Building and Repairing Without a License

In 2001, a residential landlord sued the Arizona Registrar of Contractors to establish that he was not a contractor and, thus, did not need a contractor’s license to repair his own buildings using his own employees.

The landlord, Barry Levitan, owned two apartment complexes in Flagstaff that needed repairs. His five-unit property needed a new roof, and one of the apartments in his 79-unit complex had a stained toilet that had to be replaced.

The Registrar of Contractors informed Levitan that he could not perform the repairs himself unless he held a contractor’s license. Levitan had been a defendant in 13 different legal actions brought by the Registrar. He prevailed in all 13, but the Registrar continued to insist that Levitan hold a contractor’s license before repairing his property. So Levitan sued the Registrar.

WHAT IS A CONTRACTOR?

The case rested solely on the definition of “contractor” contained in A.R.S. § 32-1101(A)(3):

“Contractor” is synonymous with the term “builder,” i.e., any person, association, or combination of them that, for compensation, … does himself or by or through others, or directly or indirectly supervises others to: (a) construct, alter, repair, improve, or demolish any building, road, excavation or other structure, project, development or improvement, or to do any part thereof, or (b) connect such structure or improvements to utility service lines, metering devices, and sewer line.

Arizona courts have held that persons who conduct such activities are subject to the Registrar’s jurisdiction and discipline, whether or not they hold a license.

In Levitan’s case, the Arizona Court of Appeals ultimately held that he was not required to hold a contractor’s license because he was not paid for performing repairs and therefore was not doing the work “for compensation.” The court rejected the Registrar’s argument that the rent Levitan received from tenants constituted compensation.

(During the course of the litigation, Levitan agreed that he did not qualify for the owner-builder exemptions contained in A.R.S. § 32-1121. That statute provides that, as long as an apartment or condominium complex has four units or less, the owner, his management agent, and their employees may do the work necessary to repair and maintain the structures without holding a contractor’s license.)

UNLICENSED CONSTRUCTION

Similarly, a property owner may build on his own property using his own employees if the structures are intended for occupancy solely by the owner — not for use by employees or business visitors, and not for sale or rent to the public.

An owner developing its own property for sale or rent, or for occupancy by employees or business visitors, must hold a valid contractor’s license or must contract the work to a licensed general contractor or licensed specialty contractors. The licensed contractors’ names and license numbers must appear in all sales documents so that anyone injured by poor construction can identify the party responsible.