“Hello Carl, I purchased your book "Be Your Own HOUSE CONTRACTOR".
My question to you is, do you use an Independent Contractor agreement when you are your own contractor?
What determines if an individual can perform work as an independent contractor?
I am beginning to rehab properties and I will like to know if you are familiar with a regulation in California that limits the number of rehabs you can do as an owner of a property when you pull an owner’s permit?
Also, do you have to live in the property when you renovate a home when you are your own house contractor?”
You actually have 4 questions here:
1.Yes, you should use a contract, even a simple one like the one shown here. It is available at “Subcontractor Contract” as PDF. Be sure that they are insured.
Here’s a sample of a certificate of Insurance, and read “Subcontractor Insurance”.
2. What determines if someone is an independent contractor is answered on my “Subcontractors” page:
A subcontractor (sub) is an individual or a firm that contracts with a General Contractor (You) to perform part or all of a specific job. In your case you are technically the builder or general contractor, and you will build your house by subcontracting with others for specific jobs. You will pay for the project by setting a predetermined contract amount with each sub. This is important. You will have no hourly wage employees working for you, which means you will avoid all of the governmental red tape and taxes concerning employees. Your subcontractors are not considered to be employees.
3. Most states require an individual to be licensed as a General Contractor if they are in reality building (Rehabbing) for the “General Public”, not for their own primary (or secondary) residence. They also consider this activity to be a business. So does the IRS.
4. Assuming you mean, do you have to live in the house AFTER you are finished rehabbing, the answer would be, “what was your intent when you started the project”. If you rent it or sell it afterwards, that shouldn’t create a problem if you only do it that one time (different states will have different opinions), but otherwise #3 would apply.
Call your local building inspection department for advice. That’s what they are there for.
Carl Heldmann, byoh.com