Owner/builder
Exemption (B&P 7044)
Owner/builder
Exemption (B&P 7044)
Who is considered an owner/builder
Any individual, or group of individuals, who own the property on which they
plan to construct, alter, repair, improve, or
remodel a building or structure. Also, a tenant may be considered an owner/builder (case-by-case).
Is an owner/builder required to have a
license?
An owner/builder is exempt from licensure, but there are limitations. A
license is not required if:
a. The owner/builder does the work himself or herself or through his or her own
employees with wages as their sole compensation and the
structure (s) is/are not intended for sale
b. The owner/builder contracts with properly
licensed subcontractor (s). This exemption applies to the construction of a
single-family residential
structure and limits the number of structures intended or offered for sale to
four or fewer in a calendar year
c. Number of structures is unlimited if the owner/builder contracts with a
general building (“B”) contractor
Is a homeowner required to obtain a license if he/she wants to improve
his/her home?
A homeowner improving his or her principal place of residence is exempt from
licensure if all of the following exist:
a. The work is performed prior to sale;
b. The homeowner resides in the residence for the 12 months prior to completion
of the work;
c. The homeowner has not taken advantage of this exemption on more than two
structures during any three-year period.
Are there any trades that property owners are prohibited from performing themselves?
Property owners are prohibited from performing well-drilling work covered under
the
C-57 Well Drilling classification.
Does the owner/builder exemption apply to an individual who builds homes for
resale (spec homes)
and are there any limitations?
Yes. The owner/builder exemption would apply to an individual who builds
homes for resale under any of the following conditions:
a.
Licensed tradesmen are hired to perform all work on the project (provided no
more than four structures per calendar year are intended for resale)
b. A
licensed general contractor is hired to perform and/or subcontract the
completion of all work on the project. (No restriction on the number of
structures completed per calendar year.)
c. The owner/builder performs the work, all or in part, and resides in the
completed structure for one year prior to resale. (Applies to not more than
two structures in a three-year period.)
A word of caution from the Contractors State License Board
Anyone who talks you into being your own general contractor, or "owner/builder" may be doing you no favor.
"Owner/builder" describes a situation in which the homeowner becomes the general contractor.
As an owner/builder, you (not the person you hire) assume responsibility for the overall job.
Your responsibilities may include such things as state and federal taxes, workers' compensation insurance, and other legal liabilities.
You may be required to hire various subcontractors for your project, scheduling their work and supervising the job.
If a worker is injured while working on your property, you could be asked to pay for injuries and rehabilitation through your homeowner's insurance policy.
By signing a building permit application as an owner/builder, you assume full responsibility for all phases of your project and its integrity.
Hiring an unlicensed "consultant" to manage the project does not save you money in the long run.
By hiring a licensed experienced contractor for your project to hire licensed knowledgeable tradespersons, the contractor becomes responsible
for all phases of construction. Unless you are very experienced in construction. It is best to leave these matters to your licensed contractor
6/04
A frequent practice of non-licensed persons professing to be contractors is to have the property owner obtain the building permit as "owner/builder",
erroneously implying that the property owner is providing his or her own labor and material personally.
A contractor's license issued by the State of California Contractors State License Board is required when the work is to be performed by someone
other than the property owner and is valued over $500.00 including labor and material. The licensed contractor should obtain the permit.
Building permits
are not required to be signed by property owners unless they are performing
their own work personally.
Contractors are required by law to be
licensed and bonded by the State of California and to have a business
license from the city or county
in which they are performing work. They are required by law to provide for workers' compensation if they employ or otherwise engage any person to work.
They are also
required by law to put their
license number on all forms of advertisement, proposals, estimates, and
contracts.
If you plan to do your own work as an
owner/builder,
with the exception of the various trades that you plan to subcontract to
licensed contractors,
you should be aware of the following information for your benefit and protection:
If you employ or otherwise engage any persons other than your immediate family,
and the work (including materials and other costs) is
$500 or more for the entire
project, and such persons are not
licensed as contractors or subcontractors, then you may be an employer.
If you are an employer, you must register with the state and federal governments
as an employer, and you are subject to several obligations
including state and federal income tax withholding, federal social security taxes, workers' compensation insurance, disability insurance costs,
and unemployment compensation
contributions.
There may be financial risks for you if you do not carry out these obligations,
and these risks are especially serious with respect to workers'
compensation insurance.
For more specific information about your obligations under federal law, contact
the Internal Revenue Service at (800) 829-1040 [and, if you wish,
the U.S. Small Business Administration at (800) 359-1833].
For more specific information about your obligations under state law, contact the Employment Development Department at (916) 653-0707,
the Department of
Industrial Relations at (415) 703-4580, and the Franchise Tax Board at (800)
852-5711.
Business and Professions Code, Section 7044 provides for an exemption from the
contractor's
license requirements for "owner/ builders".
Section 7044
reads, in part, as follows:
7044: This chapter does not apply to any of the following:
(a) An owner of property, building or improving structures thereon, or
appurtenances thereto, who does the work himself or herself or
through his or her own employees with wages as their sole compensation, provided none of the structures, with or without the
appurtenances
thereto, are intended or offered for sale.
(b) An owner of property, building or improving structures thereon or
appurtenances thereto, who contracts for such a project
with a
subcontractor or subcontractors
licensed pursuant to this chapter.
However, this exemption shall apply to the construction of single-family
residential structures only if four or fewer of these structures are intended or
offered for sale
in a calendar year. This limitation shall not apply if the owner of property
contracts with a general contractor for the construction.
(c) A homeowner improving his or her principal place of residence or
appurtenances thereto, provided that all of the following conditions exist:
(1) The work is performed prior to sale
(2) The homeowner has actually resided in the residence for the 12 months prior
to completion of the work
(3) The homeowner has not availed himself or herself of the exemption in this
subdivision on more than two structures
more than once
during any three-year period
Information about
licensed contractors may be obtained by calling the Contractors State
License Board at 1-800-321-CSLB
----------------
Contractor State License Board
P.0. BOX 26000, Sacramento, CA 95826
Phone: 800-321-2752
Fax: 916-255-1395