an hour
T.C.A. § 50-1-211, in force since July 1, 2026, voids a noncompete against an employee whose annualized compensation is under $70,000. The statute annualizes an hourly wage by multiplying the rate by 40 and the product by 52, which turns the floor into an hourly number. The line falls at $33.66. At $33.65 the statutory calculation returns $69,992.00, which is under the floor and void; at $30.00 an hour a service technician or install helper annualizes to $62,400.00 and cannot be bound at all.
A Tennessee technician running call volume through July and August takes home more than the statute credits them with, because overtime sits outside a calculation that multiplies a base rate by a fixed forty-hour week. Commissions run the other way. Annualized compensation includes commissions and nondiscretionary bonuses, so a comfort advisor selling replacement systems on a commission plan can clear the floor while the technicians who installed what they sold sit under it.
Whether the wage bar reaches the customer non-solicit a buyer reaches for next is unanswered. The measurement date is not: a covenant re-papered at closing is read against the technician's rate on the day it is signed, not the rate they were hired at, so a technician still at $30.00 an hour signs one that is void on signature.
Bid capacity is set by the buyer's balance sheet, or by a bond
Rule 0680-01-.24(2), with T.C.A. § 62-6-119(b), requires a prime bidder to list one HVAC contractor with that contractor's classification and monetary limit on the bid envelope or in the electronic bid, or the bid shall not be considered, and requires that subcontractor to furnish evidence of an active license showing name, classification, monetary limit and expiration date. The monetary limit is the largest project the license permits the company to bid, and after closing it is the buyer's entity that has to carry it into the bid package.
Rule 0680-01-.13(1)(a) sets that number, generally, at the lesser of 10 times net worth or 10 times working capital, with receivables more than three months past due excluded from working capital. Rule 0680-01-.32, effective November 18, 2025, requires the supporting financial statement to be prepared under generally accepted accounting principles by a licensed public accountant or CPA, on the accountant's letterhead showing the license number, dated no earlier than 12 months before the application, and prepared in the name of the applicant, all unless waived by the Board in its discretion and for good cause. A reviewed statement supports a limit of $3,000,000 or less; above $3,000,001 and up to unlimited, an audit is required.
Because the license is issued to the buyer's entity, that statement is the buyer's, not yours, and a newly formed acquisition entity has no operating history behind it. Where acquisition debt is pushed down into the licensed company, the working capital figure Rule 0680-01-.13(1)(a) multiplies by ten is the post-closing one. Rule 0680-01-.13(3) then lets the Board ask for a guaranty agreement, line of credit, bond or other indemnity where an applicant presents a primarily cash financial statement without fixed assets and where the applicant is completely or partly owned by a parent company, and in the parent case it can ask for the parent's own financial statement together with a guaranty of the subsidiary's contracting debts. A sponsor unwilling to file its own statement with a Tennessee board has to reach the number another way.
There are four routes to a higher limit, three of them in the Board's rules. A line of credit is added to working capital at full value and an indemnity counts at 50%, under Rule 0680-01-.13(2). A guaranty agreement can supplement working capital or net worth under Rule 0680-01-.13(4), with the guarantor's own financial statement behind it. At $300,000 of both working capital and net worth the Board may, in its discretion, award an unlimited license under Rule 0680-01-.13(9), which is most likely what a target bidding large commercial work already holds. Since July 1, 2026, T.C.A. § 62-6-111(b)(5), added by Public Chapter 1039, lets an applicant post a surety bond of at least 50% of the requested monetary limitation in lieu of filing a financial statement at all.
The bond is not a free election. It has to stay in force for as long as the license is held or until a conforming financial statement is filed, claimants may bring an action directly on it, and if it ceases to be in effect the license becomes invalid. The same act lets the Board release a copy of any bond, surety or personal guaranty to anyone who asks for it, so the buyer's credit support becomes a public document. One further line catches a target carrying more than one classification: Rule 0680-01-.13(8) forbids combining the monetary limits of two classifications to bid one project and allows a 10% tolerance on the limit, so a company holding a building classification alongside its CMC bids each project against one of those limits.
Questions Tennessee sellers ask
- Does my Tennessee contractor's license transfer to the buyer?
