# Advantages of contractor's license



## skyhigh (Nov 23, 2006)

I was wondering if you guys can help me understand if there are any advantages in having a contractor's license for an owner-builder/developer like me. Here is the deal.

I've recently completed building a house from the ground up (as owner builder) and have sold it for very good profit. I, my father, and my brother, have all worked many various jobs in construction before, so we did a lot of work ourselves, but we also obviously hired various contractors for all kinds of jobs we didn't see the point in doing ourselves. I am now considering buying a fourplex in less than prime condition, fixing it, leasing it, and selling it. I would later like to move to fixing up run down office buildings. I wish to go the "investment real estate" route this time instead of building a house, because I am a commercial real estate broker and often come across great redevelopment opportunities.

I've got the experience to get the license, so here is my question. Considering that I never plan to hire workers to work for me, and aside from the awesome ability to be able to post on here with other contractors, are there advantages of having a contractor's license for someone like me? Do you often get some kind of discount (particularly for the materials after rough inspection) that I wouldn't get? Is there some kind of "insider's information" that is available to contractors that I am overlooking? Most importantly: Are the city/county planning and building officials more willing to work with you guys in getting you the permits/information on development in the city?


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## Glasshousebltr (Feb 9, 2004)

I think it depends on where your at Sky.

Better give us a Location?

Bob


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## RobertCDF (Aug 18, 2005)

In my city you HAVE to occupy the building if you are owner GC. Although I dont know how they check up on that... or if they even bother. But its just the rules... So you might want to check with your area.


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## marc (Mar 18, 2005)

skyhigh said:


> I was wondering if you guys can help me understand if there are any advantages in having a contractor's license for an owner-builder/developer like me. Here is the deal.
> 
> I've recently completed building a house from the ground up (as owner builder) and have sold it for very good profit. I, my father, and my brother, have all worked many various jobs in construction before, so we did a lot of work ourselves, but we also obviously hired various contractors for all kinds of jobs we didn't see the point in doing ourselves. I am now considering buying a fourplex in less than prime condition, fixing it, leasing it, and selling it. I would later like to move to fixing up run down office buildings. I wish to go the "investment real estate" route this time instead of building a house, because I am a commercial real estate broker and often come across great redevelopment opportunities.
> 
> I've got the experience to get the license, so here is my question. Considering that I never plan to hire workers to work for me, and aside from the awesome ability to be able to post on here with other contractors, are there advantages of having a contractor's license for someone like me? Do you often get some kind of discount (particularly for the materials after rough inspection) that I wouldn't get? Is there some kind of "insider's information" that is available to contractors that I am overlooking? Most importantly: Are the city/county planning and building officials more willing to work with you guys in getting you the permits/information on development in the city?



Just to put a bit of a spin on your question............What would be the disadvantage of getting your contractors license? In my area you can't get a permit without it.


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## skyhigh (Nov 23, 2006)

Thank you for your replies.

I apologize for forgetting to include the location where I reside. I live in California (Sacramento area). There is a blueprint online for those who must have a license in the state and those that are exempted. As far as I gather from one of the exceptions to the rule about those who do not need a general contractor's license, I can make improvements to four structures within a year's period without a contractor's license if I use contractors to do some work (see link below).



> Just to put a bit of a spin on your question............What would be the disadvantage of getting your contractors license?


Fair question. I guess time would be one reason, as I would need to spend a couple of hours going over some basic codes to make sure I pass and then have to interrupt my schedule to take the test. There is also a $400 fee that I'd rather spend on golfing if I don't need the license. 

Link to blueprint: htt-p://ww-w.cslb.ca.go-v/applicants/blueprint.asp


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## tkle (Apr 15, 2006)

Owner-builders who build or improve existing structures on their own property if they contract for the construction with a licensed contractor or contractors.


> contract for the construction with a licensed contractor or contractors


Tells me a licensed contractor needs to do the work.


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## Dustball (Jul 7, 2006)

In my city, you're only able to rehab one house every two years without a license.


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## cmwacasey (Aug 13, 2006)

with my long time good reputation,I am too busy to worry about a liscense.As I have said before,I beleive a good reputation is worth more than a liscense.With over 30 years of in the feild experience,and being booked for a solid 19 years,I feel as though I can stand behind my statements.


