Sometimes an Oregon real estate licensee will be operating as a contractor and not even know it!
By Jeff Sorg, OnlineEd Blog
(July 21, 2017)
(PORTLAND-OR) Sometimes an Oregon real estate licensee will be operating as a contractor and not even know it! ORS 701 defines a contractor as
” . . . a person who, for compensation or with the intent to sell, arranges or undertakes or offers to undertake or submits a bid to construct, alter, repair, add to, subtract from, improve, inspect, move, wreck or demolish, for another, any building, highway, road, railroad, excavation or other structure, project, development or improvement attached to real estate or to do any part thereof.”
Under this statutory definition, the Oregon Construction Contractors Board (CCB) will use the following three-question test to determine if one is acting as a contractor, thereby requiring a contractor’s license.
- Is the work being done construction related?It does not matter if the work being done is new home construction, remodeling, upgrades, or repairs. It also does not matter whether the licensee is doing the work or if it is being done by others who are licensed or unlicensed.
- Is the real estate licensee offering the property for sale? If the licensee buys the house for a rental or primary residence, then the licensee would not have to be licensed as a general contractor to hire contractors. If the licensee buys the house with intent to resell, then the licensee might need a contractor license.
- Is the real estate licensee the direct beneficiary of the sale?If the licensee is the direct beneficiary of the sale – in other words, the party who will receive the proceeds from the sale – then a contractor’s license would be required. If the real estate licensee is acting as an agent for the seller by arranging for the work to be done, the licensee would not have to be licensed as a general contractor because the licensee is not a direct beneficiary of the sale.
If the real estate licensee answers yes to all three of the above questions, then the licensee probably would be violating the contractor license law if operating without a contractor’s license.
There are two exemptions under ORS 701.010 that would exempt a licensee from having to register as an Oregon contractor:
- If the licensee owns the property and occupies the property, the licensee is not a contractor if the licensee has contractor work performed on the property.
- If the licensee owns the property and rents the property, the licensee is not a contractor if the licensee has contractor work performed on the property.
What these rules mean for Oregon real estate licensees:
- If a real estate licensee buys and moves into an existing house, then fixes it up and sells it, the licensee fits the exemption and a contractor’s license is not necessary.
- If a real estate licensee buys a property, fixes it up, rents the house, and then sells it, the licensee fits the exemption, and a contractor’s license is not required.
- If a real estate licensee builds a new house, lives in it, and then sells it, the licensee fits the exemption, and a contractor’s license is not necessary.
- If the real estate licensee builds a new house, lives in it, and then sells it, and does this on a regular basis, the licensee will not fit the exemption, and the licensee will be deemed a contractor who must have a contractor’s license. This law states that a person is operating as a contractor if the person sells two or more new homes within a three-years. Therefore, a licensee can build one new house and live in it for three years and not be required to have a contractor’s license. But, if that person arranges for or does construction work on two or more newly built properties for compensation and with the intent to sell them within a 36 month period, a contractor’s license is required.
Note: Licensing rules are fluid. Please be sure to check with the CCB to find out if you are exempt from CCB licensing.
ORS 701.010 outlines those who are exempt from construction contractor licensing by includes the following definition:
“An owner who contracts for one or more licensed contractors to perform work wholly or partially within the same calendar year on not more than three existing residential structures of the owner.”
However, this exemption does not apply to “an owner contracting for work that requires a building permit unless the work that requires a permit is performed by or under the direction of a general contractor.” The above exemption means that an owner may contract with one or more licensed contractors to perform work within the same calendar year on not more than three residential properties of an owner.
For the exemption from contractor licensure to apply, the type of work the contractors can perform are those things that do not require a permit. Examples include painting, installing carpet, repairing a roof, or installing new cabinets. If any work requires a permit, then the owner cannot use the licensure exemption and must hire a general contractor.
Getting a contractor license is pretty easy and includes completing the OnlineEd 16-hour Oregon CCB approved contractor pre-license course and passing the CCB’s open-book licensing exam. Learn more about the OnlineEd $68 Contractor Pre-License Course.
For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.
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