- Not to a third-party buyer. T.C.A. § 62-6-111(e)(2) and Rule 0680-01-.09(2) treat a purchase by non-stockholders of the majority interest as a change in mode of operation, and the entity must apply for and obtain a new license before further undertaking contracting. The two transfers Tennessee does mandate, at § 62-6-111(f) and (g), move a license from a dissolved partnership to a former partner and from a proprietorship or partnership to the corporation it becomes; both are the same people in a new wrapper and both are priced at $100 under Rules 0680-01-.20(4) and (5). In an asset sale nothing transfers and no clock starts, but the buyer needs its own CMC or CMC-C license with an adequate monetary limit on day one.
- My technicians are paid $30 an hour. Can a buyer hold them to non-competes?
- Not on anything signed on or after July 1, 2026. T.C.A. § 50-1-211 voids a noncompete against an employee whose annualized compensation is under $70,000, and the statute annualizes an hourly wage at the rate multiplied by 40 and then by 52, so $30.00 an hour is $62,400.00 and the covenant is void as a matter of public policy. The first hourly rate that clears the floor is $33.66; at $33.65 the calculation returns $69,992.00 and the covenant still fails. Overtime does not help, because the formula fixes the week at forty hours. Commissions do count, which is why a commissioned comfort advisor can be bound while the technicians beside them cannot.
- The buyer is forming a new entity. What decides how large a job it can bid after closing?
- Its own balance sheet, or a bond. Rule 0680-01-.13(1)(a) generally sets the monetary limit at the lesser of 10 times net worth or 10 times working capital, computed from a CPA statement prepared in the applicant's name, with a review supporting up to $3,000,000 and an audit required above $3,000,001. The number can be built up: a line of credit counts toward working capital at full value and an indemnity at 50% under Rule 0680-01-.13(2), a guaranty agreement can supplement either figure under Rule 0680-01-.13(4), and at $300,000 of working capital and net worth the Board may award an unlimited license under Rule 0680-01-.13(9). Since July 1, 2026, T.C.A. § 62-6-111(b)(5) also allows a surety bond of at least 50% of the requested limit instead of a financial statement, provided the bond stays in force; if it lapses, the license becomes invalid.
- Our buyer wants to bring its own qualifying agent in from Georgia. Will that work?
- Not without exams. Tennessee waives the trade exam by trade rather than by state, and for the mechanical exam the Board's table lists Alabama, Louisiana, Mississippi, Ohio, South Carolina and West Virginia. Georgia is not on it, and Arkansas and North Carolina appear only for building and electrical classifications. The waiver also covers the trade exam alone, so a qualifier with no prior Tennessee score has to sit the Tennessee Business and Law exam before the buyer's license can issue. Both exams fall inside the period when the company cannot bid licensable work.
- We pull permits in Nashville and never held a state license for our small residential jobs. What changes at closing?
- Two things, and one of them may already be a problem. Tennessee never created a limited HVAC license, only the Limited Licensed Electrician and Limited Licensed Plumber, so there is no HVAC-specific state credential below $25,000. That is not the same as no credential: in nine counties, Bradley, Davidson, Hamilton, Haywood, Knox, Marion, Robertson, Rutherford and Shelby, residential work from $3,000 to under $25,000 requires a state Home Improvement license or a contractor's license with a residential classification, and Davidson and Shelby are Nashville and Memphis. Metro's building-permit requirements set a permit bond on Form DCAB7 at $10,000 for contracts under $25,000 and $40,000 at $25,000 and over, and the bond must be in exactly the same name as on the state license, so a license issued to a new entity forces a new bond rather than an endorsement. That document addresses building permits and does not state mechanical permit requirements, so read the mechanical permit file for every county the target pulls in, alongside the Davidson County business license, workers' compensation proof and certificate of insurance naming Metro. What no county or municipality can do is make a state licensee or its employees sit a local exam, under T.C.A. § 62-6-111(i)(2)(C), so the local layer is paperwork rather than a second licensing regime.
Where these facts come from
Everything above that is a rule rather than a judgment is listed here with its publisher and the date it was checked. Licensing, tax and non-compete rules change, sometimes without much notice. None of this is legal or tax advice, and it is not a substitute for your own counsel and CPA.
