Owner-builder
Business and Professions Code section 7044 exempts certain owners building on their own property from the Contractors State License Law. It is one of the most frequently invoked and most frequently misdescribed provisions in the chapter. The exemption is conditional in ways that are easy to lose track of mid-project, and selling what was built triggers a presumption structure with two distinct tiers — one rebuttable, one conclusive. This guide, reviewed by Jayson R. Elliott, reads the current text and flags where widely circulated summaries are describing a superseded version.
Section 7044 provides that the chapter does not apply to several categories of owner-builder. The categories are distinct, they carry different conditions, and qualifying under one does not mean qualifying under another. The current version dates from an amendment operative January 1, 2017.
The first category covers an owner who builds or improves a structure on their own property, and it requires two conditions to be met together. None of the improvements may be intended or offered for sale. And the property owner must personally perform all of the work — or any work not performed by the owner must be performed by the owner’s employees, with wages as their sole compensation.
That second condition is stricter than most descriptions of the exemption convey. Paying someone who is not an employee, on any basis other than wages as their sole compensation, is outside this category. The exemption is not a general permission to build unlicensed; it is a permission to build with your own hands or your own payroll.
A separate category covers an owner who builds or improves a structure on their own property and contracts the work to appropriately licensed contractors. This is the route most spec-adjacent owner-builder projects actually rely on, and it is where the numerical limit discussed below attaches.
A further category addresses a homeowner improving their principal place of residence, subject to three conditions: the work is performed prior to sale, the homeowner has actually resided in the residence for the twelve months prior to completion of the work, and the homeowner has not used this exemption on more than two structures more than once during any three-year period.
The twelve-month residency condition runs to the period before completion, not before commencement — a distinction that matters on a long project.
This is the part of section 7044 most often stated incompletely, and the incomplete version understates the risk at volume.
In all actions brought under the chapter, two rules apply together. First, except as provided by the second rule, proof of the sale or offering for sale of a structure by or for the owner-builder within one year after completion of the structure constitutes a rebuttable presumption, affecting the burden of proof, that the structure was undertaken for purposes of sale. Second, proof of the sale or offering for sale of five or more structures by the owner-builder within one year after completion constitutes a conclusive presumption that the structures were undertaken for purposes of sale.
The distinction between those two tiers is the whole game. A rebuttable presumption shifts the burden — the owner-builder can still put on evidence that the structure was not undertaken for sale. A conclusive presumption cannot be rebutted at all. At five or more structures sold or offered within a year of completion, the question of purpose is closed as a matter of law.
Quick reference — the §7044 sale presumption One structure sold or offered for sale within one year after completion: rebuttable presumption affecting the burden of proof that it was undertaken for sale. Five or more structures sold or offered for sale within one year after completion: conclusive presumption. The clock runs from completion of the structure, not from the start of work. The presumption goes to purpose — whether the work was “intended or offered for sale” — which is the condition the exemption itself turns on.
For single-family residential structures, the exemption applies only where four or fewer such structures are intended or offered for sale in a calendar year. That limitation does not apply where the owner of the property contracts with a general contractor for the construction.
The general contractor exception is worth pausing on, because it changes the economics of the analysis rather than merely relaxing it. An owner who engages a licensed general contractor is not counting structures. An owner assembling the project themselves out of licensed subcontractors is.
Note also how the numerical limit and the presumption interact. The limit is set at four or fewer intended or offered for sale in a calendar year; the conclusive presumption arrives at five or more sold or offered within one year after completion. They are measured differently — one by calendar year, one by a rolling year from completion of each structure — so they do not line up neatly, and a project can sit on the wrong side of one without obviously crossing the other.
Two directions, and both come up in practice.
A licensed contractor building on speculation on property they own may be relying on an exemption that has quietly stopped applying — because the intended-or-offered-for-sale condition was never satisfied, because the owner-performed or owner-employee condition was not met once trades were engaged on other terms, or because volume crossed a line. Where the exemption does not apply, the licensing framework does, and so does the payment bar in section 7031 if licensure is defective for the work at issue.
Separately, a licensed contractor working under a permit an owner pulled as an owner-builder should understand where licensing exposure actually sits on that job, and should not assume the owner’s permit status resolves anything about the contractor’s own obligations. A contractor performing work requiring a license needs to be licensed for it regardless of who pulled the permit.
Whether spec building crosses from owner-builder into “builder” status for construction defect purposes is a separate question governed by a different statute, and it is covered on the spec-building guide beneath this page.
Section 7044 was restructured by an amendment operative January 1, 2017, and the subdivision lettering changed. Under the current version, the sale presumptions live in subdivision (b). Under the prior version, subdivision (b) held the four-or-fewer single-family limit and the general contractor exception.
That matters practically because owner-builder declaration forms issued by permitting agencies, and a great deal of secondary commentary, still cite the old subdivisions — commonly attributing the four-structure limit to section 7044(b). The substance of the four-or-fewer rule and the general contractor exception remains in the statute; the subdivision reference in those materials does not match the current text.
The practical guidance is narrow but useful: rely on the substance, verify the subdivision against the current code before quoting a citation in any document that matters, and treat a form’s statutory reference as informational rather than authoritative.
Before you ask
Under Business and Professions Code section 7044, the exemption applies to single-family residential structures only where four or fewer are intended or offered for sale in a calendar year, and that limitation does not apply where the owner contracts with a general contractor for the construction. Separately, proof of the sale or offering for sale of five or more structures within one year after completion creates a conclusive presumption that they were undertaken for purposes of sale.
Business and Professions Code section 7044 provides that proof of the sale or offering for sale of a structure by or for the owner-builder within one year after completion creates a rebuttable presumption, affecting the burden of proof, that the structure was undertaken for purposes of sale. Because the exemption turns on the improvements not being intended or offered for sale, that presumption goes directly to whether the exemption was ever available.
Both, depending on volume. Business and Professions Code section 7044 makes the presumption rebuttable for a structure sold or offered within one year after completion, but conclusive where five or more structures are sold or offered within one year after completion. A conclusive presumption cannot be overcome by contrary evidence.
It depends which category of the exemption is being relied on. Under Business and Professions Code section 7044, the category covering an owner who performs the work requires that the owner personally perform all of it, or that any work not performed by the owner be performed by the owner’s employees with wages as their sole compensation. A separate category covers an owner who contracts the work to appropriately licensed contractors.
Business and Professions Code section 7044 contains a category for a homeowner improving a principal place of residence, conditioned on the work being performed prior to sale, the homeowner having actually resided in the residence for the twelve months prior to completion of the work, and the homeowner not having used the exemption on more than two structures more than once during any three-year period.
No. Business and Professions Code section 7044 exempts qualifying owners from the Contractors State License Law; it does not change the obligations of anyone else on the project. A person performing work requiring a license must be licensed for that work regardless of who pulled the permit, and section 7031 independently bars recovery of compensation for licensed work performed without proper licensure.
Keep reading
Breadcrumb + pillar parent
“the spec-building guide beneath this page”
SB 800 builder-status crossover
§7031 payment bar references
Licensing exposure crossover
Inline first mention: owner-builder, rebuttable presumption, conclusive presumption, spec building
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