1.3 Qualifying Agents, Assumed Names (DBAs), and Mode-of-Operation Changes
Key Takeaways
A Tennessee contractor's license belongs to the business entity, while an individual Qualifying Agent (QA) passes the exams on its behalf; a QA must be the sole proprietor, a general partner, an LLC manager or member, a corporate stockholder owning at least 20% of the stock, or a full-time W-2 employee with a notarized Power of Attorney.
One Qualifying Agent may take the Business and Law exam while a different Qualifying Agent takes the trade exam, up to two individuals may take each exam for a firm, and passing exam scores are valid for 2 years.
Under Rule 0680-01-.02(4)(e), if a Qualifying Agent leaves the company or dies, the licensee must notify the Board in writing within 10 days and replace the Qualifying Agent with a qualified, tested individual within 3 calendar months.
Entity mode changes without ownership or officer changes use a $100 transfer within 90 days; changed ownership/officers or a merger requires a new $250 application. Existing work and new bids have different restrictions.
Passing the Tennessee Business and Law exam and trade exam is only one part of maintaining a valid contractor license. The Tennessee Board for Licensing Contractors strictly regulates who can qualify a business entity by examination, what must happen when that qualifier leaves the company, what exact name the contractor uses on bids and contracts, and how a company must transfer its license when it reorganizes its legal structure. These administrative rules (Tenn. Comp. R. & Regs. 0680-01-.02, .09 and .25) are essential licensing compliance topics.
The Qualifying Agent (QA) Role (Tenn. Comp. R. & Regs. 0680-01-.02)
Under Tennessee law, a contractor's license is issued to and owned by the business entity (the sole proprietorship, partnership, LP, LLC, or corporation), not the individual who takes the exam. However, because an artificial entity cannot sit for an examination, the business entity must designate an eligible individual—called the Qualifying Agent (QA)—to take and pass the required examinations on the entity's behalf.
Who May Serve as a Qualifying Agent?
Under Tenn. Comp. R. & Regs. 0680-01-.02, the individual designated as the Qualifying Agent for a license application must belong to one of five authorized categories:
| Entity Type | Eligible Owner Qualifier (No POA Needed) | Eligible Employee Qualifier (Notarized POA Required) |
|---|---|---|
| Sole Proprietorship | The individual Sole Proprietor (100% owner) | Any bona fide full-time W-2 employee with a notarized Board Power of Attorney |
| Partnership (GP or LP) | Any General Partner of the partnership | Any bona fide full-time W-2 employee with a notarized Board Power of Attorney |
| Limited Liability Company (LLC) | Any Member (or Manager) of the LLC | Any bona fide full-time W-2 employee with a notarized Board Power of Attorney |
| Corporation (C-Corp or S-Corp) | A major stockholder owning at least 20% of the corporate stock | Any full-time W-2 employee or officer owning <20% stock with a notarized Board Power of Attorney |
An outside 1099 independent contractor or consultant who is neither a qualifying owner nor a bona fide full-time employee with a Power of Attorney cannot serve as a Qualifying Agent. Furthermore, when an employee Qualifying Agent leaves the company, the license stays with the company (subject to the replacement window below), while the individual QA retains their personal exam scores.
Exam Splits, Multiple Qualifiers, and 2-Year Score Validity
- Splitting the Business & Law Exam and Trade Exam: The same individual does not have to take both exams. One Qualifying Agent (such as an owner or administrative officer) may pass the Tennessee Business and Law exam, while a second Qualifying Agent (such as a field superintendent or master tradesperson) passes the required trade exam.
- Up to Two Examinees Per Exam: A company may designate up to two (2) individuals to take each examination, giving the company a backup qualifier already on file with the Board.
- Two-Year Exam Score Validity: Passing exam scores are valid for two (2) years for initial licensure (or for re-application after a license expires or a QA transfers).
Departure or Death of a Qualifying Agent (Rule 0680-01-.02(4)(e))
Memorize the exact two-step statutory clock under Tenn. Comp. R. & Regs. 0680-01-.02(4)(e) when the Qualifying Agent who passed the required examination leaves the employment of the licensee, resigns, is terminated, retires, or dies:
- 10-Day Written Notice to the Board: The licensed contractor must notify the Tennessee Board for Licensing Contractors in writing within ten (10) days of the termination, departure, or death of the Qualifying Agent; AND
- 3-Month Replacement Window: The licensed contractor must replace the departed Qualifying Agent with a qualified individual who has taken and passed the required examination(s) within three (3) calendar months from the date of departure or death.
