Officials warn owner-builders of liability issues
November 20, 2015
Now that our community is coming out of the recession, there are more construction projects that are popping up all around Nevada County.
It has been very popular in the county for homeowners to act as their own "owner-builder" to manage their construction projects. An owner-builder acts as the general contractor on the job, and either does the work or has licensed subcontractors work on the project.
Some homeowners do this because they believe they can save money by not hiring a licensed general contractor. Or, they try to save money by hiring unlicensed individuals and misstating on the permit application that they, as homeowners, will do the work.
Unfortunately, most homeowners don't know they can face very serious legal and financial problems if they choose to be an owner-builder and don't follow state law.
When an owner signs a building permit application as an owner-builder, they assume full responsibility for all phases on the project and may be considered an employer if they hire unlicensed contractors.
This could include owners being responsible for:
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— Registering with the state and federal government as an employer.
— Withholding state federal income taxes and making employment compensation contributions.
— Providing workers' compensation insurance.
— Being liable for workers' injuries on their property.
Before an owner decides that they will be an owner-builder for their project, they need to ensure they know all of the requirements and state laws. Being an owner-builder is the most significant financial risk an owner can have for a construction project if they do not protect themselves by making sure a contractor is licensed through the state and has workers' compensation
Owners should beware and consider the risk before accepting full responsibility for a construction permit.
If you have any questions regarding being an owner-builder, contact the Nevada County Building Department at 530-265-1222 or BuildingDept@co.nevada.ca.us, the California Contractors State Licensing Board at 800-321-2752 and/or the Nevada County Contractors' Association at 530-274-1919.