Is a General contracting license needed to flip/rehab in AZ

[Joey Chrisman]

Hello,

First time flipper here.   I am interested in buying property and rehabbing it/changing it drastically from what it is now.  In Scottsdale most houses can't really be flipped profitably say by just adding some lipstick now.  Basically this project will require permits being pulled and an extensive rehab.  My question is how do most flippers/rehabbers in AZ operate.  I'M guessing many people, especially first time flippers do not have general contracting licenses but according to AZ law it states that if a house is built to be sold within 1 year of it being completed the owner/builder needs to be a registered contractor or hire one otherwise it's a class 1 misdemeanor.  It seems like there is a lot more liability than most people see when dealing with construction and flipping places.  Especially if say one of subs who may not be licensed or have insurances gets hurt on your flip.  I guess I'm just confused because on here because many people say to not hire general contractors  as you can figure out the process your self.   Without a general contractor license and not holding the insurances needed you run a lot of liability risks that nobody tries to sue you and your business.   It seems for any extensive renovation that needs permits pulled you need to either be a general contractor or hire one and the sub contractors that are used in building the project need to be reported to the city.    Anyone on here have experience in AZ doing extensive rehabs and how the law works for remodels?    

[Paul Hansen]

In Arizona, if you are not adding structures or appurtenances and you are only improving upon existing structures and appurtenances, then you can use licensed specialty sub-contractors. Unless you are adding structures and appurtenances, you do not have to use a GC to remain lawful. If you need permits, unless it is for plumbing or electrical, you will probably need a GC to pull those.

Otherwise, you can "project manage" the flip and line up licensed specialty subs to complete work (carpenters, roofers, floor installers, painters, etc.), and this is within the AZ law based on my interpretation (I am not a lawyer). To claim the exemption from AZ's contractor license law as an owner/developer, the statute states that licensing info must be included in the sales contract, and I have seen addendums to contracts that include this information. With that said, as a Realtor and and Investor, I haven't seen these addendums often. That doesn't mean it is right. You don't know what you don't know, and ignorance is sometimes bliss until you get caught or placed in a position of liability.

Here is the snippet from AZ Statute 32 regarding who is exempt from being licensed. Here is a link to the whole statute (see Article 2, Section 6): AZ ROC Title 32

"Owners of property who are acting as developers and who build structures or appurtenances to structures on their property for the purpose of sale or rent and who contract for such a project with a general contractor licensed pursuant to this chapter and owners of property who are acting as developers, who improve structures or appurtenances to structures on their property for the purpose of sale or rent and who contract for such a project with a general contractor or specialty contractors licensed pursuant to this chapter. To qualify for the exemption under this paragraph, the licensed contractors’ names and license numbers must be included in all sales documents."