Does an owner who builds an apartment complex on his own land for rent to the general public need a North Carolina general contractor license if construction costs $30,000 or more?
Plain-English summary
A Gaston County investor was pulling building permits without a general contractor license. He owned the lots, was building apartment complexes that cost well over the $30,000 GC licensing threshold, and was planning to lease the finished units to the public. The county attorney wanted to know whether he was illegally practicing general contracting without a license.
Assistant Attorney General James E. Magner, Jr. concluded no. G.S. § 87-1 defines a general contractor as someone who undertakes to construct a building costing $30,000 or more "for a fixed price, commission, fee or wage." The statute then carves out an exception:
This section shall not apply to any person or firm or corporation who constructs a building on land owned by that person, firm or corporation when such building is intended for use by that person, firm or corporation after completion.
The Gaston County question was whether "intended for use by that person ... after completion" required actual occupancy by the owner, or whether leasing the building to tenants counted as "use" by the owner.
The AG relied directly on a NC Supreme Court case, Board of Architecture v. Lee, 264 N.C. 602 (1965), which had construed parallel language in the architecture statute. There the Board of Architecture had argued that the "buildings for himself" exception was limited to buildings the designer would personally occupy. The Supreme Court rejected that as an unwritten gloss on the statute. The legislature had not limited the exemption to owner-occupied buildings, and the court would not add such a limit.
The same reading applied to § 87-1. "Intended for use by that person" was broad, comprehensive language; "use" included leasing the building to the public and collecting rent. If the General Assembly had wanted to limit the exemption to owner-occupied construction, it could have said so explicitly, as other states had done. The opinion pointed out that California's general contractor statute and New Jersey's architecture statute both expressly required owner occupancy. North Carolina's did not.
The AG also noted that prior unpublished opinions of the office had reached the same conclusion. So a developer who personally owned the land, paid for the construction, and would own the finished apartments was outside § 87-1's licensing requirement, regardless of what he did with the apartments after the certificate of occupancy.
Currency note
This opinion was issued in 1985. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. G.S. § 87-1 has been amended several times since 1985. The dollar threshold has changed (it was $30,000 in 1985 and is significantly higher now), and the General Assembly has refined the licensing classification structure. The basic owner-builder exception remains in the statute, but the precise scope (single-family vs. multi-family, residential vs. commercial, what counts as "intended for use") may have shifted. Confirm the current text and any North Carolina Licensing Board for General Contractors guidance before relying on the exemption.
Background and statutory framework
The general contractor licensing scheme in Chapter 87, Article 1 was set up to protect the public from construction by unqualified persons. An applicant must show experience, financial responsibility, and pass an examination. The licensing board (now the North Carolina Licensing Board for General Contractors) administers the system and can take disciplinary action against unlicensed contracting.
The owner-builder exception reflects a policy judgment that someone building for themselves does not need state-imposed competence protection. They bear their own risk: if the building falls down, the consequences land on them. So the legislature carved out a narrower scope for the licensing requirement, focused on contracting for others.
The question in this opinion was whether "for others" should be defined by who pays at construction time (anyone who pays a builder a fee or wage to construct is dealing with a contractor) or by who occupies after completion (whether the building ends up housing the owner or someone else). The architecture-statute parallel from Lee answered it: the legislature used construction-time language and refused to layer post-completion occupancy onto it.
Two side notes. First, the exception applies only to land actually owned by the builder. Buying a vacant lot, building, and selling would qualify even though the eventual occupant is someone else; building on someone else's land would not. Second, the exception is for building on the owner's land. A person who builds on his own land and then immediately contracts that work out to another unlicensed builder for a fee is not protected, because the third-party builder is contracting for another.
Common questions
Could the owner-builder hire individual carpenters and electricians without each subcontractor needing a GC license?
The opinion did not address subcontractors directly. Plumbing, electrical, and HVAC subcontractors operated under their own licensing statutes (Chapters 87, Articles 2-4 and related provisions). The general contractor licensing exception in § 87-1 only affected the GC requirement; it did not relieve subcontractors from their own licensure obligations.
What if the owner planned to sell the apartments as condominiums after construction?
The opinion's logic ("use" includes any lawful use) would extend to selling the finished units. The owner would still have constructed and owned the building, and the post-completion disposition was the owner's choice. The architecture parallel in Lee supports this reading. A modern developer doing condo construction should confirm with the current LBGC.
Could a corporation invoke the exemption by buying land in the corporate name and building?
Yes, the statute expressly covers "any person or firm or corporation." The exemption was not limited to natural persons. A real-estate investment corporation building rental property on land it owned in the corporate name was within the exemption.
Did the AG opinion shield the owner from liability for construction defects?
No. The opinion addressed only the licensing requirement. Construction defects, building-code violations, and personal-injury liability were governed by separate bodies of law. An owner-builder who built an unsafe structure would still face civil liability, even if no license was required to build it.