If the contractor fails to notify the Board within 10 days or fails to qualify a tested replacement Qualifying Agent within 3 months, the contractor's license (or the specific trade classification qualified solely by that departed QA) automatically becomes invalid/inactive, and the contractor must cease bidding and contracting until a new Qualifying Agent is approved.
Assumed Names / DBAs and the Exact-Name Bidding Rule (Rule 0680-01-.25 & .25)
Under Tenn. Comp. R. & Regs. 0680-01-.25, a contractor must bid, advertise, sign contracts, pull permits, and conduct business strictly in the exact name as it appears on its Tennessee contractor's license certificate.
- Using an Assumed Name (DBA — "Doing Business As"): If a licensed corporation, LLC, or partnership wants to bid or advertise under a trade name or assumed name, it cannot simply print the DBA on its bid envelope or letterhead. Instead, before bidding under an assumed name, the contractor must:
- Register the assumed name with the Tennessee Secretary of State, Division of Business Services (valid for 5 years); and
- Submit a Name Change / Add DBA request to the Tennessee Board for Licensing Contractors—accompanied by the Secretary of State assumed-name filing and an updated Certificate of General Liability Insurance listing both the legal entity name and the DBA—so the license is officially issued as
[Exact Legal Name] d/b/a [Assumed Name].
- Consequence of Bidding in a Different Name: Submitting a bid under an unregistered DBA, an abbreviated trade name that omits the licensed entity's name, or the name of a parent, sister, or subsidiary company not listed on the license is a direct violation of
Rule 0680-01-.25. The bid must be rejected as invalid, and contracting under an unlisted name constitutes unlicensed contracting.
Mode-of-Operation / Entity Structure Changes (Tenn. Comp. R. & Regs. 0680-01-.09)
A Tennessee contractor's license is never automatically transferable when a business changes its legal structure. Whenever a contractor undergoes a Change in Mode of Operation—such as converting a sole proprietorship into an LLC or corporation, converting a partnership into an LLC or corporation, converting a corporation into an LLC, or completing a merger, acquisition, or reorganization that creates a new legal entity with a new Federal Employer Identification Number (EIN)—the existing license does not automatically cover the new entity.
Under Tenn. Comp. R. & Regs. 0680-01-.09, the contractor must follow strict transition rules:
- 90-Day Filing Deadline and $100 Transfer Fee: The contractor must submit a complete Mode of Operation Change Application to the Board within ninety (90) days of the date of the entity change, accompanied by:
- The $100 mode-of-operation transfer fee;
- A new CPA Reviewed or Audited Financial Statement (or a 50% Contractor's Surety Bond under Public Chapter 1039) prepared in the new entity's exact name;
- Proof of Active / Good Standing registration with the Tennessee Secretary of State for the new entity;
- Updated General Liability Insurance and Workers' Compensation certificates (or exemption registration) in the new entity's exact name; and
- Confirmation of the Qualifying Agent (and a new notarized Power of Attorney if the QA is a full-time employee rather than a qualifying owner of the new entity).
- Completing Existing Contracts vs. Bidding New Work During the 90-Day Window (
Rule 0680-01-.09):- Existing Contracts in Progress: Provided the Mode of Operation Change Application is filed with the Board within 90 days of the reorganization, the contractor MAY continue performing and complete existing contracts that were already in progress at the time of the change.
- Strict Ban on Bidding or Signing New Contracts: During the transition, the new entity MAY NOT bid on, offer to engage in, or enter into any NEW construction contracts until the Board formally approves the Mode of Operation Change Application and issues the revised license in the new entity's name.
Warning
Application Check — Don't Confuse the 10-Day / 3-Month QA Rule With the 90-Day Mode-of-Operation Rule:
- Qualifying Agent Departure or Death (
Rule 0680-01-.02(4)(e)): Notify the Board in writing within 10 days, and replace the Qualifying Agent with a tested, qualified individual within 3 calendar months. - Mode-of-Operation / Entity Change (
Rule 0680-01-.09): File the Mode of Operation Change Application with the $100 fee within 90 days of the reorganization; you may complete existing contracts in progress, but you cannot bid on or sign any new contracts until the Board issues the revised license in the new entity's name. - Corporate Stockholder QA (
Rule 0680-01-.02): Must own at least 20% of the corporate stock to qualify as an owner without a notarized Power of Attorney.
