HUD Guidelines For Property Preservation License
HUD regulations do not state the need for a license of any type.
The General Requirements portion of the regulations states, under paragraph title: Mortgagee Responsibility: ” A Mortgagee may use any individual or firm to perform preservation and protection services on properties securing FHA-insured mortgages, however, the Mortgagee remains fully responsible to HUD for its actions and the actions of its agents.”
This statement in the HUD Regulations is the foundation for all companies placing full responsibility for all field services performed by independent contractors upon the contractors themselves.
As independent contractors, property preservation contractors are assuming total responsibility for their services and will normally need to be licensed by their city, state and county authorities.
In some cases, depending on the types of services offered, the contractor may be required by state, county and city
to obtain one or more licenses. It would be impossible to list what licenses may be needed by contractors across the country so each contractor has the responsibility of acquiring and maintaing licensing for their area of operations and services within their area. Although not all property preservation contracting services involve the full scope of responsibilities normally required of other craftsmen and professionals, the mere mention of some preservation duties may result in licensing authorities stating that a license is needed “for that.”
Contractors are encouraged to create a list of potential services that may be performed and notate the craft or trade category normally associated with those services. With this list in hand, discuss potential licensing requirements with legal, insurance and financial counsel before approaching local licensing authorities.
The following list of common construction trades can, in some areas, require licensing or union membership. Again, although property preservation contractors normally do not identify themselves as a craftsperson within a certain trade, depending on the location and circumstances, licensing may be required.
This list is not a complete list of all construction trades and is to be used only as an example list from which contractors can
start their own list.
Heating, ventilation and Air-conditioning
Painting and Decorating
As a final discouraging note, trades and crafts unions in many areas have hired attorneys to help them combat what they see as “unlicensed contracting”. They feel property preservation contractors are cutting into their business and doing so “under the radar.” You should keep your finger on the pulse of your legal community and be sure you have legal representation yourself.