As a matter of first impression, the Alabama Supreme Court held that a general contractor’s failure to obtain a required Municipal and Utility (“MU”) classification before entering into a construction contract does not automatically render the contract void. Construction Services, LLC v. RAM-Robertsdale Subdivision Partners, LLC, No. SC-2025-0774, 2026 WL 1755510 (Ala. June 18, 2026).

In RAM-Robertsdale Subdivision Partners, the general contractor had an Alabama general contractor’s license with a Building Construction (“BC”) classification and entered into a contract to develop a residential subdivision. Its scope of work included clearing and grading the property, constructing roadways and drainage infrastructure, and installing water and sewer utilities.

Before the contract was executed, the City of Robertsdale’s engineer questioned whether the contractor’s BC classification authorized it to perform the stormwater, water, and sewer work contemplated by the project. In response, the general contractor agreed to obtain an MU classification before installing the storm pipe and utility infrastructure. Shortly thereafter, the general contractor entered into a contract with the landowner to develop the subdivision and subsequently amended its license to add the MU classification.

A dispute later arose between the general contractor and the landowner, resulting in litigation. The landowner argued that the contract was void because the general contractor lacked the required MU classification at the time of execution. The trial court agreed and entered summary judgment in favor of the landowner.

The Alabama Supreme Court reversed. The court observed that contracts entered into by unlicensed general contractors are generally unenforceable because Alabama’s General Contractor’s Practice Act imposes criminal penalties for performing general contracting work without a license, and Alabama courts have long held that such contracts violate public policy. The court also noted, however, that Alabama law recognizes a substantial-compliance exception where enforcing the contract would not undermine the purpose of the licensing statute.

Ultimately, the court concluded that no prior Alabama appellate decision had addressed whether an otherwise licensed general contractor’s failure to possess the correct license classification at the time of contracting renders the contract void. As a matter of first impression, the court declined to extend Alabama’s public-policy doctrine to those circumstances. The court emphasized that the purpose of the licensing statute is to protect the public from incompetent contractors, not to create a forfeiture where a contractor has substantially complied with the licensing requirements. In RAM-Robertsdale Subdivision Partners, the general contractor possessed a valid Alabama general contractor’s license, sought guidance from the licensing authorities, obtained the MU classification before performing the utility work, and did not engage in any scheme to circumvent the licensing requirements. Under those circumstances, voiding the contract would not advance the purpose of the statute and would produce an inequitable result.

This case is a landmark decision for Alabama construction law. While general contractors must still obtain the classifications required for the work they perform, RAM-Robertsdale Subdivision Partners establishes that an otherwise licensed contractor’s failure to possess the correct classification at the time a contract is executed does not automatically render the contract void. The decision provides greater protection for contractors who act in good faith, substantially comply with Alabama’s licensing requirements, and correct classification issues before performing the work that requires the additional classification.