owner builder should beware of

There some important things owner builders should be ware of



In this economic down turn, bank have now construction loan at all. And bank also have very restrict for equality loan. Home owner try to save money and take risk to be an owner builder instead hiring quality general contractor.


A lot of people made money by doing this before economic crash. When housing market booming they turn around sold it as is right after build.


First, owner builder is legal only if owner build it self or owner hire licensed sub contractor, most people not doing this at all. They do everything by other people, a small group of people used to work for other company, and now they got laid off. They travel around city looking for construction site ask for job.


Owner have obligation for the following liability.


1. Owner has liability for IRS about all the people’s payroll tax.
2. owner have liability for Workers compensation insurance
3. Owner has liability for all payee income tax if they miss report tax. Because every individual which have no contractor license maximum can get paid without w-9 report no more than $750 per year.
4. owner also liable for all the penalty for delay report


even some time owner hired some sub contractor, they have worker’s compensation insurance, but actually sub contractor owner just have certificate for owner exemption, he report have no employee, or just report one or two employee to get certificate. Then they hire more workers without put them in the payroll. Which means insurance not cover if any of them not in the payroll? Which means it will hold owner liability as well if worker open law suit for injury. Which means it is possible owner’s property might put on security on the law suit lien, and which means if bank find out the situation bank might ask you pay off all the loan right way. Especially owner borrowed equality loan but tear down the whole house without get bank agreement to do so.


Second: owner builder build home legally can not sale without live in the house at least one year after build. And also owner builder have same liability for the construction since owner act as a general contractor. Most general contractor has liability insurance. But most owner never pay attention check with their insurance carrier if the policy cover construction work or how the cover it.


Third: owner builder have not enough knowledge about poseur how to build and how to schedule each trade. It is because a lot miss functional scheduling. So the job runs a lot worse and complicated. Sub contractor get mad by wasting more time to go in back and force in the wrong time, and end up either argument arise, or sub hire temporary cheap labor from homedepo and not pay them as the discussed after work, the quality turn bad and even some time labor come back steel stuff because not get paid right.
So be careful when you have no choice to do so.