License Requirements for Foreclosure Trash Out

Foreclosure trash outs are part of the property-preservation process. When a homeowner's mortgage default leads to foreclosure, the investor that repossesses the home -- the bank that issued the loan or the government or government-related entity that insured or guaranteed it, such as the Department of Housing and Urban Development (HUD) or Fannie Mae -- must clean debris and possessions out the home, perhaps do repairs, and secure the property so it can be listed for sale. Property preservation is the blanket term for this process. Banks, HUD and other entities hire local businesses to do property preservation. In some cases, foreclosure trash-out specialists may need licenses.

Licensing Requirements

No special license is required to do trash outs or property preservation, but when a service provider acts in the capacity of a contractor, remodeler or specialty contractor, its state might require that it have licenses. Each state has its own laws that regulate general contracting and trades. Some only require that tradespeople such as electricians and plumbers be licensed, while other states also license general contractors. In addition, there may be different licensing requirements for residential and commercial work.

Obtaining a State-Required Contractor's License

States that mandate licensing for trash-out service providers set their own requirements for the licensing process. According to the National Association of Home Builders, applicants may need to have practical experience, show financial stability and perhaps perform classroom work before sitting for an exam that must be passed. Some states also require that contractors take continuing education as a condition for renewing their licenses.

Business License

According to the Small Business Administration (SBA), many types of businesses need a business, occupational or profession license, a registration or a permit. Municipalities may require registration or licensing as well. The SBA recommends keeping careful records of license and registration expiration dates and copies of all applications and forms. It also reminds licensees to follow requirements for displaying licenses and permits. Contractors who expand their businesses to include new services may need additional licenses.

Property Preservation Company Testing

Some property preservation firms require that the contractors they hire pass a quiz demonstrating knowledge of the various preservation procedures. One such company, Safeguard Properties, tests familiarity with HUD and Department of Veterans Affairs (VA )guidelines; determining property vacancy status; identifying health hazards; the difference between debris and personal property; and the steps a contractor must take to perform a number of specific repairs. The quiz also asks questions about winterizing homes; the process of bidding on jobs; FHA, HUD and VA requirements, and experience in real estate owned (REO) trash outs. These quizzes don't lead to official certifications, nor do they apply to licensing requirements in the states that have requirements. They're strictly in-house certification tools.

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About the Author

Daria Kelly Uhlig began writing professionally for websites in 2008. She is a licensed real-estate agent who specializes in resort real estate rentals in Ocean City, Md. Her real estate, business and finance articles have appeared on a number of sites, including Motley Fool, The Nest and more. Uhlig holds an associate degree in communications from Centenary College.