Tenn. Comp. R. & Regs. 0680-01-.09(2), implementing T.C.A. § 62-6-111(e)(2), provides that in the case of a merger, purchase by non-stockholders of the majority interest, reorganization pursuant to a bankruptcy proceeding, or any other type of change in mode of operation of an entity engaged in contracting, the entity shall make written application to the Board and obtain a new license before further undertaking contracting. Rule 0680-01-.09(5) gives the licensed entity ninety (90) days from the date of the change in mode of operation to submit either an application for a mode change, where there are no changes in ownership or officers, or a new application where there are; provides that the entity may not bid on or enter into new contracts until a new or revised license has been issued; permits the entity to continue work on contracts entered into prior to the change provided the application is made within the ninety (90) day period; and states that such applications for change in mode of operation may be reviewed and approved consistent with Rule 0680-01-.02. Rule 0680-01-.09(4) requires the qualifying agent or majority stockholder to appear before the Board unless specifically waived. Rule 0680-01-.02(6) authorizes the executive director to approve an application before a regularly scheduled Board meeting where the application is timely, no impediments are evident, and the applicant provides evidence that loss of substantial business is imminent if licensure is delayed, with evidence including information on pending projects that were lawfully bid or contracted; Rule 0680-01-.02(6)(c) lists an application to change a mode of operation, an application to change the name on a license and an application to change ownership of a license among the approvable types. Rules 0680-01-.20(4) and (5) each price at $100 the two transfers provided for by T.C.A. § 62-6-111(f) and (g), the transfer of a dissolved partnership's license to a former partner and the transfer of a proprietorship's or partnership's license to a corporation; § 62-6-111(f)(1)(B) and (g)(1)(D) permit the Board in its sole discretion to modify the monetary limitation prior to transfer.
Tennessee Secretary of State, Rules of the Tennessee Board for Licensing Contractors, Chapter 0680-01 (revision effective November 18, 2025). Checked 2026-09-07.
Tennessee's two statutory transfer routes are mandatory but reach only same-people conversions; neither reaches a purchase of the majority interest by a third party, which § 62-6-111(e)(2) sends to a new license instead. The publications host requires a browser user agent and returns 403 to some automated clients.
Rule 0680-01-.02(4) sets the qualifying agent requirement by entity form: for a sole proprietorship, the individual owner or a full-time employee with written power of attorney; for a partnership, a general partner or such an employee; for a corporation, a major stockholder owning at least 20% of stock or such an employee; and for a limited liability company, a manager, member or full-time employee with a written power of attorney, with no ownership percentage stated. Rule 0680-01-.02(4)(g) requires that where a person other than an owner acts as qualifying agent, an owner or officer with an ownership interest or power of attorney also appear along with the qualifying agent for interview before the Board. Rule 0680-01-.02(4)(e) requires the Board to be notified within ten (10) days of the death, resignation, termination or incapacity of a qualifying agent, allows three (3) months to seat and examine a replacement, and provides that if not, the license becomes inactive until a new qualifying agent is appointed. Rule 0680-01-.08 requires written notice to the Office of the Board within thirty (30) days of any change of address or, in the case of a corporation, of officers. The Board's Qualifying Agent change materials state that there is no fee for the change, that a revised license certificate will not be issued, that a company replacing a qualifying agent who has passed the exam for its license classification may continue to operate, that the power of attorney must be signed by the owner and notarized where the qualifying agent holds less than a 20% interest, and that a qualifying agent may be listed on up to two (2) licenses only where that person is a majority owner of one of the entities, with a Board interview where a person is listed on more than two.
Tennessee Board for Licensing Contractors, Qualifying Agent add/change request instructions, with Chapter 0680-01. Checked 2026-09-07.
The 20% threshold is codified for corporations at Rule 0680-01-.02(4)(c) and is not the test for a limited liability company, where any member or manager may qualify. The 30-day notice of a change of officers is written for corporations by its own parenthetical. Board forms are revised without notice; pull them fresh before building a closing calendar.
