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Understanding and Applying California’s New Owner Builder Law

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Why did the law, AB 2335, change?

(Health and Safety Code Section 19827) The California Legislature declared an “urgent and statewide public interest in assuring” that contractors comply with Contractors’ License Law, Business and Professions Code and Workers’ Compensation Insurance requirements to insure property owners are informed about, and protected from fraudulent representation, liability for worker’s injuries, liability for material and labor costs unpaid by contractors, licensing requirements and employer tax liabilities.

An owner-builder permit applicant is required to complete an acknowledgement form indicating they understand all the legal liabilities associated with improving their property as owner-builders.

As a builder-owner.... 

Did you know – unlicensed persons frequently have the property owner obtain an “Owner-Builder’ building permit which erroneously implies that the property owner is providing his or her own labor and materials personally?

Did you know – your homeowner’s insurance may not provide coverage for injuries sustained on your property construction project by an unlicensed contractor and his/her employees?

Did you know – if you are considered an “employer” under state and federal law, you must register with the state and federal government, withhold payroll taxes, provide workers compensation and disability insurance, and contribute to unemployment compensation for each “employee”?

Did you know – that if you fail to abide by these laws you may be subjected to serious financial risk?

Did you know – that over 20,000 consumer complaints are filed each year with many relating to owner-builder projects?

You may not be “saving lots of money” by hiring an unlicensed person and being your own “contractor”. Owners beware and consider the risks before accepting full responsibility for your construction permit.

The intent of the law is not to discourage an owner-builder who understands construction and all legal and licensing requirements but to assist property owners unfamiliar with construction laws to protect against unlicensed persons and prevent financial harm due to defective workmanship and injured employees.

To learn more on this subject, including information about who is considered an owner builder, licensing requirements, and other details from the California Contractors State License Board, please click here.

Question: Is it true that a contractor's license is not required if the work to be performed is under $500?

Answer: Yes, the B&P Section 7048 (Small Operations) provides an exemption from licensure for minor work if the aggregate contract price, including labor, materials, etc., is less than $500.This exemption does not apply if the minor work is part of a larger project.

Question: Are there any trades that the property owners are prohibited from performing themselves?

Answer: Yes, property owners are prohibited from performing well-drilling work covered under Well Drilling (C-57) contractor classification.