Owner-Built Home Faces Sale Issues

   Question: We bought a lot in Flagstaff several years ago to build our retirement home. Although my husband was not a licensed contractor, he and our son built the home mostly on weekends. After we retired, we moved to Flagstaff. The problem is that, due to the high altitude and cold, after only four months my husband’s health was deteriorating and we decided to move back to Phoenix. When we contacted the listing broker to sell our home, she said that we could not sell our home for at least one year because our home was not built by a licensed contractor. What can we do? We are planning on living with our son in Phoenix until the year passes, but that seems so unfair.

   Answer: An owner of a lot does not need a contractor’s license to build a home for a personal residence. If the home is constructed by the owner with the intent to sell, however, a contractor’s license is required. Any sale of the home within one year after completion is prima facie evidence that the home was constructed with the intent to sell the home. If there was no intent to sell your home at the time of construction, but the sale of your home is now required in good faith due to your husband’s health problems, there should be no violation of the law. The listing broker should be able to list and sell the home. Because of the potential liability for poor construction, however, some brokerage firms prohibit their agents from taking listings of any home built by an unlicensed contractor. Finally, when you sell your home, you will need to disclose that the home was not built by a licensed contractor. You also should require that the buyer hire a licensed contractor or an engineer to do the home inspection.

   If you would like assistance regarding commercial or residential transactions, potential litigation, HOA issues, estate planning or other legal matters, please call our office at 602.957.9810 and arrange for an initial consultation with one of our real estate attorneys.

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