SB 1077, HB 846: Limiting the Haw. Rev. Stat. 444-2.5 Owner Building Exemption
Under current licensing laws, building owners are exempt from having to have a valid contractors’ license if they are performing construction on their own property. The type of property currently allowed under the owner builder exemption includes residential, farm, industrial and commercial. Contractors have historically had a problem with the owner builder exemption, not only because of the loss of business associated with the exemption but also because of the kinds of problems associated with unlicensed work: hurt workers without workers compensation insurance to cover them, shoddy work that may even violate codes, and general avoidance of the protections inherent in contractor licensure. On the other hand, the exemption allows owners to perform work on their own property at a much reduced cost since they are not paying any markup to a contractor for its services.
The two bills currently moving through the 2013 legislature attempt to address these issues and also severely limit the scope of the owner building exemption. Under both the House and Senate bills, the exemption is limited to only residential and agricultural structures, eliminating the exemption for commercial and industrial buildings. Also, the exemption requires owners to comply with certain quasi-licensure requirements, such as mandatory workers compensation insurance for construction workers directly employed by the owner, compliance with the building code, and record-keeping requirements for work completed. The statute also requires contractors contracting with owner builders to comply with the contractor disclosure requirements of the licensing statute, and to do so at the time of contracting.
Anna H. Oshiro is an attorney with Damon Key Leong Kupchak Hastert in Honolulu, Hawaii. She focuses on all aspects of Construction Law. See her blog at http://www.hawaiiconstructionlaw.com