Is a General contracting license needed to flip/rehab in AZ

7 Replies

Hello,

First time flipper here.   I am interested in buying property and rehabbing it/changing it drastically from what it is now.  In Scottsdale most houses can't really be flipped profitably say by just adding some lipstick now.  Basically this project will require permits being pulled and an extensive rehab.  My question is how do most flippers/rehabbers in AZ operate.  I'M guessing many people, especially first time flippers do not have general contracting licenses but according to AZ law it states that if a house is built to be sold within 1 year of it being completed the owner/builder needs to be a registered contractor or hire one otherwise it's a class 1 misdemeanor.  It seems like there is a lot more liability than most people see when dealing with construction and flipping places.  Especially if say one of subs who may not be licensed or have insurances gets hurt on your flip.  I guess I'm just confused because on here because many people say to not hire general contractors  as you can figure out the process your self.   Without a general contractor license and not holding the insurances needed you run a lot of liability risks that nobody tries to sue you and your business.   It seems for any extensive renovation that needs permits pulled you need to either be a general contractor or hire one and the sub contractors that are used in building the project need to be reported to the city.    Anyone on here have experience in AZ doing extensive rehabs and how the law works for remodels?    

You seem to have answered your own question….hire a gc or try to become one. The problem with the latter is you have no idea which subs to use and which ones not to….which is the key to a successful job. 

Yeah I mean I have a few relationships with different subs from previous work I have done on my own house but becoming a contractor might cost just as much as hiring one and getting the insurances/tax/legal set up.  Not too mention the experience that a general contractor would bring over what say my knowledge is for dealing with permits and code.  You could always hire a bad general contractor or one who uses bad subs.  

Some flippers have a licensed GC they've worked with many times that maybe offers better pricing. That relationship maybe took a dozen or more deals. Other flippers will simply roll the dice and use a mix of licensed and unlicensed subs.

Yeah I guess maybe I'm overthinking it and I wonder if they really enforce the statute all that much.  I guess I could say I'm building it for myself and when I am done sell it and if everything is done to code and permitted you likely won't have many issues.   probably what a lot of people do like you saying. 

Originally posted by @Joey Chrisman :

Yeah I guess maybe I'm overthinking it and I wonder if they really enforce the statute all that much.  I guess I could say I'm building it for myself and when I am done sell it and if everything is done to code and permitted you likely won't have many issues.   probably what a lot of people do like you saying. 

Areas that have these laws often place a deed restriction that you can’t sell within the year when you pull an owner occupant/builder permit.  

@Joey Chrisman

Some areas require a permit to paint a house or to even replace a storm window or door.

Usually a home owner can pull the permits.

My county in Illinois will not allow a home owner to modify a septic system al all. This must be done by a state licensed and insured plumbing company.

You may well be able to DO most of the work yourself, but since your renovations will be substantial, you might wish to use an area licensed and bonded contractor to pull those permits and deal with the inspectors.

I would have coffee with a building inspector in your area and run some things by him.

It's never a bad thing to

@Joey Chrisman From what I think I know, if you do the work yourself (no subs or specialized trades) on your own property, no GC license is required. 

If anyone does work on your property and that work exceeds $1k, they must be licensed/registered with the AZ ROC. 

Reference the Arizona Registrar of Contractors website.