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Show Notes:
You will learn the legal, financial, and operational rules governing owner-builders in California, from general contractor licensing exemptions to trade subcontractor liabilities. We break down the statutory guidelines that allow homeowners to pull their own permits and act as their own project managers, including state build-frequency caps that typically restrict owner-builder exemptions to one primary residence every two years. Discover the critical differences between general building permits and owner-builder affidavits, and see why municipal plan examiners evaluate construction blueprints under identical standards whether managed by a property owner or a commercial builder. We examine why mandatory builder’s risk insurance is vital for protecting personal assets against jobsite accidents or structural damage during framing, and outline the legal liabilities of hiring trade subcontractors for electrical, plumbing, and foundation excavation. Explore how investing in civil grading plans upfront prevents expensive foundation wall redesigns on sloping parcels, and see how our engineered panelized building system and complete owner-builder kit home packages provide the precise documentation required to secure fast municipal approvals.Key Q&A Highlights from Episode 102
Q: How often can a homeowner act as an owner-builder in California without a contractor’s license?
A: Under California state regulations and general municipal guidelines across the United States, homeowners are typically permitted to build or remodel one personal residential property every two years under an owner-builder permit exemption. Attempting to construct multiple homes annually without a commercial general contractor’s license violates state licensing laws, as regulatory agencies classify frequent builds as commercial development rather than personal residential owner-builders.
Q: Does an owner-builder permit change how building inspectors evaluate a custom home?
A: No, building departments issue identical residential building permits and conduct the exact same code inspections regardless of whether a licensed general contractor or the property owner pulls the permit. Owner-builders must submit permit-ready architectural blueprints, stamped structural engineering calculations, and Title 24 energy compliance packets that meet all local building codes prior to permit issuance.
Q: Is an owner-builder legally liable for the licensing and insurance of specialty subcontractors?
A: While property owners are legally permitted to perform their own electrical, plumbing, or framing work without a license on their personal home, any third-party trade contractor hired to perform specialty work should be licensed and carry general liability and workers’ compensation coverage. When hiring an established trade company, that contractor’s business license and insurance policy cover the installation and any employees they bring onto the jobsite.
Q: Why is builder’s risk insurance necessary even when paying cash for custom home construction?
A: While mortgage lenders universally require builder’s risk insurance as a condition of a construction loan, cash-funded owner-builders need this coverage to protect raw framing materials, mechanical equipment, and standing structures from on-site theft, vandalism, weather collapse, and third-party injury liabilities. Standard residential homeowners insurance policies do not cover active construction sites, leaving self-funded builders exposed to total financial loss before a certificate of occupancy is granted.
Q: Why does a civil grading plan prevent foundation budget overruns on sloping California lots?
A: On sites with natural elevation changes, attempting to determine foundation heights in the field often reveals that a standard 8-foot basement or stem wall cannot clear the downhill slope or reach required frost line depth. Drafting an engineered grading plan before ordering concrete or framing panels ensures foundation walls, stepped footings, and structural hold-downs are pre-engineered to exact finished grade lines, avoiding mid-construction change orders and stop-work inspections.
Transcript:
Steve Tuma: A lot of people will come to us, or find us online, or through referrals, saying “panelized homes.” But we actually help the owner-builder understand and help them through the project.
Host: Hello, everyone, and welcome to episode 102 of the Panelized Prefab Kit Home Building Show. With me today, as he never fails to be, is the president and founder of Landmark Home and Land Company, a company which has been helping people build their new homes where they want, exactly as they want, nationwide and around the globe since 1993, and that would be Mr. Steve Tuma. Steve, how you doing, buddy?
Steve Tuma: It’s another great day. It’s always a great day in Landmark land, helping people build homes. There’s always fun challenges to get over, unique projects, interesting customers that, you know, just want to build cool homes. So we’re always ready.
Host: Yeah, well, today we’re going to pay off a debt to our listeners and fulfill our promise to do a part two episode of our building in California portion of our ongoing building in 50 states series. As much as I wanted to try to get the whole story in on this second part, I think we’re going to have to do a part three. But that’s okay, because all these questions are important, and I want to give you a chance to be able to tell the listeners exactly the ins and outs of building in California. So why don’t we dive into part two right now, if you’re ready?
