OWNER-BUILDER BROCHURE

This brochure covers the risk of taking on the task of
being an owner-builder
and covers the following issues:

Legal Implications
Code Compliance
Liability Implications
Economic Realities
Project Management
Financing
Conclusion

FOR A COPY OF THIS BROCHURE CLICK HERE 

The Haywood County Homebuilders Association Mission Statement reads: "HCHBA, the voice of Haywood County’s building industry, is an association of building professionals and related associates, whose purpose is to maintain high standards in the building industry for its members and homeowners." In that light, we would like to address the serious subject of unlicensed contractors. Since building a home is one of the biggest decisions of your life, it shouldn’t turn out to be one of the biggest mistakes of your life.

For jobs valued at $30,000 and under, a license is not needed. Neither is one required if you are building a home and acting as your own general contractor—however, certain specific laws apply. A homeowner wishing to "pull" (apply for) his or her own permit may do so, if they intend to supervise the project themselves. Of course, they must be present on the job, must call for and be present for all inspections by the Building Department, must handle and supervise all the subcontractors, and live in the home for at least a year before advertising the home for sale or rent. There are individuals who are qualified, who want to put in the time and effort to build their own homes, and this provision is intended to preserve their right to do that.

However, pulling a permit with the intent to hire an unlicensed contractor is called "aiding and abetting" and has unpleasant ramifications aside from the legal ones (injunctions, fines and imprisonment).

First of all, there is structural liability; oftentimes we get a set of plans which appear to be complete, yet while we are following them in the field, the need for extra framing, or even engineering, arises. Without the proper experience, one might not be able to make that calculation. While we wish it were otherwise, building is not a linear process, where you follow certain steps and end up with a house. There may possibly be thousands of decisions along the way that will determine the soundness of your structure, such as, "Will that beam in the floor carry the roof load?" or "What type of framing over the windows will defray the weight of the cathedral ceiling?" or "What size footing (the part of the foundation that bears directly on the earth) do I need under the stairwell supports?" Not answering any one of these questions correctly can result in disaster—if not for the homeowner, then for the unlucky person who later purchases that house.

Construction in the mountains is no comparison to what it is in other areas of the country. A builder in Florida, for example, can know beforehand exactly how deep his footings will be and how much foundation material he’ll need, because the soil conditions are predictable and the land is flat. Encountering rock while digging footings in this region is commonplace; pulling it out leaves a bigger hole, which requires more concrete. Also, excavation (the art of creating a flat area out of a sloped one) sometimes results in some "fill" dirt, which must be dug through to reach compact soil, also creating a larger cavity for concrete and consequently, a taller foundation wall, and in some instances, retaining walls and extra erosion control practices. Your foundation is the last place where you want to make errors in judgment.

You can imagine all the other crucial areas, such as plumbing, electrical, heat and air installation, that go behind the walls, and must interconnect correctly because they cannot be accessed once the drywall is in place. Add to that the vagaries of weather, deliveries, subcontractor dependability, soil conditions, the shifting price of materials, equipment failures, etc….GOOD GRIEF, who would want this job anyway??? And especially without the proper credentials, opening one self up to legal consequences on top of the staggering responsibility is not a position any intelligent person would desire, once they had all the facts.

Let’s add to the list the issue of Workers Compensation Insurance. Purchasing a policy is only the beginning; at the end of the job you will pay additional premiums for any uninsured subcontractors who worked on your job. The same is true for General Liability. Licensed Contractors are required to carry Worker’s Compensation insurance, which protects you, the homeowner, from loss due to injury on your job. And of course, your Contractor’s General Liability and Builders’ Risk Insurance protect you further from exposure to damages to the structure during construction.

Given all of these potential hazards, most financial institutions look less favorably on "Owner-Builder" loans, and their interest rates will reflect that. Also, subcontractors and suppliers give discounts to their Contractors, who are their repeat customers, and an Owner cannot expect the same financial consideration. And if you think the salespeople will give you an accurate material estimate—well, as careful and efficient as some of them are, they are ultimately not accountable for costs, and comparing bids is never "apples to apples". The volatile nature of material pricing, and of Contracting in general, is the reason why most banks, and most suppliers and subcontractors, prefer to have a licensed contractor pulling the permit.

Given all these potential pitfalls, if you’re qualified and you still want to build your own house and do it legally, and you have the time and energy to do so, then please proceed. Otherwise, leave it to experienced professionals who have the expertise to make these crucial decisions, and who are willing to shoulder the responsibility for you. That’s what the Homebuilders Association is here for.  

by Mary Stewart
HBA Vice-President & Builder Member