Report Title:
Owner-builder Permits; Disclosure
Description:
Requires sellers to disclose whether building or structure improvement was done under an owner-builder permit. Clarifies owner-builder exemption under section 444-2(7) applies only to the building of, or structural improvement to, a building or structure. Establishes penalties for owner-builders who fail to comply with the terms of section 444-2(7), including restriction on resale of property. Effective January 1, 2112. (HB3107 HD2)
HOUSE OF REPRESENTATIVES |
H.B. NO. |
3107 |
TWENTY-FOURTH LEGISLATURE, 2008 |
H.D. 2 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO OWNER-BUILDER PERMITS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 508D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§508D- Real estate disclosure; building or structural improvement by owner-builder. Any building or structural improvement done by an owner-builder under section 444-2(7) is a material fact that shall be conspicuously included in the disclosure statement."
SECTION 2. Section 444-2, Hawaii Revised Statutes, is amended to read as follows:
"§444-2 Exemptions. This chapter shall not apply to:
(1) Officers and employees of the United States, the State, or any county while in the performance of their governmental duties;
(2) Any person acting as a receiver, trustee in bankruptcy, personal representative, or any other person acting under any order or authorization of any court;
(3) A person who sells or installs any finished products, materials, or articles of merchandise that are not actually fabricated into and do not become a permanent fixed part of the structure, or to the construction, alteration, improvement, or repair of personal property;
(4) Any project or operation for which the aggregate contract price for labor, materials, taxes, and all other items is not more than $1,000. This exemption shall not apply in any case where a building permit is required regardless of the aggregate contract price, nor where the undertaking is only a part of a larger or major project or operation, whether undertaken by the same or a different contractor or in which a division of the project or operation is made in contracts of amounts not more than $1,000 for the purpose of evading this chapter or otherwise;
(5) A registered architect or professional engineer acting solely in the person's professional capacity;
(6) Any person who engages in the activities regulated in this chapter as an employee with wages as the person's sole compensation;
(7) Owners or lessees of property who build or [improve]
make structural improvements requiring a permit from the appropriate county
agency to residential, farm, industrial, or commercial buildings or
structures on property for their own use, or for use by their grandparents,
parents, siblings, or children and who do not offer the buildings or structures
for sale or lease; provided that this exemption shall not apply to electrical
or plumbing work that must be performed only by persons or entities licensed
under this chapter, or to the owner or lessee of the property if the owner or
lessee is licensed under chapter 448E. In all actions brought under this
paragraph, proof of the sale or lease, or offering for sale or lease, of the
structure not more than one year after completion is prima facie evidence that
the construction or improvement of the structure was undertaken for the purpose
of sale or lease; provided that this provision shall not apply to residential
properties sold or leased to employees of the owner or lessee; provided further
that [in order] to qualify for this exemption the owner or lessee must
register for the exemptions as provided in section 444-9.1. Any owner or
lessee of property found to have violated this paragraph shall not be permitted
to engage in any activities pursuant to this paragraph or to register under
section 444-9.1 for a period of three years. There is a presumption that an
owner or lessee has violated this section, when the owner or lessee obtains an
exemption from the licensing requirements of section 444-9 more than once in
two years;
(8) Any joint venture if all members thereof hold licenses issued under this chapter;
(9) Any project or operation where it is determined by the board that less than ten persons are qualified to perform the work in question and that the work does not pose a potential danger to public health, safety, and welfare; or
(10) Any public works project that requires additional qualifications beyond those established by the licensing law and which is deemed necessary and in the public interest by the contracting agency."
