risks of pulling a permit for others?
I’m already thinking that this is something I don’t want to be a part of, but I’m curious to see if anyone has an idea of the risks involved.
A buddy of mine, who is not yet licensed, is working with some investors to rehab a house and in this particular instance – they want to pull a permit for the job. They’ve done work in the past without a permit.
So he asks me if I can help him out by pulling the permit – they do the work and I can come around and double check how they are proceeding along the way.
Like I said – sounds like too much trouble for the potential risks, but what would be the risks?
If he has liability insurance, but I’m the contractor on file for the permit – is there a liability issue if some one gets hurt on the job – or, one if 4 years down the line the ceiling falls on the homeowner?
Anyway to enable me to help this guy out here in this situation, but still keep it legal? This is in Michigan.
Thanks,
JT
Replies
You are kidding, right? Asking a bunch of strangers something you should be asking your attorney?
We all know it is done, but do you want to be part of it?
I don't feel like spending the $100 it'll cost to ask my attorney and so will be telling them no thanks - but figured I'd see what the general risks could be in such a situation and see if anyone has been involved in such an arrangement where it went bad.JT
Julian
This is the question that I would have to ask myself, Whats in it for me, by that I mean whats the up side or benifit of doing something like this?
My answer comes back to me the same each time I ask it, there is no up side, all down, and for that I wouldnt do it.
I know that the guy is a friend but business is business and thats what you have to think about. I dont have to profit from a friend but when its business there has to be something in it for mine.
Doug
JT-
I'm not sure why the investors couldn't pull the permit. I'm in Oregon and in my municipality, the owner of the property can pull the permit, whether or not their licensed.
JK
I don't think you can do that in mi if the house is uninhabited.JT
Whoever owns the property can pull the permit in Michigan.
Someone has to own the place, one of the investors or your buddy?
Make them pull it and wash your hands of this one.
yeah, there's that too
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
I have seen this type of situation go south around here, and friends no longer get along.
If JT wants something done for code and his buddy refuses to do it, the line gets drawn in the sand.
He could W-9 his buddy and get all the insurance paper work from him I guess. Just more time and hassle.
I would give his buddy a small "finders fee" and offer to take the job off his hands. A buyout so to speak.
Well, this guy's not that close of a buddy really - more of a distant friend I guess. His crew is actually the one doing the work for some investors - one of those deals where they're rehabbing the house at a straight cost of $25,000 for all of the needed renovations.Of course - being an investor property - this won't be some high class remodel - it'll probably be do only what you have to to sell it. Not the kind of work I like to do myself.They said they've done this with other guys and would pay me $5-600 for the trouble.The upside is cash - the downside is what I'm wondering about.JT
JT: I'm a Michigan contractor and a Home Owners permit can be obtained. However, sometimes when a LLC, Corp. or Partnership is involved the building department wants a licensed person to be resposible. I would call the BT and find out if a homeowners permit can be obtained. You maybe sticking your neck out.
$500-600 is not worth the trouble.
Like I told Piffin you could W-9 the guy and his crew but they have to be insured up to your Insurance companies standards. Some want $300,000 policies (which are cheap), others I have worked for required $1,000,000 of coverage.
Doing it this way makes them a sub to you, make sure the guy and his crew know that you have the final say at the end of the day.
>>$500-600 is not worth the trouble. That's what I'm thinking.Thanks for all of the replies.Julian
Here in the peoples republic of Maryland all licensed contractors pay in to a guaranty fund. If you fail to preform the fund pays to finish the job and you lose your license till you repay the fund.
Kinda stops that sorta thing.
The downside is that your name and license number is on the permit as the contractor of record. That puts you in the bullseye for resolving any problems during, or after, the project.
You could probably do this with a contract having the right buzz words and tricky phrases, but you'll need to spend the $100 (or more) to get your lawyer to tell you how. - lol
The only legal way I see would be for you to write up a contract namoing him as subcontractor and another one with the investors as customers. Illegal wayas always have their own consequences spelled out in the law
Oh, and add on your markup as the monery passes thru your hands.
But it sounds like a shaky bunch that I would not want to play with.
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Taunton University of Knowledge FHB Campus at Breaktime.
where ...
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Let me get this straight: You worked you tail of to become qualified to pull permits... and now you want to undermine that system and screw yourself?
Your "friend" ought to know better than to even ask. And for an illegal, unlicensed job, to benefit some speculators? With friends like that, you need no enemies.
