Flipper/Rehabber · Member since 2021 · 3 posts · 0 votes
We start our first flipping project in San Jose, we will hire licensed contractors to apply for electrical and HVAC permits. However, we are debating whether we should get the permit for remodeling as well. We need to open an unbearing wall for the kitchen and break the closet wall to expand the master bathroom space, then other works are just cosmetic. With the permits, city inspectors could make sure contractors' works meet the code, which will make the selling process more smooth, also would there be any legal issue flipping house without a permit in San Jose ? Thanks for any advice : )
There is a simple solution to this DO NOT pay your GC unless he provides you lien releases from his sub contractors. I deal with this all the time it is normal business in California. If your GC gets upset find a new one.
Your contractor should take care of all of the permits but, ultimately, you're on the hook, not them. So, make sure that you call the appropriate agencies to make sure it was done properly.
Also, when you are done with the rehab, rush down to the recorder to submit all of the completion paperwork because California has a stupid law that makes it possible for sub-contractors to put a lien on your property if your contractor doesn't pay them even if you paid your contractor.
I almost got hit with this situation because the electrician called me and told me that he was going to put a lien on my house if I didn't pay him. I told him to take it up with the contractor and he told me that he tried but the contractor wasn't returning his calls.
I rushed down to the Recorder's office and submitted all of the paperwork about five minutes before he walked through the door.
There is a simple solution to this DO NOT pay your GC unless he provides you lien releases from his sub contractors. I deal with this all the time it is normal business in California. If your GC gets upset find a new one.
Call the city of San Jose building department tell them what you are doing and they will tell you if you need a permit or not. Im guessing since its California the answer will be yes.
Thanks @Craig Parsons, I will definitely look into your suggestion because that would be better. However, I've heard this same nightmare scenario from numerous investors in a local REIA.
It's a really stupid law meant to protect sub-contractors from getting screwed but it just screws someone else, the investor who already paid enough to pay everyone, instead of the person that the sub-contractor should go after... the GC.
And yeah, in California, it's a safe bet to bet that a permit is required for just about anything.
It's a really stupid law meant to protect sub-contractors from getting screwed but it just screws someone else
As a GC who dealt with this for decades in Cali, it doesn't really screw anyone. As long as all involved know the rules of the game and play accordingly. :-)
Mechanics' liens are not unique to California. Virtually every state provides for them.
Not exactly. We are talking about preliminary notices (20 days in Cali) here which protect subs and material suppliers. A General Contractor can file a lien at almost any time and sometimes without a prelim notice. It is much trickier to do it as a Subcontractor.
Only 28 states have the prelim process which allows the sub to get notice served to the property owner....
It's a really stupid law meant to protect sub-contractors from getting screwed but it just screws someone else
As a GC who dealt with this for decades in Cali, it doesn't really screw anyone. As long as all involved know the rules of the game and play accordingly. :-)
I respectfully disagree. I'm making an agreement with and paying the GC. The GC is making agreements with and paying the SC.
So, if I pay the GC in full and they don't pay the SC, it's not fair for the SC to be able to come after me to get his money. He made a deal with the GC and is owed his money by the GC.
I certainly want the SCs to get paid and I wouldn't work with the GC again if they don't pay their SCs but I shouldn't have to essentially pay for the SC twice just to avoid a lien on my property.
I respectfully disagree. I'm making an agreement with and paying the GC. The GC is making agreements with and paying the SC.
So, if I pay the GC in full and they don't pay the SC, it's not fair for the SC to be able to come after me to get his money. He made a deal with the GC and is owed his money by the GC.
I certainly want the SCs to get paid and I wouldn't work with the GC again if they don't pay their SCs but I shouldn't have to essentially pay for the SC twice just to avoid a lien on my property.
Of course most GCs will pay their subs as required by Stater Law and their contract with said sub. What I'm saying is that the Homeowner has a responsibility to assure this was done by getting the proper paperwork before releasing payments to the GC. IF they dont follow the rules of the game, then yes, they could get screwed....but that's on them (as well as the crooked GC)
There is no need for this to happen if the homeowner is paying attention. If this does not work for John Q Public then they need to change the laws...
I'd say get the permit/s anyway, the LAST thing you'll want during a flip is a stop work notice. You're already pulling permits for HVAC and ELE. The inspector will notice the condition of the home when he is out for rough inspections; what will he/she say when they come back for final inspections and notice a fully rehabbed house?? Even though it is cosmetic work, most municipalities in CA will want a permit for everything except floors and paint... Learn to do it the right way. Then you'll have a pretty good idea of what you NEED to pull permits for when rehabbing the next one ;)
Also, a structural engineer will need to advise the city wether or not a wall is load bearing or not (at least that's been my experience with Orange County CA municipalities)
It's a really stupid law meant to protect sub-contractors from getting screwed but it just screws someone else
As a GC who dealt with this for decades in Cali, it doesn't really screw anyone. As long as all involved know the rules of the game and play accordingly. :-)
I respectfully disagree. I'm making an agreement with and paying the GC. The GC is making agreements with and paying the SC.
So, if I pay the GC in full and they don't pay the SC, it's not fair for the SC to be able to come after me to get his money. He made a deal with the GC and is owed his money by the GC.
I certainly want the SCs to get paid and I wouldn't work with the GC again if they don't pay their SCs but I shouldn't have to essentially pay for the SC twice just to avoid a lien on my property.
The ONLY way you (the investor/homeowner) gets screwed is IF you do not perform the proper paperwork, i.e. lien releases upon each payment.