SECTION 3. Section 444-9.1, Hawaii Revised Statutes, is amended to read as follows:
"§444-9.1 Issuance of building permits; owner-builder registration. (a) Each county or other local subdivision of the State which requires the issuance of a permit as a condition precedent to the construction, alteration, improvement, demolition, or repair of any building or structure shall also require that each applicant for such a permit file as a condition to the issuance of a permit a statement that the applicant and all specialty contractors are licensed under this chapter, giving the license numbers and stating that the licenses are in full force and effect, or, if the applicant is exempt from this chapter, the basis for the claimed exemption; provided that if the applicant claims an exemption under section 444-2(7), the applicant shall also be required to certify that the building or structure is for the applicant's personal use and not for use or occupancy by the general public. Each county or local subdivision of the State shall maintain an owner-builder registration list which shall contain the following information:
(1) [the] The name of any owner or
lessee who claims an exemption from this chapter as provided in section
444-2(7);
(2) [the] The address of the property
where exempt building or improvement activity is to occur;
(3) [a] A description of the type of
building or improvement activity to occur;
(4) [the] The approximate dates of
construction activity; and
(5) [whether] Whether any electrical or
plumbing work is to be performed and if so, the name and license number of the
person or entity who will do the work.
The absence of such registration is prima facie evidence that the exemption in section 444-2(7) does not apply.
(b) The county shall verify the license
against a list of licensed contractors provided by the state contractors licensing
board, which [list] shall be updated at least quarterly. The county
shall also verify that the applicant is in fact the contractor so licensed or
the contractor's duly authorized agent.
(c) To qualify for the exemption under section 444-2(7), the county shall provide the applicant with a disclosure statement in substantially the following form:
"Disclosure Statement
State
law requires [construction] building or structural improvement to
be done by licensed contractors. You have applied for a permit under an
exemption to that law. The exemption provided in section 444-2(7), Hawaii
Revised Statutes, allows you, as the owner or lessee of your property, to act
as your own general contractor even though you do not have a license. You must
supervise the [construction] building or structural improvement
yourself. You must also hire licensed subcontractors. The building must be
for your own use and occupancy. It may not be built for sale or lease. If you
sell or lease a building you have built yourself or made a structural
improvement to within one year after the [construction] building or
structural improvement is complete, the law will presume that you built it or
made the structural improvement for sale or lease, which is a violation of
the exemption, and you may be prosecuted for this. It is your responsibility
to make sure that subcontractors hired by you have licenses required by state
law and by county licensing ordinances. Electrical or plumbing work must be
performed by contractors licensed under chapters 448E and 444, Hawaii Revised
Statutes. Any person working on your building or structural improvement
who is not licensed must be your employee, which means that you must
deduct F.I.C.A. and withholding taxes and provide workers' compensation for
that employee, all as prescribed by law. Your [construction] building
or structural improvement must comply with all applicable laws, ordinances,
building codes, and zoning regulations. If you violate section 444-2(7), or
fail to comply with the requirements set forth in this disclosure statement,
you may be fined $5,000 or forty per cent of the [appraised] value of
the building [as determined by the county tax appraiser,] specified
by the county or other local subdivision on the permit application of the building
or structural improvement of the structure, whichever is greater, for the
first offense; and $10,000 or fifty per cent of the [appraised] value of
the building [as determined by the county tax appraiser,] specified
by the county or other local subdivision on the permit application of the building
or structural improvement of the building or structure, whichever is
greater, for any subsequent offense."
The county shall not issue a building permit to the owner-applicant until the applicant signs a statement that the applicant has read and understands the disclosure form.
(d) A county building inspector or other building official shall report to the regulated industries complaints office the name and address of any person, who, in the opinion of the building inspector or official, has violated this chapter by accepting or contracting to accomplish work which would classify the person as a contractor under this chapter.
(e) Any person who obtains a permit under section 444-2(7) shall comply with all of the requirements specified in the disclosure statement in subsection (c)."
SECTION 4. Section 444-23, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:
"(e) Any person who violates section
444-2(7)[,] or 444-9.1(e) shall be fined:
(1) $5,000 or forty per cent of the [appraised]
value of the building [as determined by the county tax appraiser,] specified
by the county or other local subdivision on the permit application of the building
or structural improvement of the building or structure, whichever is
greater, for the first offense; and
(2) $10,000 or fifty per cent of the [appraised]
value of the building [as determined by the county tax appraiser,] specified
by the county or other local subdivision on the permit application of the building
or structural improvement of the building or structure, whichever is
greater, for any subsequent offenses."
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect on January 1, 2112