Rule 0680-01-.13(1) provides that the monetary limitation may generally be determined, for applicants having no apparent deficiency with respect to plant or equipment, as the lesser of ten (10) times net worth or ten (10) times working capital, excluding from working capital receivables more than three months past due. Rule 0680-01-.13(2) provides that lines of credit and indemnities on forms furnished by the Board may be considered to raise a monetary limitation, that lines of credit may be added up to full value to working capital, and that credit for indemnities is limited to fifty percent (50%). Rule 0680-01-.13(3) permits the Board to require a guaranty agreement, line of credit, bond or other indemnity for applicants that have a primarily cash financial statement without fixed assets and where an applicant company is completely or partly owned by a parent company, in which case the Board may require the parent's financial statement together with a guaranty agreement of the subsidiary's contracting debts. Rule 0680-01-.13(4) provides that a guaranty agreement may be utilized where an applicant wishes to supplement the working capital and/or net worth portion of their financial statement, with the guarantor's personal financial statement required. Rule 0680-01-.13(8) provides that where a contractor holds a license with more than one classification with different monetary limits, the monetary limits shall not be combined to bid a project, and Rule 0680-01-.13(8)(a) allows a 10% tolerance on the monetary limit. Rule 0680-01-.13(9) provides that where an applicant demonstrates a minimum working capital and net worth of three hundred thousand dollars ($300,000) or more, the Board may in its discretion award an unlimited license. Rule 0680-01-.32, filed August 20, 2025 and effective November 18, 2025, provides that when an applicant or licensee submits a financial statement as part of any application, then unless waived by the Board in its discretion and for good cause, the statement must be executed by a licensed public accountant or certified public accountant on the accountant's letterhead showing the license number, be prepared in accordance with generally accepted accounting principles, be dated no earlier than twelve (12) months prior to the date of application, be prepared in the name of the applicant or licensee, and, where the accountant is not licensed in Tennessee, be accompanied by a copy of the accountant's license.
Tennessee Secretary of State, Rules of the Tennessee Board for Licensing Contractors, Rules 0680-01-.13 and 0680-01-.32. Checked 2026-09-07.
Rule 0680-01-.13(1) opens with 'generally' and offers alternative methods, so the ten-times computation is a default rather than a fixed formula. Rule 0680-01-.13(8) speaks to a license carrying more than one classification with different monetary limits; the CMC subclassifications listed at Rule 0680-01-.16 Appendix A are not separate classifications and do not carry separate limits. Rule 0680-01-.13(3) joins its cash-statement and parent-company limbs with 'and'; confirm with the Board which reading it applies before relying on either. Every requirement in Rule 0680-01-.32 is expressly waivable for good cause.
The Board's contractor's license application (Form IN0439, Rev. 02/25), captioned for new applications, reinstatements, changes in ownership, mergers, reorganizations and second licenses, states that a contractor's license is required prior to bidding projects of $25,000 or more; that all new applicants must take the Tennessee Business and Law exam and must provide a copy of their Tennessee Business and Law exam score; that a reviewed financial statement is required to obtain a monetary limit of $3,000,000 or less and an audit is required to obtain a monetary limit of more than $3,000,001 up to unlimited; that a qualifying agent may be listed on up to two (2) licenses if that person is a majority owner of one of the entities; and that the only reason an application would be held for a Board meeting is where the Board has questions and needs to schedule an interview, with an emergency review available by applying for a hardship. The same application provides for the Limited Licensed Electrician (LLE) and Limited Licensed Plumber (LLP) credentials, with no equivalent limited license for HVAC, and for a Home Improvement license covering residential work from $3,000 to under $25,000 in nine (9) counties: Bradley, Davidson, Hamilton, Haywood, Knox, Marion, Robertson, Rutherford and Shelby.
Tennessee Board for Licensing Contractors, Contractor's License Application (Form IN0439, Rev. 02/25). Checked 2026-09-07.
The Board reorganizes its forms directory periodically and this link has returned 404 to some clients; verify against the Board's current forms page and cite the form by its revision. The Home Improvement county list is statutory rather than a product of the form, and should be confirmed for the county in question.
The Board's Transfer, Change Mode of Operation packet (Form IN-1322, Rev. 10/25) states on its face that the form cannot be utilized to add new owners changing the majority ownership, or to transfer the license to another business entity, giving the example that a corporation cannot transfer to another corporation, new or existing; it asks whether there has been a change in owners, officers or titles, and instructs that if there is new ownership the applicant must complete a new license application and not this form, citing T.C.A. § 62-6-111(e)(2). The packet asks applicants to allow up to six (6) weeks for processing and states that a revision requires Board approval at the Board's regularly scheduled meetings unless approved for a hardship. For an entity-level change it requires a reviewed or audited CPA financial statement in the new name, proof of general liability and workers' compensation insurance in the name to be licensed, amended Secretary of State charter documents, and a notarized contractor's affidavit that the prior entity's liabilities have been satisfied.
