Building My 1st Spec House
I don't need any financing to build my first spec house. I just purchased the land. Could you tell me do I need to purchase insurance for this project or do the contractors I hire have sufficient insurance coverage to handle this.
Thank you
debbie,
you will first need to become a licensed general contractor. check with your state for requirements it is usually not abig deal to become licensed. Your state will most likely require proof of insurance to grant a license. Even if they do not you still need it because you can still be sued even if all your subs are insured.
hope this helps.
Debbie, make sure you have liability insurance and make sure you have proof in writing of your contractors fire & extended coverage and workmans comp. Talk to your insurance agent or attorney about the extent of your contractors coverage, riders to the policy and about being listed as an additional insured. If one of the workers on the job site gets hurt his attorney will go after everybody and anybody. Good luck.
Quote:
On 2004-01-16 06:09, Debbiegreenberg wrote:
I don't need any financing to build my first spec house. I just purchased the land. Could you tell me do I need to purchase insurance for this project or do the contractors I hire have sufficient insurance coverage to handle this.
Thank you
As other have stated, all contractors / subcontractors should provide you a copy of their General Liability and Workers Comp Insurance. (Workers comp is not required if an employer has less than 3 employees.....however, I (and I am a builder) require all my subs to carry both.....and they provide me a copy of said insurance before they start work.
It is customary that you carry your own Builders Risk policy....this protect you for damage and theft to the property while it is under construction. When I do a spec home then I carry my own....I do a custom home for a client....they carry it.
Some lenders require that you obtain lien releases prior to disbursing final payments.....
Good luck.
NC_Yank
Debbie -
Are you building this yourself or are you hiring a General Contractor? Someone mentioned in an above post that getting a GC's license is usually no big deal..well as a GC I can tell you that I strongly disagree with that statement. One needs to know and understand the building trade both the technical and business side of the business. I have had many homeowners try to be their own contractor and until they find out how much of a headache it is..they usually end up hiring me to undo their mess. Basically, what I'm telling you is that Building Construction is more than just passing an exam. Therefore, if you are not experienced in building I highly recommend that you work out a deal with a licensed, bonded GC. Lastly the GC should be the one to carry Builder's Risk on the project not the owner.
Debbie, congrats on your purchase and courage to go for it. Two things that I would like to mention. You do not need to be a General Contractor in order to do your own house. The second thing is the point that Jonesoe30 brought up about managing such a project. There is a lot involved, but I would take it that you are experienced or you know someone real well who is experienced enough to help you out. If you do not, find someone that is willing to help you out and go for it. It will be a learning experience and a good challenge.
Wish you well !!!
Quote:
On 2004-01-16 20:54, jonesoe30 wrote:
Debbie -
Therefore, if you are not experienced in building I highly recommend that you work out a deal with a licensed, bonded GC. Lastly the GC should be the one to carry Builder's Risk on the project not the owner.
Hi Jonesoe,
I agree with you about most people do not know what they are getting into when they try to be their own contractor.
However I respectfully disagree about the Builders Risk policy being carried by the builder.
If its my spec home and my money involved than I am responsible.
The person who has the greatest investment to lose (in this case the homewoner) should carry it.
Not to mention that homeowners and contractors sometime do have a falling out.....then the policy is null and void.
Plus it is an added expense that is going to be passed unto the homeowner anyway.............also if they check with their local insurance company.......will find that it is cheaper for them to get it and convert it into a regular homeowners policy.
My insurance agent has advised me to do it this way since I have been in business.....never had a problem yet.
At least this is the case in North Carolina
NC_Yank -
Hi there! I believe you're probably right on about the Owner carrying Builder's Risk if their financing the project out of their own pocket, however, at least I know in Florida that when my client goes through the Bank with financing, it has been my experience that the bank usually requires the builder to obtain a Builder's Risk policy to cover for the damages and theft of materials, etc... This is part of the bank's prerequisites for the Builder.
In response to post above that you do not need a G.C. license, i do not believe this is correct, if you are building on spec for resale to someone else you need a g.c. license. You can verify with your state. As stated above the licensing process is fairly simply. Managing your subs as someone mentioned is more time consuming and difficult, whether to undertake this process is really a personal decision. On the insurance issues a good agent should be able to advise. When in doubt it in my opinion it is always better to spend $ for the extra coverage especially in todays litigous society.
In response to the before posts stating that "obtaining a g.c license being fairly easy" , I was wondering does your state require you to have a certain amount of start up capital in an account somewhere around $17,500. I know here in Concord, NC that amount is required and I was wondering does anyone have any input on how this requirement can be waived...NC Yank I noticed you reside in Concord as well...do you have any advice?? thanks a lot fellow investors
Hi Shamund,
The $17,500.00 can not be waived.
It is just another hoop to jump in obtaining the license......there are other cost associated as well...
In the next few years it will increase evermore and the restrictions will increase as well.
I answered one of your other post.....you can private email me with further questions.
NC_Yank
I just finished my first home in South Carolina.
While I hired a GC to advise me, in my case it was money wasted. In SC you can be an "owner/builder" and build one house at a time. To do more than one you need to have a GC license. To get a GC license you need a letter (in SC ) from a GC saying you have worked for him for at least one year, which I got after the house was done.
As for Insurance, need and SHOULD have builders risk. Here ia something I learn the hard way about builders risk, our policy was cancel after 3 months because State Farm said I failed to report a past claim when applying for the builders risk (the claim was not a claim at all and was cleared up later). They canceled us and I had to get a new builders risk policy and they are VERY few who will write a builders risk policy on a house already under construction.
For new owner/builders I recommend the "home builders guide". I bought it off the web for $75. It is a 300 page word document with practical step by step time lines and check lists for each phase. It was a lifesaver, I caught a lot of mistake by the subs and it help me keep my schedule of events on track for a timely finish.
Good luck.
Francis X
Thank you for the information about builders insurance. Could you please tell me exactly where on the internet I can purchase the home builders Guide. It sounds like something that would be very helpful. I tried to find it but did not have any luck. Thank you again
Deb
Private email me and I'll give you the info to the home guide.
Francis X. <IMG SRC="images/forum/smilies/icon_rolleyes.gif">
[ Edited by francisx61 on Date 01/29/2004 ][ Edited by NC_Yank on Date 01/29/2004 ]