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## Mike Finley (Apr 28, 2004)

I'm very surprised you can pull homeowner permits on properties you don't occupy as a residence. If you *can *pull them then a license isn't a big deal in that regard. I'm still not sure you are really clear on your understanding of the laws in this regard so make sure. 

Yes there are discounts for professional contractors at some suppliers. For every supplier that won't provide a discount to a non-contractor there seems to be 5 that will no matter who you are. But like I said there are some that do and depending upon what they supply it's up to you to decide if the savings are worth it. It isn't uncommon to receive discounts from a low of 5% to a high of 40% off of retail. It also isn't uncommon for suppliers to treat everyone as a retail customer or everyone as a wholesale customer.

As far as working with the building dept, I don't think it is out of line to consider that they cut homeowners a little slack in patience and dealing with them. However, it's all relative. Being a homeowner, you might get some slack on the first few times dealing with them, but after your 10th time still not knowing what you are doing their patience will wear thin. There is also the consideration that some inspectors hate homeowners because they are dangerous, don't know what they are doing and make their job harder. Inspectors who feel that way aren't going to let you into the 'club' for a long time. Most inspectors were contractors so some of them will go out of their way to help you with scheduling inspections since they know what you are going through, others just don't give a crap and love the security of thier governement job.


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## K2 (Jul 8, 2005)

In my county Owner Builders are allowed to do one single family a year, three in a lifetime. Need a "C" residential to build 
a duplex/4plex but need a B commercial to remodel the same. Owner permits for elect, plumbing, etc. are only allowed in single family dwellings that are occupied by the owner. 

The only disadvantage I ever saw in a license is that you might
get a " you should know better" from a judge but working without a license in an area that requires a license or stretching the grey area isn't going to buy any points with anyone. Like Bob said. The whole thing depends on where you're working and what might be required.


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## cmwacasey (Aug 13, 2006)

A savvy contractor can dance around permits that can waste his time and add unnecessary cost for a HO.I am not against liscence and permits for contractors that have not already proven themselves.I care more about MY customers than the government and their inspectors,that only care about their job.(generally speaking)


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## K2 (Jul 8, 2005)

> A savvy contractor can dance around permits


I probably hate bureaucracy more than anyone but I can't dance. 

I think even the best dancers would have a problem at our joint.


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## cmwacasey (Aug 13, 2006)

In texas everyone knows how to two step,except me.I disco.


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## thom (Nov 3, 2006)

SkyHigh, our rules in NM wouldn't allow you to do what you are doing. You could probably do it and not have any real difficulties with the law until something bad happens, then the **** hits the fan. 

The "bad" thing could be an injury, an unhappy client, a pissed off inspector, or one of the many things we don't think about until it happens to us.

In NM

Owner builder = residential only, must own the house as a residence, not a business (rental). 

As an owner-builder your are a GC and must follow all the laws other GC's do.

Every one who works on the site must be covered by Workmens Compensation Insurance. This is more restrictive than federal law. Your family must be covered by WC as well if they are working on the job.

Taxes is a big issue. Clearly you pay your family. Are you withholding taxes? This one comes back to bite you years later and is cumulative.

Liability is forever. Well almost anyway. The statute of limitations starts running when the code defficiency is discovered, not when it was made. Could be 30 years after the fact. You can cover your ass a little bit (certainly not entirely) by incorporating, but then you are now an owner-builder by definition. 

When you have someone out there doing clean up who gets injured, he will sue. His lawyer will use your lack of a license as evidence that you were negligent in your business practices. 

Why take the risk? Get the license. Get the insurance. Do it like a professional.


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## skyhigh (Nov 23, 2006)

I hear what you guys are saying and the response seems to be overwhelming in that I should just go and get the license. Many people involved exclusively in the commercial development trade seem to echo your guys' comments as well. Thank you all for your responses.


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## wackman (Nov 14, 2005)

K2eoj said:


> I probably hate bureaucracy more than anyone but I can't dance.
> 
> I think even the best dancers would have a problem at our joint.


I just had an issue with the city. They told me I couldn't do something I wanted to do. I fought with them a little bit but then appeared to give up and do what they wanted.

