WHY DO I NEED A CONTRACTOR?
THE RISKS OF BEING AN OWNER/BUILDER
If you are considering doing a construction job as an owner/builder, there are a number of important issues to be aware of. Legal obligations and risks may outweigh the financial benefits.
An owner/builder is what the term indicates – a person who owns a property that acts as their own general contractor on the job and either does the work themselves or has employees (or subcontractors) working on the project.
THE RESPONSIBILITIES OF AN OWNER/BUILDER
This section outlines the job responsibilities of a property owner/builder. You assume full responsibility for all phases of your project and its integrity. You must pull all building permits. Your project must pass codes and building inspections.
The owner/builder is also responsible for ordering materials and making sure all suppliers are paid. You just also supervise, schedule and pay subcontractors. If you use anyone other than your immediate family or a licensed subcontract for work, you may be considered an “employer”.
Employers must register with the state and federal governments and are obligated to participate in state and federal income tax withholding, federal social security taxes, workers’ compensation insurance, disability insurance costs and unemployment compensation contributions.
THE DOWNSIDE OF BEING AN OWNER/BUILDER
This section presents some additional issues that should be taken into consideration before deciding to become an owner/builder. Unless you are knowledgeable about construction, mistakes can be costly and take additional time to repair and/or do it right.
Subcontractors and suppliers who are not paid on schedule may file mechanic’s liens against your property. Educate yourself about mechanic’s liens and how to prevent them.
If your workers are injured, or your subcontractors are not licensed or do not carry liability insurance or worker’s compensation and they are injured, you could be asked to pay for injuries and rehabilitation through your homeowner’s insurance policy of otherwise face lawsuits.
You should be cautious of unlicensed individuals claiming to be contractors who prey on homeowners. They may promise to guide you through the owner/builder process for a consulting fee, but they are breaking the law.
Remember, as an owner/builder, you assume full responsibility for all phases of your project and its integrity.
Licensed contractors must demonstrate knowledge of their craft, be tested, fingerprinted, bonded and must undergo a FBI background check before they are licensed to work in California.
Illegal contractors can bungle a job and/or skip out with your down payments, leaving you on your own to deal with the issues.