| Licensing Event | Mandatory Notification / Filing Deadline | Replacement / Action Window | Fee & Key Consequence |
|---|---|---|---|
Departure or Death of Qualifying Agent (Rule 0680-01-.02(4)(e)) | Within 10 days in writing to the Board | Within 3 calendar months to qualify a tested replacement QA | License/classification becomes invalid if not replaced within 3 months |
Mode-of-Operation / Entity Change (Rule 0680-01-.09) | Within 90 days of entity structure change | May complete existing contracts in progress; cannot bid or sign new contracts until revised license is issued | $100 fee + new entity CPA financial statement (or 50% bond), SoS registration, and insurance |
Adding an Assumed Name / DBA (Rule 0680-01-.25, .25) | Before bidding or contracting under the DBA | Register DBA with TN SoS first, then update Board license and insurance certificate | Bidding under an unlisted name invalidates the bid and constitutes unlicensed contracting |
A mode change with no change in ownership or officers uses the Board’s transfer application and $100 fee. A change in ownership, officers, or a merger requires a new license application and $250 fee. The 90-day mode-change window does not mean three calendar months for the separate QA replacement rule. When replacing a QA, the Board requires the applicable trade qualification; its current replacement instructions do not require a new Business and Law examination. Existing qualifying exam records and Board waiver conditions must be reviewed before assuming retesting is necessary.
Source check (October 13, 2026): Board renewal and QA-change instructions.
The Vice President of Estimating for a Tennessee commercial construction corporation wants to serve as the Qualifying Agent on the corporation's contractor license application. He is a full-time W-2 employee who owns 5% of the corporation's voting stock. Under Tenn. Comp. R. & Regs. 0680-01-.02, what is required for him to qualify the corporation?
He cannot serve as Qualifying Agent under any circumstances unless he purchases at least 51% of the corporate stock
He may qualify the corporation automatically as a major stockholder because he owns at least 5% of the stock
Because he owns less than 20% of the corporate stock, an owner/principal of the corporation must execute the Board's notarized Power of Attorney form authorizing him as a full-time employee Qualifying Agent
He must post a personal $100,000 surety bond with the Tennessee Secretary of State before taking the exam
On June 1, the sole Qualifying Agent for a licensed Tennessee mechanical contractor resigns to take a job in another state. Under Tenn. Comp. R. & Regs. 0680-01-.02(4)(e), what are the contractor's mandatory deadlines to keep its license valid?
Notify the Board within 30 days and replace the Qualifying Agent at the next biennial license renewal
Notify the Board within 90 days and replace the Qualifying Agent within 1 year
Notify the Secretary of State within 5 business days and pay a $200 penalty within 60 days
Notify the Board in writing within 10 days of the departure and replace the Qualifying Agent with a qualified, tested individual within 3 months
A contractor licensed for ten years as a sole proprietorship (John Doe Construction) forms a new Limited Liability Company (John Doe Construction, LLC) on March 1 and transfers his equipment and employees into the LLC. He submits a Mode of Operation Change Application with the $100 fee and a new LLC financial statement to the Board on April 15 (45 days after the change). While waiting for the Board to issue the revised license in the LLC's name, what work may the contractor legally perform?
He may continue working to complete existing contracts already in progress, but he may NOT bid on or enter into any new construction contracts until the revised license is issued in the LLC's name
He may bid on and sign new contracts in the LLC's name immediately because he filed the application within 90 days
He must immediately stop work on all existing contracts in progress until the next quarterly Board meeting
He may bid on new contracts up to 50% of his prior monetary limit during the 90-day transition period
Tri-Star Commercial Group, Inc. holds an active Tennessee BC-B contractor's license under the exact name Tri-Star Commercial Group, Inc. The company wants to bid a retail project under the marketing name Tri-Star Retail Builders. What must the company do BEFORE submitting a bid under Tri-Star Retail Builders?
Nothing, as long as the license number of Tri-Star Commercial Group, Inc. is written on the bid envelope
Register the assumed name (d/b/a Tri-Star Retail Builders) with the Tennessee Secretary of State AND have the Tennessee Board for Licensing Contractors add the DBA to its contractor's license (with matching insurance) prior to bidding
Attach a letter from its CPA inside the sealed bid envelope explaining that both names belong to the same tax identification number
Notify the project architect within 10 days after bid opening that Tri-Star Retail Builders is an unregistered trade name
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