I waited 4 weeks and it cost me a little bit of money to sit on it but then I came back armed to the teeth with code and legalities but hopeing to fool them and get my way without the fight.

This group never even questioned it. I got the permit I wanted in about 2 hours. It just goes to show if you can boogie and have some political savvy you can usually get your way, at least here.

It's like dealing with the cops (from a different lifetime), don't tell them $h!t, make them figure everything out on their own and you'll probably get set free. Make the inspectors and plans examiners figure everything out and they'll miss something. If they like you to begin with that'll only help.

Sorry, I'm a little intoximicated...

Wack


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## RobertCDF (Aug 18, 2005)

cmwacasey said:


> A savvy contractor can dance around permits that can waste his time and add unnecessary cost for a HO.I am not against liscence and permits for contractors that have not already proven themselves.I care more about MY customers than the government and their inspectors,that only care about their job.(generally speaking)


I have NO respect for a "contractor" who does not have a license in state that requires one. I think it is just a stupid plan. $75 a year is a waste? Come on get real.


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## Mike Finley (Apr 28, 2004)

cmwacasey said:


> A savvy contractor can dance around permits that can waste his time and add unnecessary cost for a HO.I am not against liscence and permits for contractors that have not already proven themselves.I care more about MY customers than the government and their inspectors,that only care about their job.(generally speaking)


Could you elaborate on which permits you are talking about that add unnecessary costs and waste a contractors time?


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## tkle (Apr 15, 2006)

Mike Finley said:


> Could you elaborate on which permits you are talking about that add unnecessary costs and waste a contractors time?


Licenses,codes,and permits are there for the public's protection.They also help me establish price by putting forth the same standards for all to meet.To bypass these steps saying it's for the good of the customer is just plain wrong.It's only good for the hacks.


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## K2 (Jul 8, 2005)

> I am too busy to worry about a liscense.


How much time can it take to get a license??

A licensed guy can do everything an unlicensed guy can do.


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## cmwacasey (Aug 13, 2006)

I have the respect from the people I work for,the people that know what I have done.They beleive I am truley concerned for them,as I am.I have probably seen more hack work than most and I can say there are plenty of liscenced hacks.I do not need a kid out of college with no common sense coming out to inspect my jobs.(getting in my way and slowing the job down)I feel as though my reputation is on the line on every job I do,and am driven by that.-----with that being said--I think liscences are good,but not for me.


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## pwrpapa (Jul 3, 2005)

cmwacasey said:


> I have the respect from the people I work for,the people that know what I have done.They beleive I am truley concerned for them,as I am.I have probably seen more hack work than most and I can say there are plenty of liscenced hacks.I do not need a kid out of college with no common sense coming out to inspect my jobs.(getting in my way and slowing the job down)I feel as though my reputation is on the line on every job I do,and am driven by that.-----with that being said--I think liscences are good,but not for me.


I'm which ya hommie. LOL
I've seen a lot of nut job hacks with licenses myself.
I also know of license builders that will not pull permits. 
The only problem I can see is if you had a non paying H. O. you wouldn't have a leg to stand on in court without one.
I would just get one, why fight the system.


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## nadonailer (Nov 15, 2005)

cmwacasey said:


> I have the respect from the people I work for,the people that know what I have done.They beleive I am truley concerned for them,as I am.I have probably seen more hack work than most and I can say there are plenty of liscenced hacks.I do not need a kid out of college with no common sense coming out to inspect my jobs.(getting in my way and slowing the job down)I feel as though my reputation is on the line on every job I do,and am driven by that.-----with that being said--I think liscences are good,but not for me.


So your state won't throw you in jail for contracting without a license?


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## Mike Finley (Apr 28, 2004)

cmwacasey said:


> I have the respect from the people I work for,the people that know what I have done.They beleive I am truley concerned for them,as I am.I have probably seen more hack work than most and I can say there are plenty of liscenced hacks.I do not need a kid out of college with no common sense coming out to inspect my jobs.(getting in my way and slowing the job down)I feel as though my reputation is on the line on every job I do,and am driven by that.-----with that being said--I think liscences are good,but not for me.



I'm curious to know if your general liability insurance will deny a claim if the work was illegal, also will your customers home owner's insurance deny their claim if the work is illegal?