Steve Tuma: Yeah, let’s do it!
Host: Okay. This follow-up begins with this question: Can I legally be my own general contractor in California?
Steve Tuma: Yes, you can be an owner-builder and your own general contractor in California, as well as every other state. The state may restrict you to not being able to do 20 homes a year or something, so if you’re doing it literally for your own family and you’re going to live in it a certain amount of time, they allow you to do it.
Which is really nice, because it allows you to save the money. Being an owner-builder allows you to save the money, it allows you to control the budget, it allows you to build the house you want, and it allows you to know what is being built.
And that’s the great thing, because it’s an affordability issue as well, because some areas, actually most of California, is getting very expensive to build. And being the owner-builder, our customers can save significant money on just the general contracting fees, coordinating fees, and then also making sure that they get the materials in the house that they want.
So it’s luckily, and it’s legal everywhere in the United States to build your own home, including California, which is really cool.
Host: Yeah, well, that’s not a loophole, that’s what I was saying, it’s actually legal in every state.
Steve Tuma: Right, and California allows it. And we’ve done some simpler ADUs, and we’ve also done some very, very complex big homes with owner-builders in areas where they have very stringent building departments. And I think that’s why customers really like working with us in California and other states that have tighter regulations, because we do have the process, and the service, and the product of developing the plans to help them understand what the building department needs so that they can go through and properly apply for permits, and get the permits, and then build a quality home.
Host: Makes sense. Hey, you know there’s something I’ve been meaning to ask you, I’m going to throw this in here, but I’ve heard you talk about owner-builder permits. What exactly is that? You’ve mentioned it a couple times in past episodes, but what is an owner-builder permit, and how does that differ from any other building permit?
Steve Tuma: Well, in a sense, I might have said an owner-builder, people can apply for the permit as an owner-builder, the actual building permit is the same. The application process is the same, the plan review process is the same, the permit issuance is the same, the actual inspection processes are there.
Some areas may just have you sign an owner-builder affidavit so that you understand that you’re the general contractor, you’re responsible to get it done, you’re responsible to do it. So it’s more something to just clear the communication so that the owner-builder understands the requirements.
Now, we have a very thorough process working with customers on the plans, so our customer base knows what they’re doing. They’re not just watching a YouTube video on how to build a home in 20 minutes and thinking it’s actually going to happen. Our customers research it, we spend time with them, we go through the process with them so that they understand the process.
So that paperwork is usually not an issue, in fact, no customer has ever brought it up to me as an issue. And that’s only if the building department requests it, many of them don’t.
So the permitting process is the same, and we’re very strong in that. We understand what’s required for building permits to be issued in California, any municipality in California, or any in the 50 states as well.
That’s why people work with us. The permitting is a big, big component of the help that Landmark Home and Land Company supplies that isn’t available in other places.
Host: Right. You know, I hate to keep going backwards, but I don’t want to let some of this stuff just go by without a follow-up, and you had mentioned in the question about legally being your own contractor in California, you said as long as you’re not building a ton of houses. But how many houses can I build as an owner-builder?
Steve Tuma: In general, what I’ve seen nationwide as well in California is you could build one every two years. Some places allow you to do more, there’s other ways to dance around it. But generally, I think after that they might say, “Hey, if you’re doing a house or two a year, or three, or four, or five a year, you’re likely to be doing more than just a home for yourself.”
So this literally has to be for yourself. So I think they look at it as two years, and then some people talk to their tax people and I guess there’s some advantages to doing it every two years as well, which is why we have a lot of customers that do that.
But, like I say, that’s one of those things to check with the building department, but a general rule of thumb is they’ll allow you to build one house every two years as an owner-builder without needing a general contractor.
Host: So they’re just making sure that you’re not actually putting together whole housing projects.
Steve Tuma: Exactly. They want to help your family as your family for a home for themselves to live in.
Host: Yeah. Also, in the past you’ve mentioned owner-builder exemptions and explained what that was all about. But how hard is it to sell the house afterwards if I used that owner-builder exemption?
Steve Tuma: Generally, it’s fine. I’ve never heard of anyone having an issue if they said, “Oh, is this owner-builder?” The permitting is not any different. The permitting process, the materials, the inspection process, the building processes are just as if a general contractor were to do it.
