Can You Build Your Own House Without a License?

Giovanni Valle is a licensed architect and LEED-accredited professional and is certified by the National Council of Architectural Registration Boards (NCARB). He is the author and managing editor of various digital publications, including BuilderSpace, Your Own Architect, and Interiors Place.

If you own a piece of land and are thinking about building a home, you may be mulling over the possibility of avoiding general contractors and building your home from the ground up. Can you do this without a license?

Most states and local jurisdictions require a license to build a house. While it is possible to function as an owner-builder and directly hire licensed subcontractors, the responsibilities and the legal issues surrounding such an approach mean it’s rarely advisable for most homeowners.

Keep in mind that as an owner-builder, you will still need (and want) to have an insurance policy to cover general liability, builder’s risk, and workman’s compensation, particularly if you will be hiring subcontractors. In this article, you’ll learn more about the practicality of becoming an owner-builder. Keep reading.

Why You Should Build Your Own House

Building your own house as an owner-builder is an adventure many people embark on for various reasons. While some homeowners become owner builders to keep costs down, others love the satisfaction of calling the shots at every layer of the construction process.

If you’re a highly skilled DIY enthusiast, you may be able to build your home piece by piece, taking charge and completing plumbing, roofing, electrical, and finishing works. However, it’s rare to find an owner-builder adopting this approach.

In many cases, most owner-builders will take on a portion of the work while directly overseeing skilled trade subcontractors working on other aspects of the project. Such a system allows them to exclude general contractors and save money on the fees.

General contractor fees can amount to up to 25% of the entire construction cost. Therefore, saving this large chunk of the budget is excellent motivation for prospective owner-builders.

Do You Need a License To Build Your Own House?

Depending on your jurisdiction, you’ll need to pull permits and get a license for the major aspects of construction.

So, even when you can handle plumbing, roofing, or electrical installations, you may need licenses and permits for each of those aspects of the project.

The Risks of Building Your Own House

If you’re thinking of becoming an owner-builder, you need to weigh the risks carefully against any potential benefits you may have in mind. The risks associated with building your own house can have a negative impact on the cost of the project and your home’s value in the long term.

Some of the common risks to keep in mind include the following:

Construction costs can go out of control and blow your budget.
Issues with construction scheduling can lead to costly delays in completing the project.
Complications you can’t solve may arise in the middle of the process.
You may fail to stick to the local code with your construction leading to extra expenses on correcting issues.
You may find it difficult to find willing subcontractors for projects you can’t handle because many of the best ones avoid owner-builders.
Owner-builders typically don’t get the best terms on a construction loan from most lending companies.
Inexperienced owner-builders can be taken advantage of by shady contractors.
Your home’s resale value may be far off the average rates because it’s not built by a known professional.

Tips on Building a Home Without a License

If you’d like to take on the challenge of becoming an owner-builder, here are a few important tips that can help you.

Work With a Licensed Contractor

Developing a relationship with a licensed contractor can help you avoid some of the risks mentioned above. The contractor can serve as a consultant, steering you in the right direction every step of the way.

However, securing a relationship with a licensed contractor isn’t always easy, as many of them tend to avoid owner-builder relationships, especially when they aren’t experiencing downtime. There’s no incentive for them to share in some of the risks associated with such a project. So, you have to be patient with your search.

Estimate Costs and Schedules Carefully

While building your own house, ensure proper estimation for the cost of materials and labor in addition to the construction schedule. It’s important to strike the right balance here because you need the right estimates to determine if you have the right budget for your new home and whether you should obtain a loan.

When thinking of costs, you have to look beyond the labor and materials.

There are other costs you have to include, such as the cost of:

Specialized insurance
General liability and construction insurance
Workers compensation coverage for laborers
Etc.

Know Your Responsibilities

Being the owner builder of a project makes you responsible for the construction. Even when you’re working with a consulting contractor, the integrity of your new home is your responsibility. You’ll be liable for any problems that may arise.

You’re responsible for ordering materials and delivering them to the site on time, paying your suppliers, and getting all the necessary permits needed for the project. You’ll also have to manage and schedule subcontractors and make sure the construction site complies with all safety requirements.

Understand Your Legal Obligations

When building your own house and hiring subcontractors, you may be classified as an employer of labor. In such a scenario, you may be required to register with the local, state, and federal governments. You’ll also have all the responsibilities of an employer.

Pay Attention to Local Laws

Owner builders have to meet specific laws in certain jurisdictions. In places like California, Louisiana, and Georgia, you can’t build your own home without a license if you don’t own the property. There’s also a limit on the number of homes you can build yourself and a limit on selling your home.

Final Thoughts

While the thought of functioning as an owner-builder may seem appealing to many, it doesn’t come without significant challenges. Weigh your options carefully and holistically, looking beyond the amount you’ll save by ditching a general contractor.

Are you certain, for example, that you can complete your construction without costly mistakes and breaking down due to stress? General contractors are licensed, properly insured, and have experience working with and managing subcontractors. For most homeowners hiring a licensed general contractor is the best option, despite the added costs.