Proposed Law Would Toughen ‘Owner-Builder’ Requirements
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by Dave Smith
Lawmakers are considering a pair of bills that would add new requirements for those who choose to build their own homes instead of hiring a licensed contractor.
State law provides an exemption for “owner-builders” from the requirement to hire a contractor to build their home. It also prohibits the selling of an owner-builder home within one year unless certain hardship conditions exist.
However, the measures, Senate Bill 1077 and its companion, House Bill 846, both of which were introduced at the request of the Abercrombie administration, would tighten the restrictions on owner-builders.
The bills would clarify existing law that requires that the owner-builder must ensure that some aspects of the construction, such as plumbing and electrical work, are done by licensed plumbers and electricians, and that the project follows all “applicable laws, ordinances, building codes and zoning regulations.”
However, they would also require that the owner consider the workers doing the non-licensed portions of construction “employees” and must deduct FICA and other withholding taxes from their pay as well as provide them with workers’ compensation insurance.
The bills would also require that upon the completion of the structure the owner would, if requested by the state Department of Commerce and Consumer Affairs, need to provide copies of contracts with the workers and proof of their payment.
Those actions are designed to improve the ability of the DCCA to investigate possible violations of the owner-builder law, the bills say.
The penalty for violations under the existing statutes is a fine of $5,000 or an amount equivalent to 40% of the value of the work being done if that is greater, which for subsequent violations goes up to $10,000 or 50% of the value.
The bills would raise those percentages to 50% and 60%, respectively.
The legislation has the support of the construction trades industry.