Are you considering doing a
home remodeling project or room addition and acting Owner/Builder for
the project? This is legal and 100% doable, but there are some things
that you should know before attempting this.
What is an owner/builder?
This section defines what an owner builder is and the laws
surrounding the practice.
- An owner/builder is what the term indicates. The person owns the
property and acts as their own general contractor on the job and
either does the work themselves or has employees (or subcontractors)
working on the project.
- The work site must be their principal place of residence that
they have occupied for 12 months prior to completion of the work.
- The homeowner cannot construct and then sell more than two
structures during any three-year period.
As an owner-builder,
you will be responsible for all of the following, including being able
to develop and execute a critical path for the project.
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You
will either have to pull all of the permits or have each sub pull
their own. |
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There
is a lot of 'grey areas' between the trades, you will have to pay
for those. |
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There
is always mystery damages done on projects, you will have to pay for
them. |
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You
will have to deal with the inspectors 'face to face' for
inspections. |
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You
should be able to fully understand construction terminology. |
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All
plan revisions that are ordered by the city building inspector will
be on you. |
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You
will have to find good honest subs for all trades and keep them on a
schedule. |
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You
will have to find a deputy inspector for your concrete pour and
epoxy hold-downs. |
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You
will have to negotiate up to 10-20 contracts instead of just one. |
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You
will have to pay for extras that come up, and there will be a lot of
them. |
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You
will need to find a way to keep the job clean and safe, up to OSHA
standards. |
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You
better have a $1,000,000.00 insurance policy, because most
contractors DON'T |
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You
are legally responsible for all taxes & workers comp insurance for
workers you hire. |
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You
are responsible for yard run-off, $75,000.00 fine by the State of
California! |
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If you
get caught by the CSLB for hiring any unlicensed contractors, you
can go to jail and receive a nice fine. They do stop by jobs and
check pocket cards! |
The nature of the above
information is not to scare you, but to inform you that acting as a
General Contractor is not just having people do all the work for you.
There is a huge amount of liability involved not to mention dealing with
all of the different attitudes of all the subs and workers that you
hire.
You should also take into
consideration that you will need to be able to understand when to order
materials and when to have them delivered. You need to understand the
inspection process and know what a critical path is for your project. I
guarantee you that when the times comes to start getting the subs in,
'THEY WILL ALL TELL YOU' that they should go before the other guy...
because they just want to get in, get out and get paid!
Putting the wrong sub before the
other will cost you tearing out work and redoing it...
I GUARANTEE THIS!
Here are some questions
you might have:
-- How do I act as Owner
Builder?
-- What is an Owner Builder?
-- What should I do first as an Owner Builder?
-- What kind of subs will I need for my project?
-- Should I sign all of the contracts before I start, or when I need
them?
-- What do I do when a Contractor tells me 'that was not included in the
price'?
-- What do I do when the inspector writes a correction notice and the
subcontractor says that's not part of his job?
-- What do I do if there is an injury on the job?
-- Does an Owner Builder need to have insurance for the job?
-- Who pays for materials that are stolen from the job?
Did you know that 'ONE BAD
SUBCONTRACTOR' can shut down your entire job, cost you fines with the
city and cost you tons of money.
GOOD NEWS::::: If you can handle
all of the above situations, you are ready to become your own Owner
Builder and if it is done right, you can save about 20% or more on your
project. I strongly suggest that you do some research on the internet
first, have an attorney review your contracts, do a full background
check on all contractors you are going to hire and fully understand the
dynamics of job site problems & possible solutions.
BEST ADVISE::::: Take your
project in baby steps. Don't sign all contracts right out of the gate.
Sign as you go. Once the contract is signed, you are legally responsible
to pay that contractor the FULL AMOUNT, whether you do the work or not.
You can be sued if you don't follow through with him.
The downside of being an owner/builder
This section presents some additional issues that should be
taken into consideration before deciding to become an owner/builder.
Unless you are knowledgeable about construction, mistakes can be
costly and take additional time to repair or do it right.
Subcontractors and suppliers who are not paid on schedule may file
mechanic’s liens against your property. Educate yourself about
mechanic’s liens and how to prevent them.
If your workers are injured, or your subcontractors are not
licensed or do not carry liability insurance or worker’s compensation
and they are injured, you could be asked to pay for injuries and
rehabilitation through your homeowner’s insurance policy or face
lawsuits.
You should be cautious of unlicensed individuals claiming to be
contractors who prey upon homeowners. They may promise to guide you
through the owner/builder process for a consulting fee, but they are
breaking the law.
 REMEMBER
As an owner/builder, you assume full responsibility for all phases
of your project and its integrity.
Licensed contractors must demonstrate knowledge of their craft, be
tested, fingerprinted, bonded and FBI background checked before they
are licensed to work in California.
Illegal contractors can bungle a job or skip with the down payments
leaving the owner/builder pretty much on their own to deal with the
issue.
Good luck with
your project, and don't hesitate contacting us
for a free
consultation over the phone. |
