How exciting to be building a new home! Do your homework, due your due-diligence, “get educated” on your building options, your liabilities and warranties provided in all these options.
Being your own Builder: In Georgia, homeowners can build their own homes without a license. However, there are stipulations. Many do this thinking they will save a lot of money – not necessarily so. This process can cost you dearly if you are not educated on building. In this scenario, homeowners assume all liability for the construction methods, the adherence to building, fire and life safety codes. The homeowner is required to get their own general liability and worker’s comp insurance. If you are a very educated homeowner, know building methods, are willing to accept the full liability and do not want any home warranty once the home is finished then this may be an option for you.
If you are considering purchasing a new or partially constructed home, do your research on who built or is building the home. Were they a licensed contractor? Did they use licensed sub-contractors? Some individuals who are not licensed will build “spec homes” as their own home, then sell them when they are almost finished for a profit. This is essentially building without a license. According to the Ga. Secretary of State’s website, there are restrictions on this method:
“Yes, property owners may construct a building or structure which is for their own use and not for use by the general public and not offered for sale or lease. If you sell or transfer the building or structure, you will not be allowed to build another for a period of two years, unless you obtain a license or hire someone who is licensed to oversee the construction.”
In this method, it is unlikely that this unlicensed builder will provide the year home warranty.
Unlicensed Builder: It is the homeowner’s responsibility to insure they are working with a licensed (or unlicensed) builder. Anyone can contact the Secretary of State’s office (SOS) and confirm a builder’s professional license. If your builder is unlicensed, they will done one of these: pay another builder to pull a permit for them (highly illegal), they may have someone on their staff who is licensed pull the permit and work on the job or they will ask the homeowner to pull the permit themselves. In most states, if a homeowner pulls a permit, they assume “ALL” liability for making sure the home meets all building, state, national, fire and life safety building codes. Additionally, you void the state requirement to provide a home warranty for 12 months. And typically, it is up to the homeowner to take out all required insurance policies – alleviating the builder of all responsibilities. Generally, this is why someone hires a builder: for their in-depth knowledge and expertise in building a quality house, for their knowledge of codes and construction techniques, for their stable of quality licensed sub-contractors and for the home warranty that builders are required to provide.
Qualifying Agent: An alternate type of license in Georgia (and some other states) is called a “qualifying agent.” Builders who possess qualifying agent status are doing the work as a representative of another individual (or company.) The homeowner will have the depth of resources and liability coverage afforded through the licensed builder as if they were contracted with that builder individually. This is common however, there are restrictions. Again, per the Ga. Secretary of State’s website”:
“A qualifying agent license is not a personal license and may not be used to operate as an individual and may not be used to operate for any other business organization.”
Licensed Builder; For most situations, this is the best route. It is well worth the percent the builder will charge you above the cost of your home to take care of all the liability, carry all the required insurance, hire qualified and licensed sub-contractors and provide you with a 12 month home warranty following completion of your home. There are “FAQ’s” on the Georgia SOS’s website for homeowners with questions relating to building your home. If you feel you have issues with your builder regarding unlicensed practice or other legal issues, you can report them through the SOS office by filing a formal complaint.
Best advice for homeowners wanting to buy or build a new house is do your research, go online to the SOS’s office and research individual licenses and types of license. Talk to others in your community who have recently built and ask about builders you are considering. Also ask your builder to see certified copies of all certificates of insurance before your sign on! Be an educated consumer, don’t ask these questions when it is too late. Buyer always beware!