If a building permit has issued under the Building Act 1993 (Vic) (“Act”) in the preceding 7 years, then a vendor must disclosure this information to prospective purchasers. If a building permit has been issued and it identifies the vendor as both the owner of the property and the builder of the works, then the vendor has further obligations that it must comply with when selling the property.
Am I an Owner Builder?
You are an owner builder if you:
- intend to use your own skills to build, extend or renovate a home or a commercial premise on your own land;
- intend to manage or arrange for the works to be completed by another person e.g., a builder or tradespersons, or
- are a registered builder who builds, extends or renovates a home on your own land.
For the purposes of the Act, you are an owner builder if the permit identifies you as both the owner of the property and the builder of the works. Being an owner builder means that you must comply with the legal rights and responsibilities of an owner builder (see below). However, you should take care to ensure that the builder or tradespersons undertaking the work is a registered building practitioner and that the builder or tradesperson is not avoiding their legal responsibilities. For example, a builder, contractor or tradesperson must enter into a written contract for domestic building work that is more than $5,000.00.
Legal Rights and Responsibilities of an Owner Builder
The legal rights and responsibilities of an owner builder are contained in the Domestic Building Contracts Act 1995 (Vic) and the Act. As an owner builder you must:
- obtain building permits and planning permits (if required) from the local council for the works;
- be named as the owner builder on the building permit;
- obtain a certificate of consent from the Victorian Building Authority (“VBA”) before carrying out domestic building works where the value of those works is more than $16,000.00;
- arrange for the certification of completed work and ensure that the work is compliant with Australian standards;
- ensure the site and worker safety;
- rectify any defective building work, and
- ensure appropriate insurance policies are in place.
Owner Builder Selling a Home
If you sell your home within:
- 6 years and 6 months from the date that an occupancy permit or a certificate of final inspection was issued;
- 7 years from the issue of the building permit, where no occupancy permit or certificate of final inspection has been issued, or
- 6 years and 6 months from the date that you declare in a statutory declaration as the commencement date of the works,
then you must:
- provide a defects inspection report not more than 6 months old from a registered building practitioner for all work regardless of value including extensions, renovations, garages and verandas;
- take out domestic building insurance for work over $16,000.00. The insurance policy covers non-structural defects for two years and structural defects for 6 years. For the avoidance of doubt, domestic building insurance is not required for a commercial premise, and
- provide the following warranties in the contract of sale to the purchaser:
- that all domestic building work carried out in relation to the construction by or on behalf of the vendor of the home was carried out in a proper and workmanlike manner;
- that all materials used in that domestic building works were goods and suitable for the purpose for which they were used and that, unless otherwise stated in the contract, those materials were new, and
- that the domestic building work was carried out in accordance with all laws and legal requirements, including the Act and regulations made under the Act.
Failure to Disclosure Owner Builder Works
If you do not comply with your obligations when selling your owner builder home, the purchaser may elect to terminate the contract at any time up until the settlement date. If any of the warranties that are provided for in the contract are breach, the purchaser may have an action against you.
For further information on owner builder issues, please contact us at [email protected] or on 5303 0281 to make an appointment.
For more information on our conveyancing arm, click here.
The information on this website is of a general nature only. It is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice about your particular circumstances.
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