An owner-builder owns property and acts as his or her own general contractor. Owner-builders either do the work themselves or have employees (or licensed subcontractors) working on a construction project.
When you sign a building permit application as an owner-builder, you assume full responsibility for all phases of your project and its integrity. You may be considered an employer if you hire unlicensed contractors to do the work. This may make you responsible for:
- Registering with the state and federal government as an employer
- Withholding state and federal income taxes, federal Social Security taxes, paying disability insurance, and making employment compensation contributions
- Providing workers’ compensation insurance
Other general responsibilities include:
- Supervising the job, including scheduling workers and obtaining building permits and requesting applications
- Scheduling inspections, correcting the work, and getting it re-inspected if any of the construction doesn’t pass building inspections
- Assuring all workers and material suppliers are paid, or face the possibility of mechanic’s liens against the project property
Unless you are knowledgeable about construction, mistakes can be costly and take additional time and money to repair.
If your workers are injured or you employ unlicensed subcontractors who do not carry liability insurance or worker’s compensation, you can be asked to pay for injuries and rehabilitation through your homeowner’s insurance policy or face lawsuits against you.
If you do not pay subcontractors and suppliers on schedule, they may file a mechanic’s lien against your property.
For home improvements, the work site must be your principle place of residence that you have occupied for 12 months prior to completion of the work. The work must be performed prior to the sale of the home.
You cannot take advantage of this exemption on more than two structures during any three-year period.
For construction of new single-family residences, you are limited to selling four or fewer residential structures in one calendar year. The work necessary to complete the project(s) must be performed by licensed subcontractors.
The Community Development Department requires two documents for each permit obtained as owner-builder.
Find out more here: Owner-Builder Acknowledgement & Information Verification
For More Information
Contact the city’s finance office at (310) 285-2419 to find out if you need to obtain a business license.
Contact the state Employment Development Department and Franchise Tax Board for instruction on registering as an employer.
Contact the Internal Revenue Service (IRS) for information on registering as an employer.
Obtain workers’ compensation coverage, and inquire with your insurance company about any need to increase your liability coverage.