Tips for Owner Builders in Arizona

An Owner Builder is a person who is building a home without the services of a general contractor. With the tight economy, this option has begun to look a lot more attractive than ever before, and indeed permits show us the number of people doing their own building has almost doubled.

In the state of Arizona, we have a registrar of contractors, which most owner builders know about and use to check out prospective subcontractors. Any complaints lodged against these contractors is supposed to show up, and contractors who break the rules willfully are supposed to have their licenses suspended. There is also the belief that the ROC in some way insures the workmanship of the project.

Here are some very important things to know, before relying on that resource for anything at all. Contractor complaints, when registered, can take up to 6 months to appear on the website. It could take more, but the ones I have filed have taken as much as 6 months. While the ROC is supposed to act as an arbitrator between the home owner and the subcontractor, hearing are generally schedule 9-12 months after the complaint is validated. All told, you may be looking at over a year before any action at all is taken.

There is also a perception, a rumor really, that there is a recovery fund that covers any subcontractor malpractice. This could not be farther from the truth. The recovery fund only pays out to persons who are injured due to poor workmanship, or no work being performed. You are also covered for a maximum of $30,000. Even if you do have a legitimate claim, the process of recovering funds is glacially slow, and there is no guarantee you will be successful.

If the Roc offers no real protection or useful information, then what can an owner builder do? Here are a couple of extremely useful ways to find out the real deal on any contractor, and protect yourself.

- Identify all the principles of the company. Run a check on them through the Recorder’s office to determine if someone has liens on their company, personal property, etc…
- Run the company and all principles through the Maricopa superior court to find out if there is any legal action pending.

- Check their references. Actually call their references and get info on their performance
- Do not pay a deposit to the subcontractor! Most subcontractor’s will require a deposit for materials. However, you can either set up an escrow account or offer to pay their material suppliers directly and have the materials dropped at your job site, at which point you should be watching them like a hawk.

-Do not pay 100% until you are positive you will no longer need that trade. Most companies will need to be paid most of the contract upon completing the work, but you can insist on paying 95% and holding back 5% until any changes which are needed are complete.

These are very solid basic actions to protect yourself from crooked contractors. There are a disturbing number of companies going out of business right now, and one of the worst things that can happen is to give someone a deposit, and the next they they shut the doors to their business. You have no legal recourse in this situation, and even if you did it would be very tough to actually get any money back in your pocket.

This is still a historic time to build a home. There is almost never this much excess supply driving material and labor prices down, and this is the best time to take advantage. Done right, there are still people making money by building.