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## tkle (Apr 15, 2006)

cmwacasey said:


> I have the respect from the people I work for,the people that know what I have done.They beleive I am truley concerned for them,as I am.I have probably seen more hack work than most and I can say there are plenty of liscenced hacks.I do not need a kid out of college with no common sense coming out to inspect my jobs.(getting in my way and slowing the job down)I feel as though my reputation is on the line on every job I do,and am driven by that.-----with that being said--I think liscences are good,but not for me.


I just hope you don't drive.If you take pride in what you do,do it right.As for the inspectors,you have no clue...


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## cmwacasey (Aug 13, 2006)

My state has the death penalty.we throw crooks in jail.liscensed drivers are another good example of just because you have a liscense,that you can do something properly.(can anyone disagree with that?.just using an example previously stated.)Insurance is not a problem and I work quite well with insurance companies.To reiterate my veiw on this subject--Reputation is more important than a liscence.---To those without a good developed reputation ,a liscence should probably be required.


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## tkle (Apr 15, 2006)

Not having the proper license says that you don't do things properly.That you're willing to bypass steps that you think are unneccessary.You probably don't use turn signals cause you already know which way you're headed.


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## cmwacasey (Aug 13, 2006)

tkle,these days you are probably right.I guess you are probably pretty young and well educated.When I started things were different.A mans reputation was what was the most important thing he could have.Back then we did not need fancy pieces of paper with frilly titles.


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## K2 (Jul 8, 2005)

With regards to the original post.

In my county every permit, inspection, contractor, or Owner contractor, is available on line for every property, (residential and commercial). If you go to sell your home and you say you "did this", "this is new", "that is redone", "we put on that addition", all the info on permits etc is available to realtors, appraisers, potential buyers, banks, title companies, judges, lawyers, etc, etc. This info can screw up a home sale or put the pricing in favor of the buyer even if the work was done to the highest quality.

If this type of info is not available in your area then it probably will be in a few years. It's just makes sense to follow most of the rules. I've been in the trades for close to 40 years. Following most of the rules is not that difficult.


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## RobertCDF (Aug 18, 2005)

cmwacasey said:


> My state has the death penalty.we throw crooks in jail.liscensed drivers are another good example of just because you have a liscense,that you can do something properly.(can anyone disagree with that?.just using an example previously stated.)Insurance is not a problem and I work quite well with insurance companies.To reiterate my veiw on this subject--Reputation is more important than a liscence.---To those without a good developed reputation ,a liscence should probably be required.


I have an EXCELLT reputation.... But guess what I have a license too because it makes sence. And its also the law... 

I love people that think they are above the law... Arrrogant pricks.


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## tkle (Apr 15, 2006)

cmwacasey said:


> tkle,these days you are probably right.I guess you are probably pretty young and well educated.When I started things were different.A mans reputation was what was the most important thing he could have.Back then we did not need fancy pieces of paper with frilly titles.


...and you probably knew all your neighbors.Actually I'm old and ignorant.Back then you had a reputation.Now,nobody knows you or me from adam.


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## K2 (Jul 8, 2005)

On a slightly different subject I once got an A$$ chewing from a District court judge. I had been doing some property management for some friends as I thought I was very experienced from doing my own property management. This judge informed me that in my state it is illegal to manage someone else's property without the proper real estate license. In a tenant/landlord dispute I would be the one in the wrong and the judgements for damages against me could be real , punitive, and substantial. 

In my case, on this day, the other party/ tenant did not show and the judge was only interested in embarassing me.

That changed my know it all status quick.


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## Mike Finley (Apr 28, 2004)

cmwacasey - guess you are still researching this?



Mike Finley said:


> I'm curious to know if your general liability insurance will deny a claim if the work was illegal, also will your customers home owner's insurance deny their claim if the work is illegal?


Not trying to break em on you, you sound like a good guy who wants what's best for his customers, you probably do great work for them and go the extra mile when necessary. Seriously if you put a lot of worth on your reputation and doing what's right for your customers, you should put some serious consideration into the sticky liability issues you are creating for your customers everytime you avoid the permit process.