Tennessee Board for Licensing Contractors, Transfer, Change Mode of Business Operation information packet (Form IN-1322, Rev. 10/25). Checked 2026-09-07.
The document checklist in this packet belongs to the mode-change filing, which a buyer taking majority ownership may not use. The buyer's own filing is the new license application, Form IN0439, and its requirements should be read from that form.
The Board for Licensing Contractors meets during the months of January, March, May, July, September and November. Applications are to be received by the last day of the month prior to the meeting at which they are to be considered.
Tennessee Board for Licensing Contractors, meeting information. Checked 2026-09-07.
Meeting dates and submission cutoffs are published per meeting and change. Confirm the current agenda deadline with the Board rather than relying on the pattern, and note that Rule 0680-01-.02(6) provides an approval route that does not wait for a meeting.
Public Chapter No. 934 (House Bill No. 1034, 114th General Assembly), passed April 20, 2026 with an effective date of July 1, 2026, adds Tenn. Code Ann. § 50-1-211, providing that an employer shall not require, request, or enforce a noncompete agreement against an employee whose annualized compensation is less than seventy thousand dollars ($70,000), and that a noncompete agreement made in violation of the section is void and unenforceable as a matter of public policy. Annualized compensation means total compensation including wages, salary, commissions, nondiscretionary bonuses and other remuneration, and for an hourly employee is calculated by multiplying the hourly rate by forty (40) and multiplying the product by fifty-two (52), that is 2,080 hours. On that formula $30.00 per hour is $62,400.00; $33.65 per hour is $69,992.00, below the floor; and $33.66 per hour is $70,012.80, above it. Section 50-1-210 sets rebuttable presumptions on the reasonableness in time of a restrictive covenant sought to be enforced, and § 50-1-210(c) provides that 'this section' does not prohibit an employer from enforcing a confidentiality or nondisclosure agreement, a client or customer nonsolicitation agreement, or an employee nonsolicitation agreement. Section 3 of the act provides that it applies to proceedings occurring and agreements entering into, renewed, or amended, on or after July 1, 2026.
Tennessee General Assembly, Public Chapter No. 934 (2026). Checked 2026-09-07.
The carve-out at § 50-1-210(c) is written against 'this section' and so reaches the presumptions in § 50-1-210. The $70,000 prohibition sits in the separate § 50-1-211, which carries no equivalent carve-out and does not define 'noncompete agreement', so whether a customer nonsolicitation agreement against an employee below the floor survives is unresolved, and no Tennessee court has construed the act. The $70,000 figure carries no indexation clause. The hourly calculation shown here applies the statutory formula; the statute states the formula, not the worked figures.
Public Chapter No. 1039 (2026), effective July 1, 2026, adds to T.C.A. § 62-6-102 a definition of 'total cost' meaning the aggregate monetary value of all labor, materials, equipment, subcontracted work, overhead, profit, and any other expense associated with a construction project or undertaking, regardless of whether such amounts are paid by the owner, contractor, subcontractor, or any other person, and regardless of whether the work is performed under one (1) or multiple contracts. Section 24 of the act adds T.C.A. § 62-6-111(b)(5), providing that in lieu of providing a financial statement, an applicant may obtain a surety bond in an amount that is equal to at least fifty percent (50%) of the monetary limitation that is requested by the applicant, with companion elections for monetary limit increases at § 62-6-111(k)(5) and for renewals at § 62-6-116(c) and (d). The bond must be maintained for as long as the license is held or until a conforming financial statement is filed, claimants may bring an action directly on the bond, and if the bond ceases to be in effect the contractor's license becomes invalid. New § 62-6-124(c) permits the Board to release a copy of any bond, surety or personal guaranty to a person who requests it.
Tennessee General Assembly, Public Chapter No. 1039 (2026). Checked 2026-09-07.
The statutory 'total cost' measure is broader than Rule 0680-01-.13(8), which excludes material and labor furnished by the owner. The statute controls until the Board conforms the rule, and a target that treated owner-furnished equipment or split contracts as outside the threshold after July 1, 2026 is a diligence item.
