Legal Question in Construction Law in California

Re: Owner Builder the way to go for Addition/Remodel

Owner Builder is done by many who have experience at managing projects. You can hire others as independent contractors, and you do not need to have them on a payroll as employees - but you need workers comp to cover all persons who will work on the job; and liability insurance. A good insurance broker can make sure you are properly covered. You will want a clear written agreement with the contractor defining scope of work, costs, extras, change orders, etc. Or just work on a time and materials basis. But you need to manage the contract and costs. You should also consult with your CPA on tax reportings since you will be acting as a general contractor. You will have to obtain all the permits yourself. The biggest concern I have is whether you may have to disclose on a subsequent sale that the addition was done by an unlicensed contractor. Perhaps not if you are diligent about getting all inspections done and signed off - and keep all those records. But the disclosure laws are very broad. It is your duty to make sure the work is properly engineered and done in accordance with all code requirements. There are probably many other issue that will come up as you proceed, but good luck.

Re: Owner Builder the way to go for Addition/Remodel

You are looking at a potential minefield. Mr. Smith wasn't clear when he said that you could hire others as independent contractors. You CANNOT hire an unlicensed contractor independently. He must be on your payroll as an employee. You can hire unlicensed contractors independently only if the work they are going to perform is under $500 and, even then, there are some qualifications. This is the rule: If they don't have a license, then they are your employee and you must pay taxes, worker's comp, etc. The $500 exception will rarely materialize.

I strongly advise you to hire a payroll service to handle the payroll taxes. Most will also assure that the worker's compensation fees are paid and the proper paperwork filled out.

Best of luck, but I will warn you that most owner/builder projects turn out to be far, far more work than the owner ever envisioned. Plus, they virtually always end up costing more than the owner thought. Be prepared for changes and unknowns that will drive the costs up. Surprises can be held to a minimum if you get a very good and comprehensive set of plans. Spend some money on a designer and an engineer that knows what they're doing. Since the Northridge quake, the level of engineering and detail that are required are astonishing.