Do Owner-Builders Need a Contractor License To Build a Home?

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Are you thinking about building your own home? If you have the skills necessary to pull off such a monumental task, congratulations!

Building your home could save you some money in the long run (up to 20% of construction costs), but it’s important to do it right.

If this is the first home you’ve ever built, you may be wondering, “Do I need a contractor license to build my own home?”

Here’s what you should know about the different types of licenses and permits required to build your own home. Whether you’re wondering about owner builder licenses, building permits, or contractor licenses, keep reading to learn more.

Disclaimer: This article is not legal advice. You should consult your local building regulations and a qualified attorney for legal advice.

What Licenses Are Required To Build Your Own Home?

This depends on the state you’re building in, but at a minimum, you will need building permits. You may also require some sort of builder’s license such as a general contractor or a special owner-builder license and subcontractors will also need an appropriate license for what they do.

The subcontractors you may hire for different parts of the project will need a contractor or special trade licenses, such as electrical, plumbing, and HVAC.

Even if you think you’ve got the whole home-building thing figured out, you can’t just dive right in without taking care of the preliminary steps first. If you do, you have a very good chance of violating the law and getting in trouble.

When it comes to making sure you’re properly licensed to build a home, it’s essential to review the laws in your state. Different states have different licensing requirements for building a home. But if you are wondering, “Do I need a contractor license to build my own home?” the answer in most states is most likely, “yes,” unless you never intend to resell your home.

In many states, if you build your own home without a contractor license, you cannot sell the home unless there is a “change in circumstances,” meaning you are no longer able to make the mortgage payments because of extenuating circumstances (such as being fired from your job).

You may be in breach of the law if you don’t get the appropriate owner-builder license and you decide to sell or rent your home within one year of building it. In this situation, the law presumes that you never really intended to live in the home and are thus required to have a contractor’s license. In some states contracting without the required license is considered a Class One misdemeanor.

So to answer the question, “Do I need a contractor license to build my own home?” you will want to get a contractor license if you plan to do most of the construction yourself and you plan to sell or rent the home out to someone else.

If you plan to contract different parts of your home construction out to subcontractors, the regulations are a bit different. Here are a few things you should know about how to hire subcontractors to build your own home and when you should get an owner-builder license.

Owner-Builder Overview

An owner-builder is an individual or group of people who own a property and are planning to construct, remodel, or alter a building on the property. Typically there is no licensure required for an owner-builder if:

The owner-builder contracts out the construction or renovation to properly licensed subcontractors.
The owner-builder completes the construction project by himself or pays his employees to do so and the structure is not intended for sale.
The owner-builder contracts with a general contractor.

There are some exemptions to the above rules. If you are still wondering, “Do I need a contractor license to build my own home?” you should know that it may be possible for an owner-builder to construct one or more homes for resale if he meets the following conditions:

Hires a licensed general contractor to do all the construction and subcontracting work.
Hires licensed tradesmen to do all the construction work. (In this case, the owner-builder cannot build more than four structures per calendar year that he intends to resell).
The owner-builder performs some or all of the work and occupies the finished structure for at least one year before reselling it. (In this situation, the state cannot claim that the owner-builder never intended to live in the home).

For those who are interested in learning more about how to build your own home with the proper owner-builder license or contractor’s license, see the full list of general contractors’ license information by state.

What Are the Differences Between a Building Permit and a Contractor License?

Now that you know the answer to the question, “Do I need a contractor license to build my own home?” it is important to understand the differences between a contractor license and a building permit. A building permit is a type of authorization from a local government agency that allows you to continue with the construction of a building (such as a home).

If you want to use licensed subcontractors to build your own home, you need to sign the building permit application and apply for an owner-builder exemption. Building permits make it easier for local governments to enforce compliance with state construction code law. Obtaining the proper permits also helps you stay out of legal trouble.

The exception to the building permit rule is if you are doing something minor to your home, such as adding kitchen cabinets, installing floor coverings, or repainting your house. In these cases, you shouldn’t need a building permit or an owner-builder license. The only reliable way to know whether or not you need to get a building permit for a particular project is by consulting with your local building and permit office.

You should also consult with them if you are still wondering, “Do I need a contractor license to build my own home?” by going directly to the source for an answer, you’ll learn exactly what you need to do to renovate or build your own home the legal way.

Contractor’s License Requirements

If you’ve asked the question “Do I need a contractor license to build my own home?” check with your state to make sure you’re doing things properly. While you may be able to get a contractor license without experience, some states may require you to show proof of construction experience. Others may require you to pass business competence exams before you can get a contractor’s license.