Tips for Owner-Builders

An unlicensed owner/builder can hire employees and contract directly with subcontractors to construct improvements on their own property. While there are few lenders that may allow this type of arrangement; it can be advantageous to out of pocket owners who have the cash, knowledge, and confidence to tackle it.

The most important, and often overlooked, consideration is that the owner/builder is now the contractor on record and is therefore liable for the safety of all workers as well as compliance with the environmental (EPA) and (OSHA) regulations. Violations of federal regulations, (EPA and OSHA) are not excusable and the fines and penalties are expensive. You can read more about that here.

If you choose this course of action; it is extremely important that you are also aware that an unlicensed owner/builder cannot sell or lease, or offer to sell or lease, the property within 12 months of completion.

>However; there can be extenuating circumstances caused by a number of factors having to do with health, divorce, death, loss of employment etc. which may allow you an exemption from the “12 month” rule. Should any of these circumstances pertain, you must apply to the State Contractors License Board (for an exemption in order to be allowed to sell the property.

Another glitch that can occur is that the owner must remember to file a Notice of Completion of Contract which is provided after publication in the newspaper once a week for 2 consecutive weeks.

As a licensed broker, I would not normally be involved in an owner builder property due to the 12 month restriction. However, my clients were able to qualify and obtain an exemption and are closing escrow on the sale of their owner built home this week.

So long as you follow the rules, there is always a way!

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