Oregon flipping laws

[Nels Norquist]

I have clients who are in contract on a short sale that they were planning on using the BRRR method on. After going through inspections and looking at comps, they are thinking it might end up being better for them just to flip the property. I think since they had bought with the purpose of renting, if they decide to sell they will probably be fine, but I wondered if anyone had experience with this. I have seen @Jay Hinrichs talk about having a developers license in Oregon, as it is less work than getting the GC, but I have found some exemptions and wondered if I am reading this right. Seems to say that if you do 3 or less flips a year you don't need a GC or Developers license, thoughts?

(6) An owner who contracts for one or more licensed contractors to perform work wholly or partially within the same calendar year on not more than three existing residential structures of the owner. This subsection does not apply to an owner contracting for work that requires a building permit unless the work that requires a permit is performed by, or under the direction of, a residential general contractor.

Thanks

Nels

[Tyler Combs]

Hi @Nels Norquist, it's tough to figure this one out because of all the conflicting information you hear about this and the "3 flips or less rule".  To make your own determination, the Oregon state page with links to both of the ORS statutes is here: https://www.oregon.gov/CCB/licensing/Pages/whoneed...

My interpretation is that if you buy a house and make improvements with the intent to sell, then you need a Residential Developer's License, even if you are hiring a GC.  In ORS 701, it defines a Developer as follows: 

The key here is "the intent sell".  If you're flipping a property, you are directing a contractor to make improvements in the property with the intent to sell.  It doesn't matter if you're the homeowner and you do less than three a year, you controlling the construction process for a product that will be sold to a new buyer, and the state wants you to have a bond and insurance to protect that new buyer if you screw it up.  A developers license doesn't require any testing or experience like a GC license does, just proof of your bond and insurance.

Best of luck!