T.C.A. § 62-6-102 defines a contractor by reference to bidding, offering a price, or negotiating a project, and § 62-6-103 requires a license before bidding. Rule 0680-01-.24(1) provides that a subcontractor is required to be licensed in order to perform electrical, plumbing, heating ventilation, air conditioning and roofing work when the amount is twenty-five thousand dollars ($25,000.00) or more, and masonry work when the amount is one hundred thousand dollars ($100,000.00) or more. Rule 0680-01-.24(2), with T.C.A. § 62-6-119(b), requires the prime bidder to list one HVAC contractor with that contractor's classification and monetary limit on the bid envelope or in the electronic bid, or the bid shall not be considered, and requires the subcontractor to furnish evidence of an active license showing name, classification, monetary limit and expiration date.
Tennessee Board for Licensing Contractors, Rule 0680-01-.24, with Tenn. Code Ann. §§ 62-6-102, 62-6-103 and 62-6-119(b). Checked 2026-09-07.
Rule 0680-01-.24(1) supports the subcontractor half of the threshold only. The general bid, offer and negotiate trigger for a prime contractor is statutory and should be cited to §§ 62-6-102 and 62-6-103 rather than to the rule.
Rule 0680-01-.16, Appendix A, lists the classification MC (CMC), Mechanical Contracting, with ten (10) subclassifications: A. Plumbing and Gas Piping; B. Process Piping; C. HVAC, Refrigeration, Gas Piping; D. Sprinklers and Fire Protection; E. Insulation of Mechanical Work; F. Pollution Control; G. Pneumatic Tube Systems; H. Temperature Controls; I. Boiler Construction and Repairs; and J. Fuel Gas Piping and Systems. HVAC sits at subclassification C and is carried on a license as CMC-C. Appendix A further records that the designation represents that the licensee has passed the Board licensing exam and that no county or municipality shall require such state licensee or its employees to pass any county or municipal test or examination, pursuant to T.C.A. § 62-6-111(i)(2)(C).
Tennessee Secretary of State, Rule 0680-01-.16, Appendix A. Checked 2026-09-07.
There is no separate credential styled 'CMC (Plumbing/HVAC)'. A contractor performing both holds one CMC license carrying the A and C subclassifications, which is why Rule 0680-01-.13(8)'s bar on combining monetary limits across classifications does not describe a CMC-A plus CMC-C target. A target's certificate should be read for exactly which classifications and subclassifications it carries.
Tennessee waives the trade exam on a classification-by-classification basis. For the mechanical classification the Board's reciprocity table maps Alabama (HVAC to CMC-C), Louisiana (Mechanical to CMC), Mississippi (Mechanical to CMC), Ohio (HVAC to CMC-C), South Carolina (HVAC to CMC-C) and West Virginia (Mechanical to CMC). Arkansas and North Carolina appear on the table only for building and electrical classifications. The Board also accepts the NASCLA national commercial trade exam. Every contractor license except the restricted residential classification requires the Tennessee Business and Law exam, and the reciprocity waiver is limited to the trade exam.
Tennessee Board for Licensing Contractors, Trade Exam Waiver (Reciprocity) with Tennessee. Checked 2026-09-07.
Georgia does not appear on the Board's current reciprocity table, and an older inline list circulating in Board form text includes it. Reciprocity is by trade rather than by state; confirm the current table before assuming a qualifier can be imported without sitting the CMC-C trade exam.
The Metropolitan Government of Nashville and Davidson County, Department of Codes and Building Safety, requires the following to obtain a building permit: a Davidson County business license or exemption affidavit, with an in-state company based outside Davidson County required to obtain one where it performs more than $100,000 in bid price in the county in a taxable year; a permit bond on Metro Form DCAB7 of $10,000 for contracts under $25,000 or $40,000 for contracts of $25,000 and over, and the bond must be in exactly the same name as on the state license, if applicable; proof of workers' compensation coverage or an exemption affidavit; and a certificate of insurance naming the Metropolitan Government of Nashville and Davidson County, c/o Metro Codes, as certificate holder. The same document provides that for bids or contracts over $3,000.00 and under $25,000 for construction on a single family, duplex, triplex or quad, a state Home Improvement license, or a state contractor's license with a residential classification or with building categories, is required.
Metropolitan Government of Nashville and Davidson County, Department of Codes and Building Safety, Contractor Requirements for Building Permits. Checked 2026-09-07.
The document addresses building permits and does not separately state mechanical permit requirements, so the bond figures should not be represented as the mechanical permit schedule. Nashville is used here as the worked example; every jurisdiction the target pulls permits in sets its own bond, business license and insurance filings, and the target's permit footprint should be quantified county by county.
Page last reviewed 2026-09-07.
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