3 Construction Laws Contractors Must Know (Updated for 2024)

Construction laws shape neighborhoods, municipalities and the nation. They’re the reason why communities look the way they do — for better or worse. They usually vary by jurisdiction, but you must be mindful of three when building a structure from the ground up or restoring, renovating or remodeling one wherever you are.

1. Zoning Ordinance

Zoning defines how you can use a piece of land based on location. The most common zones are residential, commercial, industrial, agricultural, rural and historic. Each zone has a set of rules dictating which types of properties and how many you can build. It’s why you rarely see random homes in a shopping complex or near government buildings.

Mixed-use zones are relatively unpopular but have been gaining steam recently. They typically marry residential and commercial areas, allowing residents to live within easy biking or walking distance where they work.

Zoning ordinances promote order and safety. However, they can also be too prohibitive and exclusionary, fueling NIMBYism and driving up rents and home prices. Critics blame them for missing middle housing for the sake of putting a cap on population density, resulting in an inadequate diversity of housing options along the affordability spectrum.

Some jurisdictions have no zoning at all — Houston is a classic example. H-town’s lack of zoning has made its cityscape look unnatural relative to other high-profile American metropolitan areas. Some Houstonians are neighbors with a crematorium, have a backyard view of high-rises and can dine in a restaurant next door. The city regulates development projects by subdivision plat using ordinance codes instead of addressing land use directly.

While these construction laws are the be-all and end-all of local development, they allow exemptions. New ones often come with grandfather clauses, granting existing landowners the privilege to not conform to changes. Variances also enable developers to build something that deviates from the norm.

Zoning must be top of mind when planning to build anything on a vacant plot. Check with the local zoning office to get all the information you need and ensure you can legally proceed with your project.

2. Building Code

While zoning ordinances focus on what type of home you can have on the property, building codes determine its dimensions. These construction laws set the minimum legal requirements for designing and constructing structural systems, ventilation, plumbing and other home elements.

The United States doesn’t have a national standard, so municipalities can craft their own building codes. However, many simply adopt and tweak the model from the International Building Code as they see fit.

Building codes adapt to the times, so policymakers modernize them regularly. However, changes don’t retroactively cover existing homes. A house can stay noncompliant until its owner changes something significant, like modifying the heating, air, electrical, or plumbing system or altering the property’s footprint.

A sign that the owner should bring their house up to code is when their home improvement merits a building permit. This requirement informs the authorities about the project, prompting them to inspect the plans, work, finished product or all to ensure everything’s according to the law.

Only the local planning or building department can answer whether the homeowner or the contractor must pull a permit for the project. Permit approval speed depends on the type of construction work. The more complex it is, the more hoops you must jump through.

Moreover, building permits aren’t free. Many local governments base their fees on the square footage or estimated cost of the project. Generally, the more ambitious the job, the more expensive the building permit.

Many skirt this requirement getting the nod from the authorities can be time-consuming and costly. However, an unpermitted project can’t stay hidden forever. If municipal offices don’t catch you in the act, they may discover it when the owner lists the property for resale. The authorities may impose hefty fines, halt the job and demand parties to redo the work.

3. Home Improvement Law

States have enacted a form of home improvement law, establishing the legal framework that underpins the licensing criteria construction contractors must meet.

Regulating contracting is crucial to protecting consumers from exploitative practices. Licensing boards monitor the operations of legitimate contractors and keep restoration, renovation, remodeling, and new construction professionals honest. Contractors must demonstrate competence and accountability to obtain and maintain a license.

The exact list of requirements contractors need to satisfy to do business varies by trade and location. In most cases, insurance is a must.

Contractors have to carry adequate professional liability coverage to pay for any financial losses arising from the insured’s omission, error, negligence or incompetence. The general liability insurance provider would cover expenses related to bodily injury or property damage that occurs during construction. Workers’ compensation insurance covers the medical bills of any employee who gets hurt or falls ill on the job site.

Moreover, regulators also use contractor bonds as prerequisites for licensure. Such surety is a promise that the contractor is ethical and always observes relevant regulations. The surety company will compensate the homeowner when the contractor fails to behave accordingly.

Meeting the minimum insurance and bonding requirements set by state or municipal policymakers is paramount. The cost of doing business is high for licensed companies, putting them at a disadvantage when competing with their dishonest counterparts. All fly-by-night professionals claim to be credentialed. Scammers try every trick in the book to steal business from you.

Nevertheless, legitimacy makes stellar marketing. Using your qualifications to distinguish your company is sustainable and effective — especially since more property owners are waking up to the dangers of hiring unscrupulous construction professionals.

Stay current with updates to relevant licensing requirements. View continuing education as an opportunity to improve instead of a burden to remain licensed.

Familiarize Yourself With Vital Construction Laws 

Construction laws create essential bureaucracy to keep building contractors in line and protect property owners’ best interests. Learn everything you can about them before starting any project to avoid breaking any rules and stay on the good side of regulators.

Original Publish Date 1/27/2023 — Updated 10/1/2024