HB1154 HD1

SECTION 1. Section 444-2.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) This chapter shall not apply to owners or lessees of property who build or improve residential or farm buildings or structures on property for their own use, or for use by their grandparents, parents, siblings, or children, and who do not offer the buildings or structures for sale or lease; provided that:

(1) To qualify for an exemption under this section, the owner or lessee shall register for the exemption as provided in section 444-9.1;

(2) The exemption under this section shall not apply to electrical or plumbing work that must be performed only by persons or entities licensed in accordance with this chapter, unless the owner or lessee of the property is licensed for such work under chapter 448E;

(3) An owner or lessee exempted under this section shall:

(A) Supervise the construction activity on the exempt buildings or structures;

(B) Hire subcontractors appropriately licensed under this chapter to perform any part of the construction activity for which a license is required;

(C) Ensure that any electrical or plumbing work is performed by persons and entities appropriately licensed under this chapter or chapter 448E;

(D) Deduct Federal Insurance Contributions Act and withholding taxes and provide workers' compensation insurance for persons working on the construction activity who are not licensed under this chapter or chapter 448E and who shall be considered employees of the owner or lessee; and

(E) Ensure that the construction activity complies with all applicable laws, ordinances, building codes, and zoning regulations;

(4) Until completion of the construction activity, an owner or lessee exempted under this section shall make available the following records for immediate inspection upon request by the department:

(A) A copy of the building permit application;

(B) A copy of the issued building permit;

(C) Copies of all contracts with the names of all persons who performed or are performing work on the exempt buildings and structures; [~~and~~]

(D) Proof of payment to all persons contracted to work on the exempt buildings and structures; and

(E) Proof of withholding of applicable taxes including under the Federal Insurance Contributions Act, and proof of workers' compensation insurance for all persons contracted to work on the exempt building and structures and proof that any subcontractors, including independent contractors, provided tax withholding and workers' compensation insurance to their employees; and

(5) Upon completion of the construction activity, an owner or lessee exempted under this section shall keep and maintain the records identified in paragraph (4) for a period of three years from completion of the construction activity and shall make the records available for inspection within seven business days upon request by the department."

SECTION 2. Section 444-9.1, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The county shall provide applicants for the exemption under section 444-2.5 with a disclosure statement in substantially the following form:

"Disclosure Statement

State law requires construction to be done by licensed contractors. You have applied for a permit under an exemption to that law. The exemption provided in section 444-2.5, Hawaii Revised Statutes, allows you, as the owner or lessee of your property, to act as your own general contractor even though you do not have a license. You must supervise the construction yourself. You must also hire licensed subcontractors. The building must be for your own use and occupancy. It may not be built for sale or lease. If you sell or lease a building you have built yourself within one year after the construction is complete, the law will presume that you built it for sale or lease, which is a violation of the exemption, and you may be prosecuted for this. It is your responsibility to make sure that subcontractors hired by you have licenses required by state law and by county licensing ordinances. Electrical or plumbing work must be performed by contractors licensed under chapters 448E and 444, Hawaii Revised Statutes. Any person working on your building who is not licensed must be your employee which means that you must deduct F.I.C.A. and withholding taxes and provide workers' compensation for that employee, all as prescribed by law. Your construction must comply with all applicable laws, ordinances, building codes, and zoning regulations. If you violate section 444-2.5 or fail to comply with the requirements set forth in this disclosure statement, you may be fined up to $5,000 or [~~forty~~] fifty per cent of the [~~appraised~~] value of the [~~building~~] construction or improvement as [~~determined by the county tax appraiser,~~] indicated on the building permit application, whichever is greater, and as determined based on review of the circumstances of each case, for the first offense; and $10,000 or [~~fifty~~] sixty per cent of the [~~appraised~~] value of the [~~building~~] construction or improvement as [~~determined by the county tax appraiser,~~] indicated on the building permit application, whichever is greater, for any subsequent [~~offense.~~] offenses."

The county shall not issue a building permit to the owner-applicant until the applicant signs a statement that the applicant has read and understands the disclosure form."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 3000.

HOUSE OF REPRESENTATIVES	H.B. NO.	1154
THIRTIETH LEGISLATURE, 2019		H.D. 1
STATE OF HAWAII