Sounds like somebody is trying to fly under the radar. I would start asking lots of questions.
Stay out out of it unless yiu consider yourself some kind of charity.
You can make it fool proof but not idiot proof
Yes, I would do this.
Get a signed contract
Hire your friend. Pay him well.
Supervise all the work.
Charge for profit and overhead. There is always a liability issue, there are always risks. Thats why there is liabilty insurance. Thats why there is profit.
Tom
Follow your first instinct. Don't be part of it. It's the homeowner's responsibility to have a permit for the work to be done on this project. Your "buddy" has a contract with the Owner. What does it say about being licensed, insured, bonded? You take on a lot of liability if you become the general contractor of convenience. It's not easy money if shortcuts are being taken byt "your buddy" to make the most profit for "the investors." They just care about the most money they can make on the investment, not how well the work is done.
Julian, if I had a license (I don't), I wouldn't hesitate to attach it to that project providing that I had something in writing explaining the relationship. We have done this in the past for acquaintenances and yes, we've had a bit of trouble but nothing too dreadful. I don't know all the circumstances because Frank was the one handling it, after all, it's his license, and he's managed to survive. I do know that he had to sign an affidavit and deliver it to the city so they could proceed against the homeowners. He did, everything got sorted out. All's well that ends well. Franks has a very inexpensive means of having this stuff sorted out with his lawyer so he ended up with a profit even in this worst case scenario.
In a market this severe, I know Frank wouldn't hesitate on taking that $600 again for the use of his license. In fact, if your " friends" are anywhere close, Frank will pull that permit for them today!
Lets look at the scene from an objective point of view. Put aside the fear and emotionalism: the city wants a licensee to help them persuade the permit pullers to perform. The city wants permits pulled on the work, so they have a legal means of inspecting. Essentially, those are the two ingredients that will provide a legal basis for having sensible, decent remodeling in the existing home stock.
There is nothing wrong with a healty respect for the problems that could go wrong when permits are being pulled but builders in Mi put themselves at risk all the time when they remodel for someone. Let's face it, if a builder signs a contract with a homeowner, pulls the permit, then the homeowner locks them out-that builder is in the exact same position that Frank was with his situation.
Your tolerance for risk will be your guide. It helps if you have an easy way to access legal help to help you understand the situation. In your case, they are offering you $600 for the use of your license. A trip to your lawyer might eat up every bit of that, or, it might be only a fraction of it. Personally, I'd accept the risk. If I felt the need, I'd get a phone consultation with my lawyer and have them give me the wording in the written agreement to protect me. It might eat heavily into the $600, but if I only ended up with $200, I'd be happy. The next time the situation came up, I'd have the language and be able to pocket the entire $600.
For me, this is just another business decision. I don't see any more risk (actually quite a bit less) than buying and owning a skytrak.
blue
I'm more inclined to tell them - "Here's my lawyer's number, call him and set up an agreement that he says I'll work with."Then, they pay the time for the lawyer to get it set up.$250/hour adds up quick.Plus, I've got too much other crap to deal with right - I'd rather not walk into another potential crap pile.JT
then the homeowner locks them out-that builder is in the exact same position that Frank was with his situation.
Not really. In the first example, the gc and the HO initially entered into a normal good-faith contract, and it went bad. In the second case, the permit-pulling gc never intended to do any work.
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Just called and told them no thanks.Thanks for the replies,JT
Update to the Frank situation.
Frank told me today that he would only insert himself in a remod project as the license attached to the permit, if he was named the GC of record and was using their designated workers (licensed and insured) as subcontractors.
He is learning.
blue
There is no way that I would pull a permit for someone that is not a relative; even then I would be loath to do it, the potential liability is through the roof!! It only takes one mistake to make the rest of your life a misery. DON'T DO IT!
"If all else fails, read the directions"
To the best of my knowledge, permits are handed out at the building dept. and all they want is a set of plans and money. Why doesn't your buddy haul his own butt down with a set of plans and the money himself? They, the building dept., don't give a squat about any licensed contractor. You got the money for the fees, a set of plans, you get a permit.
In SF you have to have one more thing...money under the table and you get the permit even if you don't have plans. Just like New Orleans!
Isn't that precious.
Isn't that precious.
Maybe it's precious to you, but it's no surprise to me.
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
You pull the permit= you are legally liable=they screw up you can be the one caught holding the bag.
Keep a look out for the registered mail with attorney office return addresses.