Should I be worried if the GC isn’t pulling permits himself?

Question

Hello BP!

I’m a new investor working on my first deal and need to do a little bit of rehab. The bigger items on my list include some plumbing, electrical, and replacing kitchen cabinets/sink.

I have bids from two general contractors right now. The one I’m leaning towards said that the electrician and plumber would pull permits on their own and theres no need for permits on the rest of the renovation (pretty minor stuff other than kitchen cabinets). Should I be worried that the GC wouldn’t be pulling any permits himself? I‘m very worried about my liability and having work done that’s not properly permitted, and less worried about saving a few bucks. I double checked and his license is valid until 8/30/20. He stated that he had a policy that covers up to $300k but I don’t know any details other than that.

I could be wrong about this but if I understood correctly, the other contractor was going to pull a permit for the entire renovation. He has a $2mm policy.

What do I need to be doing to make sure I’m covered as much as possible liability wise here? What should I be asking about the contractors insurance, and what insurance should I take out on my own separately?

This is in Florida, btw.

Thanks for the help!Matt

Evan Polaski · Answer

@Matthew Johnson, agreed that trusting your gut is important.

Pertaining to permits, I am adding that in Ohio, kitchen cabinets do not need to be permitted, but changing a kitchen faucet or drain does.  So you would likely be covered with the plumbing permit and not need a building permit in addition to that.  Unless, some jurisdictions require a building permit to tie the plumbing and electrical permits too, even if the building permit is not needed for any work in and of itself.

Theresa Harris · Answer

As long as permits are done, I wouldn't worry.  Check to see what permits you need.

Account Closed · Answer

If Florida's construction laws are similar to California, general contractors cannot obtain permits for plumbing and electrical work. The contractors from those trades pull their own permits. Don't worry, once one of your contractors pull a permit the inspector will tell you whether or not your general contractor, or any other contractor needs a permit. You can always telephone your local building department and get the information you need.

Matthew Johnson · Answer

@Marc Winter

Thanks, Marc.

Trusting my gut is all I needed to hear - changed contractors.

Regarding the change in overhead, he didn’t mention that he changed it. I just happened to notice when comparing everything to the previous bid. He mentioned that he changed a few line items, but didn’t mention that he increased overhead.

I feel way more comfortable with the more expensive contractor in this case. I have a feeling there would have been a lot of hidden costs with the cheaper one.

Marc Winter · Answer

@Matthew Johnson--Why the rise in overhead?  The permits are not an issue if pulled by licensed professionals, ie plumber, electrician, etc.

You feel uncomfortable with this contractor?  My advice: listen to and trust your gut.

Matthew Johnson · Answer

@Frank Hinck

Thanks for the response!In talking with the permitting department, it sounds like permits are technically required for the scope of the project since the cosmetic work is about 20k (excluding plumbing/electrical). I think I need a permit for the fire alarms as well. It sounds like in practice it’s not too uncommon to only permit the major items though.

That being said, I guess my main concern is that my contractor is very against pulling any permits himself. It sounds like it would be normal for him to file a permit for the scope of the work, and the subcontractors would pull their own while noting that they’re on the GC’s project. The GC doesn’t want to pull permits for the scope of the work (only like $300 in permitting). I’m wondering if he’s trying not to take responsibility for the project in some way. He also seemed to suggest it would be cheaper to not get plumbing permit which made me uneasy (wouldn’t consider that).

Finally, the initial bid he gave me had 11% overhead which he changed to 15% after I chose him.

In all I guess I’m thinking this guy is highly questionable.

Frank Hinck · Answer

@Matthew Johnson

Not a Florida contractor, Call the City and ask what’s required.  I wouldn’t let the Permits be excluded from the first guys proposal.    Usually a GC permit is only require if walls are being built (framing inspection).    Perhaps the kitchen cabinets being replaced don’t need a permit to be pulled.    Plumbing and Electrical would be their own permits since those trades have their own licenses.

Should I be worried if the GC isn’t pulling permits himself?

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