Is This Law? Need Licensed Builder For Repairs > $500
In my real estate fundamentals course our instructor mentioned that if you are doing more than $500 worth of repairs it must be completed by a licensed professional.
I must have heard wrong because this doesn't make sense. I will have to follow up with the instructor.
Does this statement ring a bell with anyone? I am in Michigan.
Thanks in Advance
When does a residential builder need to be licensed?
In general, a person who contracts with another to do residential, or combination residential and commercial, construction or remodeling on a project whose total value is $600 or more is required to be licensed as either a residential builder or a residential maintenance and alteration contractor.
See the link below for more information about your state...
NC
http://www.michigan.gov/cis/0,1607,7-154-10557_12992_13953-66315--,00.html
In general, you do not need to be licensed (or even competent ) to pull the permits and do the work yourself on any house that you own. That's the way I've done it on both my personal residences (I buy fixer-uppers) and my investment property.
That said, individual communities may have tighter local requirements. Your best bet is to contact the local building department and verify with them that you can pull permits as the owner.
I think what your instructor was referring to is the requirements when you hire out work (they have to be licensed, etc).
Thank you both for your reply.
With respect to rehabbing do you think it is a concern if I use freelance help to complete the work?
Thanks,
wayne
You need to ask the instructor how many houses have they rehabbed? As far as needing a home builders license to do rehabs,I doubt it. In most states the owner of a property can act as his own contractor,and hire anyone they want (licensed or unlicensed).
That said,
I heard Robin Thompson say shes started out that way (freelance) in the beginning and moved away from it due to inconsistant quality, and the "huge" liability you have with regards to injury on the premises by your employees.
If someone gets hurt working for you and isn't covered by workman's comp then even bankruptcy won't save you from never ending liability.
Thanks Michael,
I thought it was common practice to hire freelancer -v- contractors in order to cut cost.
Are there any suggestiions out there to finding the right balance between cost cutting, quality of work, and liability?
The professional contractors are costly. I don't have the knowledge or the time to do repairs myself.
Thanks
In addition to the liability that Stockpro mentioned, whoever is listed on the permit for that project can be held liable if someone later is injured due to "faulty workmanship."
Example: You build a deck on a house you sell. 2 yrs later, someone leans against the railing and it gives way. The permit holder could be sued for it. How's the cost of them contractors looking now?
Roger
I am just starting out and planning ahead for my first purchase.
I have also heard of temp agencies which have their own liability insurance.
Has anyone had experiences using a hired hand from a temp agency?
If you need something like carpet and paint done, then I wouldn't go through a contractor. I would shop around for price and quality and find someone that is insured (get proof) to do this for you. Having a contractor handling everything can add up and once you find the people you like who can paint, carpet, install windows, do electrical work... it shouldn't cost too much of your time and it will save you money.
You just have to decide what you are the most comfortable with. Some investors completely contract the job out, others repair it themselves, and others fall somewhere in the middle...
Don't forget to always ask for referrals.
Why do you think the instructor would lie to you??
That''s the way she earns (albeit miniscule) her living.
You do the work . Generally,(almost always) you as the owner are exempt from this requirement..
You hire someone to do the work for you ,and it is exceeds what the teacher said then get a licensed contractor.
I don't think she lied or is misinformed she is a very good instructor. I think I may have misinterpreted her statement.
I posted on this site in order to get real life opinions from investors. The posts have helped a lot.
I think I will use a mixture of both freelancers and contractors. I will also find an investment club in my area to get other opinions.
The information I gave you before came from Michigan requirements.....
The other thing you should research is the requirements about reselling a property after you have fixed it.
Many people make the assumptions that just because certain localities allow you to pull your own permits, that you also can turn around and resale it thereafter.
This is not necessarily true. Here in NC, you can pull your own permit for your own PRIMARY residence.......or jobs that do not exceed $30,000.00 .......I suggest you contact Michigan licensing board to get the full understanding to what you are allowed to do in YOUR state.