Source
Citations
- G.S. § 87-1 (general contractor definition; owner-occupancy exception)
- Board of Architecture v. Lee, 264 N.C. 602, 142 S.E.2d 643 (1965)
- State v. Cuthrell, 235 N.C. 173, 69 S.E.2d 233
- Moon v. Goldstein, 69 Cal. App. 2d Supp. 800, 158 P.2d 1004 (1945)
Original opinion text
Requested By: Charles L. Moore Gaston County Attorney
Question: Are builders required to be licensed as General Contractors under G.S. § 87-1 when they erect apartment buildings valued at over $30,000 on their own property for lease or rent to the General Public.
Conclusion: No.
The definition of General contractors is set out in G.S. § 87-1 as follows:
"For the purpose of this Article any person or firm or corporation who for a fixed price, commission, fee or wage, undertakes to bid upon or to construct or who undertakes to superintend or manage, on his own behalf or for any person, firm or corporation that is not licensed as a general contractor pursuant to this Article, the construction of any building, highway, public utilities, grading or any improvement or structure where the cost of the undertaking is thirty thousand dollars ($30,000) or more, shall be deemed to be a 'general contractor' engaged in the business of general contracting in the State of North Carolina."
The statute contains the following exception:
"This section shall not apply to any person or firm or corporation who constructs a building on land owned by that person, firm or corporation when such building is intended for use by that person, firm or corporation after completion."
You state in your letter that building permits are being picked up by unlicensed builders who own the land on which the construction is to take place. Upon securing the building permit, apartment complexes are constructed on the property by the unlicensed builder and after completion are held out for lease and use by the general public. You have asked this office if this type of activity falls within the exception of G.S. § 87-1 which is set out above.
Our North Carolina Supreme Court has dealt with a similar problem in interpreting an exemption contained in the statutes governing the practice of architecture in North Carolina which allowed an individual to design plans for a "building for himself" without being licensed as an architect by The Board of Architecture. Board of Architecture v. Lee, 264 N.C. 602, 611, 142 S.E.2d 643 (1965). The exception contained § 83-12 and now G.S. § 83A-13(d) provides that an unlicensed individual could make plans and design a building for himself without being licensed as an architect in North Carolina. The Architecture Board contended that while an individual could design and plan a building he was going to use himself, he could not make plans for a building for lease or that was to be used by the public after completion. Our Supreme Court rejected this interpretation and held it untenable stating ". . . there is nothing in the express exception in G.S. 83-12 to justify such a contention. The words 'buildings for himself' contained in the express statutory exception are broad and comprehensive, State v. Cuthrell, 235 N.C. 173, 69 S.E.2d 233; 12 C.J.S., Building, pp. 380-81, and contain no limitation of any kind . . .
Obviously, a building may be erected for any one or more of many purposes. It seems plain that the statutory exception contemplates possession by the designer of the building for whatever lawful purpose he may choose. If the General Assembly had intended the statutory exception to be limited to buildings actually occupied by the designer, and not for lease and use by the public, it could quite easily have said so. The General Assembly in its wisdom and discretion did not so limit the statutory exception. The General Assembly having thus formally and clearly expressed its will, the Court is without power to interpolate or superimpose conditions and limitations which the statutory exception does not of itself contain."
Under the exemption contained in G.S. § 87-1, an unlicensed builder may construct a building on his own land when it is ". . . intended for use by that person, firm or corporation after completion." As stated in the Lee case "use" would mean any lawful purpose including lease and use by the public. If the General Assembly had intended that the building actually be occupied by the builder or immediate members of his family and not for lease, they could have quite easily have said so. Previous opinions by this office have also supported the proposition that a person, firm or corporation may construct a building on land owned by that person, firm or corporation and use it for any lawful purpose including leasing and use by the public without being licensed as a General Contractor under G.S. § 87-1.
In Moon v. Goldstein, 69 Cal. App. 2d Supp. 800, 158 P.2d 1004 (1945) cited in your letter the California Legislature made it clear that an owner who builds on his own land a structure not for his own occupancy was regarded by law as a General Contractor with certain exceptions not pertained to this opinion. (Emphasis added) The same was true of the New Jersey Architecture Law N.J. Statute Annotated § 45:3-10 reviewed in the Lee case, which provided that an individual could design building to be constructed by himself on his own property provided it would be occupied by himself or members of his own family. (Emphasis added)
G.S. § 87-1 has no such limitation and it is the opinion of this office that the exemption contained in G.S. § 87-1 allows an unlicensed builder to construct rental units on his own property and lease them to the general public without being licensed as a general contractor under G.S. § 87-1.
LACY H. THORNBURG
Attorney General
James E. Magner, Jr.
Assistant Attorney General