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Property Investors: Acting as your own contractor may get you in hot water. The state licensing act will have significant impact to real estate investors and property flippers who fix up properties. Owners who buy and fix up property for their own use may do so once every 2 years.
 Under the state licensing act, property investors who have in the past bought property, fixed them up and then sold them to the public will need to completely revise their business model and operations. The reason is that the term “contractor” includes a person who contracts to, undertakes to, or submits a bid or proposal to perform, or otherwise does himself or herself perform, for an owner: (A) Construction management services relative to the performance by others of such construction activities where the person performing such construction management services is at risk contractually to the owner for the performance and cost of the construction; and (B) Services of a contractor as part of performance of design-build services, whether as a prime contractor, joint venture partner, or as a subcontractor to a design professional acting as prime contractor as part of a design-build entity or combination. These investors performing their own construction management are considered "contractors" under the law and must be licensed. There a lot of real estate investors who are "upset" that they may not be able to act as their own contractor, manage the construction process and hire subcontractors and others for their residential rental properties or properties they intend to sell. Some have indicated to Board members that they will ignore the law. The Board is very aware of the situation. I understand that the Board would like to find a reasonable solution that accomplishes the purpose of the act but also address some reasonable actions for some owners. Ignoring the law is not advisable and owners who do may find themselves subject to Board action or even criminal investigation. For example, a family that moves to a new home and cannot sell their current home may want to make some improvements to their old home to increase its chances of sale. Technically once the family moved out, they may have lost the ability to use the owner exception. But if all they are doing is replacing the roof, is that a contractor situtation? If they replace the roof this month and next month add a new deck does that change the analysis? If they bring in 15 different specialty contractors to perform work all in the same week, are they then performing construction management on a home intended for sale or lease? These are issues that the Board will likely be addressing. |
More information about the owner contractor exception The Fixer-Upper Even those who are merely buying a "fixer-upper" for their own use would fall under the term "contractor" but there is a specific exception under the law for them. Under OCGA 43-41-17(h), provides a person may construct or remodel a building or structure on property owned by such person which is (1) for their own use (whether solely by that person and family, firm or corporation and its employees, (2) not for use by the general public and (3) not offered for sale or lease. You, as owner, may act as your own contractor personally providing direct supervision and management of all work not performed by licensed contractors. Although it is not specified, you will have to pull building permits in your own name, as another unlicensed party would not be able to pull the license. You may not delegate the responsibility to directly supervise or manage all or any part of the work to another unlicensed person. All work must be done in conformity with all other applicable provisions of the licensing law (including the rules and regulations of the Board) and any state, county or municipal resolution, ordinances, codes, permitting or inspection requirements. The 2 year rule If you (or your family, firm or corporation) have previously sold or transferred a building or structure constructed by a person acting without a licensed residential or general contractor within the prior 24 month period, then you may not construct another another separate building without using a licensed contractor. The 24 month period starts from the date on which a certificate of occupancy was issued for such building or structure. | Many questions remain unanswered: There are some possible interpretation issues with the exception. CAVEAT: these interpretations are speculative and have not been supported by any Board or judicial interpretation. These questions are based on MY reading of the law. They are my opinion only and are provided merely for consideration of possible discussions: Because the exception refers to the term "person" who owns, is this to be interpreted as referring to an individual person and not a business entity such as a LLC, a corporation, trust or other entity and therefore would only permit a person holding in their individual name? If the remodel does not require a building permit, it may be possible to classify the work as repair work (if stay within the repair work categories)?
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