Could Habitat for Humanity build a South Carolina home with volunteers and no licensed contractor on site?

Plain-English summary

North Augusta's city attorney asked whether Habitat for Humanity could use volunteer labor to build homes without a licensed contractor present under Section 40-59-300. The 2004 statute allowed a charitable organization to do so when it transferred a home to a low-income recipient "without consideration." Habitat's local chapter used two mortgages: one to recover construction costs and another covering the difference between cost and appraised value, forgiven over time. On the stated understanding that Habitat made no profit, the Attorney General treated this arrangement as a transfer without consideration and said the organization could build without a licensed "qualifier."

Currency note

This opinion was issued in 2004. 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.

Common questions

Q: Did the Habitat buyer's mortgage automatically disqualify volunteer construction?
A: The AG said no for the arrangement described. It reasoned that Habitat's mortgages recovered costs rather than creating a traditional sale for profit.

Q: What did the statutory exception require of the organization?
A: The provision quoted in the opinion covered a 501(c)(3) organization building with volunteer labor for an underprivileged or low-income person without a licensed qualifier. It also placed the building-permit cost on the organization.

Q: Did the opinion approve every nonprofit home sale?
A: It addressed the described Habitat financing structure and the office's understanding that Habitat received no profit. It did not evaluate a different financing arrangement.

Background and statutory framework

The opinion read "without consideration" in Section 40-59-300 in light of legislative purpose rather than as a literal bar on any mortgage. It relied on the office's understanding of Habitat's cost-recovery model and the fact that the second mortgage was forgiven over time. Its conclusion concerned construction without the presence of a licensed qualifier under that 2004 exception.

Citations

• Section 40-59-300
• State v. Martin
• Caughman v. Columbia Y.M.C.A.
• Greenville Baseball. Inc. v. Bearden

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/august-17-2004-2/
• Original PDF: https://www.scag.gov/wp-content/uploads/2011/03/04aug-17-Zier.pdf

Original opinion text

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The State of South Carolina

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OFFICE OF THE ATTORNEY GENERAL

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HENRY MCMASTER
ATTORNEY GENERAL

August 17, 2004

Kelly F. Zier, Esquire
North Augusta City Attorney
Post Office Box 6516
North Augusta, South Carolina 29841
Dear Mr. Zier:
In a letter to this office you requested an interpretation ofS.C. Code Ann. Section 40-59-300 (Supp. 2003) which states:

Notwithstanding any other provision oflaw, a 501 (c)(3) eleemosynary organization may construct a residential home with volunteer labor without the presence of a qualifier if the home without consideration is to be transferred to or made available for the use of an underprivileged or low-income family or individual. "Qualifier" for purposes ofthis provision means a builder or specialty contractor licensed to perform the particular work being done on the site. The cost of the building permit must be borne by the 501 (c)(3) organization.

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The question has been raised as to whether such provision would allow Habitat for Humanity, a 501(c)(3) organization, to construct a residential home without the presence of a "qualifier", a licensed contractor. You have particularly questioned whether a Habitat for Humanity home is transferred "without consideration" for purposes of Section 40-59-300.

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In reviewing your question, several basic rules of statutory construction are pertinent. First is the cardinal rule that the primary pmpose in interpreting statutes is to asce1tain the intent of the General Assembly. State v. Martin, 293 S.C. 46, 358 S.E.2d 697 (1987). A statute, therefore, must receive a practical, reasonable and fair interpretation consistent with the purpose, design and policy of the lawmakers. Caughman v. Columbia Y.M.C.A. , 212 S.C.337. 47 S.E.2d 788 (1948). However, the Supreme Court has cautioned against an overly literal interpretation of a statute which may not be consistent with legislative intent. Greenville Baseball. Inc. v. Bearden, 200 S.C. 363, 20 S.E.2d 813 ( l 942). As stated by the Cou11, (i)t is a familiar canon of construction that a thing which is within tbe intention of the makers of a statute is as much within the statute as if it were within the letter. It is

./l RamERT C. DF1J,,BUUD!NC • POST
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OFFICE Box 11 549

• COLUMBIA,

s.c. 292 11-1549 • TEt.EPHONE: 803-7 34-3970 • fACSIMLLE. 803·253·6283

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Mr Zier
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August 17, 2004

an old and well established rule that the words ought to be subservient to the intent and not the intent to the words. Id. at 368-369. In reviewing your question, consideration must be given to the manner in which Habitat for Humanity operates. You indicated that the local Habitat unit, following the completion of a Habitat home, transfers such home which is encumbered by two mortgages. One of the mortgages is for the costs involved in building the home, such costs including the land, materials, etc. A second mortgage is a mortgage that covers the difference between the costs and the appraised value of the completed building being transferred. This second mortgage is excused at the rate of 1120 per year while the first mortgage is paid by the grantee. Such manner of operation distinguishes the Habitat for Humanity program from that of traditional home sales inasmuch as the mortgages serve only to recoup the costs involved in building the home and do not, according to our understanding, involve any profit for Habitat for Humanity. Therefore, Habitat for Humanity homes are not therefore sold in the traditional sense. Moreover, consistent with the Greenville Baseball decision referenced above, nothing in the statutes indicates that it was the intent of the General Assembly to effectively end the manner of operation for Habitat for Humanity where it is our understanding that the homes are typically built without the presence of a qualifier.

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Consistent with such understanding, in our opinion, the manner of operation set forth above does not involve the transfer of the home with consideration. As a result, it is the opinion of this office that Habitat for Humanity, a 50l(c)(3) organization, may construct a home without the presence of a qualifier inasmuch as the home is transferred without consideration.

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Sincerely,

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Charles H. Richardson
Senior Assistant Attorney General

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REVIEWED AND APPROVED BY:
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it'obert D. Cook
Assistant Deputy Attorney General