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Building a home and the final elevation of the foundation wall sits pretty close to grade -- about 12-14 inches.

My foundation sub suggested that from the 10" wall width making a 6" shelf for the sill and extending the remaining 4" up another 14" or so and treated as a rim joist.

This would definitely protect the lumber from moisture, but is this acceptable by code?

He's says he does it on very high end homes.
 

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I've done that here a few times, mostly for handicap access homes to get the grade up to floor level. I don't see a problem with it. I would try to make it as close as possible to floor system height, including mudsill. Maybe make sure he puts bolts in both the shelf and the upper portion. I don't know that I would call it a rim joist, per se. I've usually still put a rim between the joists and the concrete, or I guess you could just block in between them. Try to keep some kind of thermal break in between the joists and the foundation, both for temperature transfer and moisture issues. Maybe some foam or sill sealer.
 

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