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## cmwacasey (Aug 13, 2006)

mike,i have had no claims on my liability insurance ever. my work generally will surpass the toughest codes.you guys also may need to understand that the laws might be different where I work,than where you work.Finally,out here where,I currently have been working for 7 years everyone does know everyone.Bad contractors will be run out of the territory quickly--they do not care about a liscence--they just want their work done right at a fair price.


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## Mike Finley (Apr 28, 2004)

Don't see what this:



cmwacasey said:


> mike,i have had no claims on my liability insurance ever. my work generally will surpass the toughest codes.you guys also may need to understand that the laws might be different where I work,than where you work.Finally,out here where,I currently have been working for 7 years everyone does know everyone.Bad contractors will be run out of the territory quickly--they do not care about a liscence--they just want their work done right at a fair price.


... has to do with this:



> I'm curious to know if your general liability insurance will deny a claim if the work was illegal, also will your customers home owner's insurance deny their claim if the work is illegal?


Unless you are saying your laws are different and your liability insurance *would *cover you on a claim on a job that has illegal work and your homeowners insurance laws *are *different and they will cover a homeowners claim on illegal work.

Perhaps you are confusing "illegal work" with work done below code or work done at sub par quality. Illegal work is work that no building permits were pulled.

Your GL insurance covers you for accidents. (You do have GL insurance right?) Just because you work to the power of 10 above code doesn't mean you can't have an incident occur where you would have to put in a claim. Past history of no claims doesn't mean a catastrophic incident can't happen, it just means it hasn't so far, (and hopefully never will).

Homeowners generally have a last line of defense against a catastrophe on their home which is their homeowners insurance policy. You see the point is, I'm not sure how your customers would be as comfortable as you believe if they were fully aware that along with as you put it "they just want their work done right at a fair price", they were also putting their largest investment they probably have (their home) at risk knowing that if anything would happen, such as a fire or water damage and was associated with the work you did that they would be getting denied for their $100,000 claim on their homeowners policy and then since your GL insurance won't have to pay either, their last recourse is suing you.

To put it another way, if all is really as happy and sunshiney as you say, try telling them all this before they hire you next time. Just let them know the possible consequences of you not pulling permits, as remote as they are and ask them if they want to roll the dice over a few hundred dollars and a few 'wasted' hours of *your *time.

You see what I'm saying? You're going along happy because you don't think anything can happen becuase you are super careful and work way above code, and your customers probably aren't even aware of the risks you are putting them in. That's not a very ethical thing to do to anybody in my opinion. Get the facts and the risks out there and let your customer decide, then hey, it's let the buyer beware at that point, instead of buyer doesn't have all the facts.


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## RobertCDF (Aug 18, 2005)

Yeah... If you did not pull a permit your or your homeowners insurance will almost definetly DENY any claim put forth. Because WITHOUT the permit and inspectios they have NO way to PROVE that you did follow the minimum code. 

For example:
Lets say you build an addition. No permit is pulled and you finish it. The work is superb! AMAZING even so far above code that inspectors could use it as a model of how to do it right. Then a fire breaks out somehow... and burns that addition down. The homeowners call thier insurance and they come out and look at it. Since there is no record of a permit or inspections. They decide that it MAY have been an electrical fire. Since it was not inspected they WILL DENY the homeowners claim. The homeowner will then come after you and your GL and they will also DENY your claim.


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## cmwacasey (Aug 13, 2006)

mike you are absolutly right and I agree 100% about telling the truth about myself.now for me this is a dead horse.finally,I appreciate all the comments good and bad.it is what makes this website interesting and informative.this is certainly not a website for people that are easily offended.


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## buckleyclan (Dec 10, 2007)

California DOES have specific rules about Owner-Building. It has been covered on this site and it definitely covererd on CSLB. 
In essence, you must live in the house that you are remodelling, having owned it for a minimum of 1 year prior to sale, or you are contracting without a license. Municipal codes and Local laws are not the same as CSLB requirements. Be careful!

check out cslb.gov if you doubt it!
 
_"Owner-builders who build or improve residential structures on their own property if_
_they either do the work themselves or use their own employees (paid in wages) to_
_do the work. This exemption is only valid if the structure is not intended to be_​_offered for sale within one year of completion;" _
*(from blueprint to getting licensed...)*


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