An owner-builder is someone who plans on constructing, repairing, or improving a building or structure on land that person owns. While normally, a contractor who works on a project that costs $500 or more is required to hold a valid contractor’s license, an exception exists for an owner of that property. Indeed, an owner has a right to perform construction on their own property without the required contractor’s license. However, the following conditions must be met:
1. No improvements are intended or offered for sale, and
2. The owner or his employees performs all the work.
1. The owner hires licensed contractors to perform the work, and
2. For single-family residences, the owner does not intend or offer for sale more than four houses in a calendar year. However, this does not apply if the owner hires a general contractor for the construction.
1. The work is performed before the sale of the property,
2. The homeowner lived in the property for 12 months before completing the project, and
3. The homeowner did not use this exemption on more than two properties more than once during any 3-year period.
While being an owner-building may be appealing to many homeowners, there are many risks that come with being an owner-builder. Specifically, the owner assumes full responsibility for the construction and is liable for any damage resulting from the construction. This includes liability for any injuries to the owner’s workers and subcontractors who are not licensed or who do not carry insurance.
Therefore, before beginning a construction project, an owner should think long and hard before deciding against hiring a licensed general contractor to take charge of the construction. While hiring a licensed general contractor may cost more, it will save the owner from potential liability that can far exceed any amount paid to the licensed contractor.