Owner-Contractor Building Construction

Projects – New Legal Requirements

Introduction

The 2011 General Assembly enacted legislation (S.L. 2011-376) imposing new

Summary of New Legal Requirements

Current Law: North Carolina law currently requires any building construction or

alteration project costing $30,000 or more to be superintended (supervised and managed)

by a general contractor licensed in this state. (G.S. 87-1) Exempt from this requirement are

building construction projects where the property owner intends to solely occupy the

building being altered or built on his own property. If the building is not occupied solely by

the property owner for at least 12 months following completion of the project, it is

presumed that the property owner did not intend to solely occupy the building. (G.S. 87-

1(b)(2)) If the property owner meets these criteria, he can, in essence, act as his own

general contractor and perform the duty of superintending the construction project himself

superintended by a licensed general contractor are not, in fact, being superintended by

unlicensed persons who are not eligible under the owner-contractor exemption.

Local governments sometimes use the owner-contractor exemption as a cost-saving

measure on public building construction projects, electing to act as their own general

contractor and directly supervising their subcontractors in lieu of hiring a general

contractor to superintend the project on their behalf. Local governments are subject to the

same eligibility criteria and restrictions under the exemption as are private property

owners.

which a property owner qualifies for the owner-contractor exemption. Instead, the

legislation amends G.S. 87-14 to now require a property owner who wishes to act as his

own general contractor to submit an affidavit to the local building inspector verifying his

eligibility for the owner-contractor exemption. The person executing the affidavit must

attest to three facts:

1. The person is the owner of the property on which the building is being constructed

or altered, or, if the property is owned by a firm or corporation, the person is legally

authorized to act on the firm or corporation’s behalf;

2. The person will personally superintend and manage all aspects of the construction

The local building inspector is required to submit the affidavit to the North Carolina

Licensing Board for General Contractors for verification that the property owner is eligible

to act as his own general contractor under the exemption to G.S. 87-1. If the Board

determines that the property owner is not eligible for the exemption, the building permit

issued for the construction project must be revoked. In addition, local building inspectors

are prohibited from conducting building inspections during construction if the property

owner is not personally present during the inspection (this prohibition does not apply if

the building plans were drawn and sealed by a licensed architect).

Application to Local Government Building Projects: These requirements do apply to

finance officer, or public works director);

2. Capable of personally supervising the construction project (the individual does not

have to be a licensed general contractor, but should be someone with enough

knowledge and experience to properly supervise the construction project);

3. Able to be personally present at all building inspections (unless the plans are drawn

and sealed by a licensed architect); and

4. Clearly authorized in writing to undertake these activities on behalf of the unit of

government, including submitting the required affidavit.

Frequently Asked Questions

who is licensed in this state. A licensed general contractor is also required for erecting a

North Carolina labeled manufactured modular building meeting the North Carolina State

Building Code. Among the exemptions to this requirement are “owner-contractor” projects

discussed in Question 2.

2. Who is eligible for the “owner-contractor” exemption?

A property owner can act as his own general contractor and thus be exempt from the

requirement to hire a licensed general contractor for building projects costing $30,000 or

more if the property owner (including the owner’s family) intends to solely occupy the

building being altered or built on his property. If the building is not solely occupied by the

duty to an unlicensed person to superintend the project on his behalf. After the building

permit has been obtained pursuant to the exemption, the property owner can only delegate

this duty to a general contractor licensed in this state.

This exemption applies to building alteration or construction projects on property owned

by individuals as well as firms and corporations (including local governments). The

exemption – and the criteria for eligibility under the exemption – applies to both

residential and commercial building construction projects.

3. How does a property owner qualify for the exemption?

4. What information must the affidavit contain?

At a minimum, the affidavit must attest to the following three facts:

1. The person is the owner of the property on which the building is being altered or

constructed, or if the property is owned by a firm or corporation, the person is

legally authorized to act on the firm or corporation’s behalf;

the North Carolina State Building Code (this last requirement does not apply if the

plans for the building were drawn and sealed by a licensed architect).

5. Is the property owner required to submit any additional information or supporting

documentation with the affidavit?

The new law does not require that the property owner submit any additional information

or supporting documentation with his affidavit. However, a local building inspector may

ask questions, require the property owner to fill out a questionnaire or form, or request

additional information in determining whether the property owner appears to qualify for

the exemption prior to issuing the building permit.

affidavit must be legally authorized to act on the entity’s behalf.

7. If the property is owned by multiple individuals (not a firm or corporation), do all

property owners have to sign the affidavit?

The new law is not clear on this point. The language of G.S. 87-14(a)(1)a. does not

specifically require all individual property owners to sign the affidavit, so it is reasonable to

assume that the affidavit may be signed by only one of the property owners. For example,

if the property is jointly owned by a husband and wife, the affidavit does not have to be

signed by both spouses and may be signed by either the husband or the wife. However, if

the husband and the wife sign the affidavit, then they both must personally supervise the

person who has legal authority to act on behalf of the firm or corporation (including a unit

of local government). It would be wise for the person who is acting on behalf of the firm or

corporation to have this legal authority in writing.

9. If the property is owned by an individual, can that individual authorize someone else to

sign the affidavit on his behalf?

No. G.S. 87-14(a)(1)a. specifically requires the person submitting the affidavit to attest that

he or she owns the property on which the building is being altered or constructed. Only in

the case of property owned by a firm or corporation (including a unit of local government)

can an individual be authorized to act on the property owner’s behalf.

form affidavit is available on the SOG’s website at

http://dailybulletin.unc.edu/summaries11/category18.html.

11. What does the building inspector do with the affidavit?

The building inspector must transmit a copy of the affidavit to the North Carolina Licensing

Board for General Contractors for verification that the property owner is validly entitled to

claim the exemption under G.S. 87-1(b)(2).

12. What kind of review does the Licensing Board conduct?

The Licensing Board is required to review the affidavit to verify that the property owner

issuing the building permit?

No. The new law does not require the building inspector to delay issuing the building

permit pending the Licensing Board’s review of the affidavit submitted by the property

owner. In fact, if the affidavit appears valid when presented to the building inspector and,

based on the information contained in the affidavit along with other information the

building inspector might request, the owner appears to be eligible for the exemption, the

building inspector does not have a valid legal basis to delay issuing the building permit if all

other permit requirements have been met. A local building inspector may ask questions,

require the property owner to fill out a questionnaire or form, or request additional

information in determining whether the property owner appears to qualify for the

17. Does the property owner have to be present at all building inspections?

Yes. One of the facts to which the property owner (or person legally authorized to act on

behalf of the firm or corporation owning the property) must attest in the affidavit is that he

or she will be personally present at all building inspections required by the North Carolina

State Building Code. If the person who executed the affidavit is not personally present, the

building inspector is not allowed to conduct the inspection. This requirement does not

apply if the plans for the building were drawn and sealed by a licensed architect.

18. Can the property owner delegate the responsibility of supervising the building project

unwilling or unable to personally supervise the project once construction has started, he or

she can only delegate this responsibility to a general contractor licensed in this state.

19. Are there any penalties for violating the new law?

Yes. If the Licensing Board determines that the property owner was not eligible for the

exemption under G.S. 87-1(b)(2), the building inspector must revoke the building permit

pursuant to either G.S. 153A-362 (for counties) or G.S. 160A-422 (for cities). If the building

construction does not cease or resumes without complying with applicable state laws, G.S.

87-13.1 authorizes the Licensing Board to apply to Superior Court for a restraining order

and injunction to stop further construction activity, and the court may order the property

20. If I have any questions or need more information, who can I contact?