So the quality of the home’s right up there, so you can’t build a home in California and it be substandard. The planning process, the plan review process, the permit issuing process, and the actual inspection process doesn’t allow for people to really build bad homes. So they want to make sure it’s all taken care of.
And we’ve had customers build multiple homes, you know, they live in one for a couple years, sell it, and do another one. And I know that some of our customers have sold them, and then they’re happy and they do another one, maybe a retirement home, or a lake house, or something like that, mountain house, something like that.
So it’s really not an issue, but it is something to understand. Just like anything else, there’s kind of little rules to the game, but I don’t think that they’re very restrictive. Most people that are building a home for themselves, even if they want to build it and sell it, they generally just naturally it’s a two-year process anyway.
Host: Sure, yeah. Let’s bounce back a little bit and talk about insurance. Do I have to have builder’s risk insurance? We hear about that a lot, and what are your thoughts on that?
Steve Tuma: Yes, you should have builder’s risk insurance. If you’re working with a financing source, they may require it. If you’re paying cash or money that you have from other places, it is something you should get. Because it’s a construction site. Someone could step on a nail, someone could fall over something like that, and you want to make sure you’re insured just as you would have on your conventional home.
Now, builder’s risk covers a different situation that your home is in, but your typical insurance agent should be able to help you out, and it’s not that expensive, but it is very valuable to have. You just never know. You could have an accident in your own home, someone slips on water in the bathroom or something like that, and something like that can happen on the construction site. You just want to be protected. It’s a smart thing to do.
Host: And you’re talking about people working on your site, let’s talk about unlicensed workers. Can I hire unlicensed workers when I’m an owner-builder, even just to save money?
Steve Tuma: Well, that’s an interesting situation, because if you’re going to work on your own home, you yourself don’t need to be licensed. So let’s just say you knew how to do electric on your own home, you could do it, you don’t have to be a licensed contractor. But of course, you will still have to do it up to code and make sure it’s done right.
So there’s a difference of unlicensed and unknowledgeable. You always want knowledgeable people that know what they’re doing building your home. And then there are some items, some processes that don’t need to be licensed.
This can go city by city, county by county on who needs to be licensed and who doesn’t need to be licensed. But generally, my understanding is that if you’re working on your own home, you don’t need to be licensed to do that work. But I always suggest only do work that you know how to do, if that’s the case, and then hire people that are licensed or the proper people to do the work for work that you’re not wanting to do yourself.
It’s one of these things, sometimes with license also comes insurance. Unfortunately, not a lot of things happen, but if you hired a plumber and his work created a problem, you want his insurance to cover it.
So with the licensing, there are benefits that those people should be insured, and if there was a problem, there should be a way to work through the processes with them.
Now, a lot of people say, “Well, sometimes that gets expensive.” And it’s like, well, you’ll have to work with your building department on exactly who they need to have licensed and who doesn’t need to be licensed. But there are certain processes that just don’t need to be licensed in general.
Host: When you outsource and you hire, say you hire an electrician, you don’t know how to do the electrical in your house so you bring somebody on. Is it normal that you just allow them to bring in their workers, and you don’t worry about hiring individuals for each department?
Steve Tuma: Well, our customer would hire someone, they’d go to a local electrical contractor, and that person, let’s just say it’s an electrician, it might be one person, it might be a team of one, two, or three people that go through and do it. So you would hire that contracting company or person, and then they would work to make sure that the work is done right. They would pull the electrical permit, and then they would also get the green tag showing that it was done right so you can move to the next phases.
Host: And is that electrical contractor responsible for the people he brings on?
Steve Tuma: Oh, yes, under his license and his insurance. So if he brings two helpers on there, he would be responsible for their work.
Host: So as an owner-builder, I wouldn’t have to be looking at each individual worker on my project and worrying about what they’re doing.
Steve Tuma: Right. If you go and hire ABC Electrical Company and they bring two or three employees to do your project, that’s under their license, that’s under their insurance.
Host: Sure, got it. Okay. These seem like trivial questions, but I think it’s kind of important.
Steve Tuma: It’s actually really important stuff. These are details that people don’t think about. We bring them up and review it with people, because some people don’t understand, they don’t think about it, or sometimes people want to bend rules a little. We don’t suggest doing that, because there are reasons that insurance are in place. It’s protection to make sure that if there’s a problem, you’re covered.
