Owner-Builders Beware

On 15 January 2015, amendments were made to the Home Building Act 1989 that are of particular importance for owner-builders. Prior to the amendments, it was common for owner-builders to obtain a permit and hire subcontractors to carry out part, if not all, of the works. These works would then be covered under the homeowners’ Home Warranty Insurance. Home Warranty Insurance was often obtained retrospectively when the building works had been completed and the property being sold. It is a requirement for the Home Warranty Insurance certificate to be included in the Contract for Sale of Land when it is sold within seven years of the completion of the building works.

The amendments made on 15 January 2015 mean that Home Warranty Insurance cannot be taken out by an owner-builder from that date onwards. If the building works are in excess of $20,000.00 and the homeowner decides to sell the property, a consumer warning must be included in the Contract for Sale stating:-

1. That an owner-builder permit was issued in relation to the land; and
2. The date that the permit was issued; and
3. That work done under an owner-builder permit is not required to be insured under the Home Building Act 1989 unless the work was done by contractors of the owner-builder.

If such a statement is not included in the Contract, the Contract for Sale of Land is voidable by the purchaser at any time prior to the completion date.

It is now the responsibility of each individual contractor to provide a certificate of insurance to the owner builder. These individual Home Warranty Insurance policies are capable of being assigned to a subsequent purchaser of the land and failure by the owner-builder to insist upon the provision of Home Warranty Insurance policies may either:

1. Inhibit the sale of land for a period of seven years from the completion of the building work; or
2. Expose an owner-builder who is selling their property to a damages claim in certain circumstances.

It is essential that certificates evidencing Home Warranty Insurance are obtained prior to the work being done by a contractor, as it is highly unlikely that a contractor will provide a certificate after they have been paid.

If you are considering any owner-builder work, we would be more than pleased to discuss this matter with you at your convenience.

For further information relating to the above article please contact Michael Giugni on (02) 8076 4539.

 

This publication is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render legal advice. The publication reflects the law at the date the publication was written, which may differ at the date the publication is being read. No reader should act on the basis of any matter contained in this publication without first obtaining specific professional advice.

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