Home maintenance: contractor paying separate company to obtain permit

Question

tl/dr: I'm trying to perform some home improvement projects in preparation for selling in 6 months. My jurisdiction requires a permit for one part (replacing siding on one side of the house). I know someone who is well qualified to do the work and is in the process of becoming a general contractor. Since he isn't one yet, he was going to pay another company to pull the permit for him. I'm not sure if this is perfectly standard and legal, or something that may cause problems when I go to sell my home. Is this above the board?

I'm planning on selling my home in ~6 months and I'm working on some minor home improvements to get ready for that. One thing I need to do is replace the siding on one side of my house. I've called all the companies in my area who would be best suited to do this, and they are all booked up, literally, for months. It's apparently the busy season.

I happen to personally know someone who has done some small projects around my house. He's also well qualified to replace the siding on my home - I know his history and he's done work far more complicated than this. He isn't a licensed contractor because he has changed careers a couple times, and is now in the process of becoming a licensed contractor.

Because I couldn't find a company to do this work for me I asked him about it, and he was the one who pointed out that a permit would be required. He said that I could either pull the permit myself or he could pay another company to get the permit on his behalf (I believe from the same company that is sponsoring him to become a general contractor).

I initially looked into pulling the permit myself (mainly out of interest in the process), but stopped when I realized that local regulations may stop me from selling my home within a year of "performing" my own home renovations. Presumably if I pull my own permit it will be assumed that I performed my own renovations. Therefore my plan right now is to let him get the permit himself, through a company that he has a relationship with. This adds an extra ~$450 to the cost of the job - $150 for the permit, and the rest goes to the company that is obtaining the permit. I don't know if that extra $300 is simply for the costs associated with filing the permit, or if it is to cover their increased liability for taking "responsibility" for the job.

However, I'm not sure if him having someone else get a permit for him is typical operating procedure or the sign of potential legal trouble down the road. Mainly:

1. Does this mean that the work would effectively be "licensed and insured" by whatever company he has get the permit?
2. Or, if something goes wrong, would this mean that I effectively hired an unlicensed contractor to do work on my house, potentially exposing myself to liability?

Obviously my preference is for option #1, and since the name of a licensed/insured company will in fact be on the permit, I actually expect option #1 to be the case. Still, I want to make sure I'm not potentially setting myself up for trouble.

Answer 1

This would depend on the regulations for such permits in your Jurisdiction, which i see is Florida but such rules are often at the county or city level.

It is likely that if the company obtains the permit they are certifying that the work was done under the supervision of one of their license holders. If that is false, it may be a violation of regulations on the part of the company which could subject them to some penalty if it comes out, and it might be fraud on your part, because you would be effectively representing that the work was done by a licensed contractor when it was not.

If the company did not do the work and was not paid for the work, it is very unlikely that their insurance would cover the work -- indeed if such a claim were made it would probably constitute insurance fraud. So the work would probably be uninsured.

One possibility: The company might be willing to take on the job and sub-contract it to the person you know and have it covered by their insurance, with one of their people checking it over to provide the required supervision. They would take a commission on the work, or some sort of fee, for this service, no doubt. They might or might not be willing to enter into such an arrangement, but if they did, it would be above board, which i think the other idea would not be.