Host: You guys at Landmark give a lot of consultation, you spend a lot of time helping the potential owner-builder figure out their project. How much of that kind of thing do you do, little stuff like that?
Steve Tuma: It’s a big part of it, is helping customers understand it. A lot of people will come to us, or find us online, or through referrals, saying “panelized homes.” But we actually help the owner-builder understand and help them through the project, which is very important.
Because a lot of people don’t realize that they think, “Oh, all panelized homes are the same.” They’re not.
The design process is us doing the plans exactly for your lot, for the exact house you want, getting you a set of plans where the plans we supply are for permitting and building, and then our panelized package matches the approved plans.
There’s a lot of detail work in there to make sure it’s put together, even with a simple home, but many more details. So sometimes people just think, “Oh, a panelized home is like a gallon of milk, it’s just a generic item.” It isn’t.
And that, I believe, is why we get a lot of, well, we have all five-star ratings, we get referrals, customers work with us again, because as they go through the process, they start realizing the help that we’re able to supply.
For example, today I’m working with a family more on the East Coast, and they didn’t think that they needed a grading plan. I was explaining to them the slope of the land and all these details of how you want to know the grades so that we can make sure your footers are on land, to make sure that the foundation wall is right. And they said, “Well, my person told me we could just figure it out on-site.”
I’m like, well, if you want to stay on budget and schedule, that may be a harder way to do it. We think it’s best to plan it out so that a properly planned building project, it’s easier to execute. You can control the budget and the schedule a lot better than just going out there and you’re thinking you’re going to put an 8-foot basement wall in and the slope of the land requires a 10-foot wall, plus a frost footer, suddenly there you are in the middle of building and you’re doing a big change. There goes your schedule, there goes your budget, and it’s just uncomfortable.
So through our relationship, we enjoy working with our customers, we help customers understand what they’re getting into. Because even professional general contractors, it’s amazing, they don’t always want to plan it out upfront. They just want to go do it and give you a bill. When’s the last time you went and bought something and said, “Hey, that’s what I want,” and then the person decides to give you a bill? Usually you want to know what it is you’re buying, and how much, and the conditions of it, and then you would go purchase it.
So that help, I think customers really realize it when we’re about a third of the way into the design phase, when we start getting into the details of different elements of the home: the HVAC system, the mechanical systems, any green code situations, any energy calculations, any grade situation, and also building department specific requirements.
Other panel companies might sell you a pile of wood and say, “Hey, there’s panels, go figure it out.” We’re saying let’s figure it out upfront to make it easier. And I believe that that is an element that customers do not understand at the beginning, that is actually the most important thing that Landmark Home and Land Company supplies.
It’s looking at your project, and how does it make sense? How do you design it? How do we look at the overall finer details, and how do we look at the overall project to understand what’s going on? And that’s a key element that customers should understand.
Host: Landmark gets involved pretty early in that stuff, right? I was watching one of your Instagram posts about dealing with building departments, and that’s a freaky thing. People just don’t know what to do, they’re running around going, “How do I even figure out this building department stuff?” And you guys are right in there to help navigate that.
Steve Tuma: We do it every day for 33 years, and that’s the thing where someone starting that’s never done it, it could be very confusing, and how do you connect the dots?
And this is one of the things that we supply that is extremely important, that people don’t understand up until they’re in the process. And this is the case whether you’re building in a place that might have a simpler building department and a simpler building site, just as much as it is a very complex home and a complex building site with a very complex building department.
It’s kind of like make your plan and then build, compared to real-time design of just making things up as you go along. So that’s what we try to point out to people is let’s take the time upfront. It will save you time, and big headaches, and money.
Host: Well, that’s always important. Let’s bounce back a little bit and go back to the contractor kind of thing. Are there certain trades that simply must be licensed contractors, and what aren’t, who can you hire?
Steve Tuma: Pretty much in California almost everyone has to be, the big things, excavators, foundation people, mechanical systems, plumbing, electric, heat, roofers, framers, different things like that. And your individual building department can give you the exact list of every person that should be licensed.
