What is “spec” building?

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Spec buildings are those built by a licensed contractor on his/her own land for the purpose of resale when there is not a custom contract.

Prior to January, 2003, certain counties allowed the provisions for contractors to spec build in their county of residence. However, legislation was put in place to allow these contractors to obtain a special “spec” homebuilding license should they apply prior to January 1, 2006. This was pursuant T.C.A. § 62-6-102(D)(i). For example, a licensed spec builder in Brownsville would have a license classification listed as: “Spec Homebuilder – Haywood County.” That contractor may build a house in which the cost is $350,000 or less.

The contractor licensed as a spec homebuilder may not construct a residence in a county in which he/she is not licensed, cannot build on land owned by another individual or entity, and cannot enter into a contract to build for anyone. In addition, a custom contract with anyone to build the home from the ground up would not be considered a spec house and would be a violation of the law.

There is no longer a provision to obtain a new spec homebuilding license. Therefore, once this license expires and is not renewed within 12 months, a spec contractor would need to apply for a residential BC-A license by taking the exams and supplying financial statements.

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