Generally Licensed Contractors and/or Subcontractors Must be Used to Construct Single-Family Residence
The developer purchased a home for an estate. He subsequently remodeled the home, including replacement of the electrical, plumbing, and air conditioning systems and updating the finishes. The developer is not a licensed general contractor. However, the developer used all licensed subcontractors to perform the work in remodeling he home.
May the developer immediately sell the home upon completion?
Generally, the use of a licensed general contractor is required to make improvements to real property where the “aggregate worth” of the improvements exceed $1,000.00. A.R.S. § 32-1123. However, an exemption to this licensing requirement allows owner/developers to improve residential real property provided all of the construction work was performed by licensed subcontractors. A.R.S. § 32-1121(A)(6). Here, even though the owner/developer himself does not hold a general contractor’s license and no general contractor was used in the construction, he may market and sell the home upon its completion because all licensed subcontractors were used to make the improvements.
For this licensing exemption to apply, the developer must include the names and license numbers for the subcontractors who performed the work in the contract documents. A.R.S. § 32-1121(A)(6).