And a lot of the building departments will check. At your building permit they might say, “Hey, who’s doing the electric, who’s doing the plumbing?” Or at the time if there’s a separate permit, say for plumbing, electric, and heat, they’ll ask for the licenses of the contractors at that time and insurance, and just make sure it’s there.
Some people say, “Why do I have to do that? That’s Big Brother watching.” To a certain degree, you also want to make sure the quality of the work is done right.
Host: Wow! I threw a lot at you and you handle it all, just like you always do, that’s good. That was pretty slam-bang.
Steve Tuma: We’ve been doing it for 33 years! This is kind of interesting information here, but just like we’re able to answer it, if a customer ever has questions, they’re always welcome to reach out to us to say, “Hey, I heard the podcast about licensing and insurance, how does this apply to me? I’m building in Ames, Iowa, I’m building in Orlando, Florida, I’m building in Newport Beach, California, I’m building in Carmel, California, wherever it is.” And we can go through the process of specifically how it affects them.
And that is a very important part of the service we provide, and we’ll help people upfront, even before they buy from us, just to give them a vision of what we need to do, but also give them the answer and saying this is how we help you through it.
So it’s kind of an interesting process, and we’re proud of what we do, we’ll talk to people. We want to let them know how we can help so that they can make the right decision to work with us and understand how we can help.
Host: You just came back with the answers so easily.
Steve Tuma: Well, it’s a little bit of a pet peeve of mine, because a lot of people call up and say, “Well, this panel company will do that.” And I’m like, I’m sure they will, who’s planning it, who’s doing this, who’s doing that, who’s there helping you through the process? And that’s where I think people realize it’s an extreme value.
Landmark Home and Land Company provides an exceptional service, we’re proactive, we’re knowledgeable, we’re on top of it. A couple customers have used the word, “Steve, you’re the engine of my project.” You push it along, you put me in position to be successful. What’s the value of that? Enjoying your building process, it’s an amazing process. People should enjoy it.
Host: Well, that’s going to wrap things up for this edition of the Panelized Prefab Kit Home Building Show, but before we let you go, Steve, as we always like to do on this podcast, let’s give you a chance to let our listeners know how to find out more about Landmark Home and Land Company.
Steve Tuma: The best thing to do is check out our website, it is LHLC.com, kind of the initials Landmark Home Land Company, LHLC.com.
And on our website, there’s these podcasts, there’s videos, there’s thousands of plans, there’s discussions on what we supply, some details on individual states. And from there, you can email us, you can also find a plan, send us an email about the plan, or you can give us a call, Mike will answer the phone at 800-830-9788.
And that’s the best thing, check out our website, give us a call, and we’ll spend the time to talk to you to find out what it is that we can do to help you and move your project along. And that’s the key: We want to know we’re working with a good customer, just like a customer wants to know they’re working with a good design and panelized home company.
So we want to get to know our customers, see what they need, see what the land is like, talk about the building department, understand how we can develop a schedule together to make it a successful build. We enjoy what we do, so we enjoy talking to potential customers about building a new home. It’s a lot of fun.
Host: Do you sometimes get so involved that it seems almost personal for you when you’re working with customers?
Steve Tuma: Oh, it is, it is! People call me nights, weekends, days, and it’s like, “Hey, Dave, what’s going on?” You talk about stuff, and I get invited to so many housewarming parties, open houses, and things. I wish I could get to them all.
I have customers call me years later saying, “Steve, I was just thinking about you, I was thinking about building the home.” It was just really cool. And it’s just an amazing feeling to see that you truly helped a family get a new home and start a new chapter in their life in an extremely positive way. It is absolutely amazing. And we love doing that, we’re very lucky. We have great customers.
Host: That’s great. Well, there it is, episode 102 of the podcast, and we want to thank you all for listening to the Panelized Prefab Kit Home Building Show and for all your inquiries into panelized home building in general. So for Landmark Home and Land Company President Steve Tuma and myself, have a great week, and we will see you next time. Thanks again, Steve.
Steve Tuma: Yeah, thank you, this was fun. Hey, I forgot to mention, we’re also on the major social medias: Facebook, LinkedIn, Pinterest, Instagram, people can check us out there as well. So thank you.
Host: Awesome. All right, everybody, talk to you next time.
Steve Tuma: Bye.
