Owner-builder. Information and Education Kit

Transcription

1 Owner-builder Information and Education Kit

2 Disclaimer Copyright in the contents of this document is owned by the Building Commission. Except as provided for in the Copyright Act 1968, no part maybe reproduced without permission. The Building Commission believes that all information, both written and oral, given in the course of or in connection with it s activities (whether by the commission itself or it s employees or agents) is accurate and reliable. However, no warranty of accuracy or reliability as to such information is given, and no responsibility for loss arising in any way from or in connection with errors or omissions in any information provided (including responsibility to any person by reason of negligence) is accepted by the Commission or by any of it s agents or employees. Building Commission 2005

3 Contents Introduction 4 Certificates of Consent 6 Applying for a Certificate of Consent 7 Preparing to start building work 8 Permits 8 Building Standards 11 Council local laws 11 Protection of adjoining property 11 Insurance 12 Carrying out building work 13 Inspections 13 Asbestos 13 Engaging builders and tradespeople 14 Preliminary Agreements 14 Major domestic building contracts 15 Domestic building contract checklist 21 Disputes involving contractors 21 Completion of building work 24 Selling your property 25 Useful contacts 26 Application for a Certificate of Consent 28 Application checklist 28 Application for a Certificate of Consent 29 List of persons authorised to witness statutory declarations 35

4 Introduction From 14 June 2005 new owner-builder laws were introduced in Victoria to provide greater protection for consumers, genuine owner-builders and registered building practitioners. The new laws mean that unregistered builders can no longer avoid registration fees and insurance by operating as a surrogate owner or by persuading owners to be the builder. From 14 June 2005 owner-builders: Must obtain a Certificate of Consent from the Building Practitioners Board in order to obtain a building permit to carry out domestic building work valued over $12,000 May only obtain building permits for a single dwelling and associated work on a single property in any three-year period Must reside and continue to reside, or intend to reside in the single dwelling. In order to obtain a Certificate of Consent, you must: Read this Information and Education Kit and sign the statutory declaration on page 34. Complete the application form on page 29. Send the statutory declaration, application form, application fee of $75 and any supporting documentation to the Building Practitioners Board. Note: A Certificate of Consent cannot be obtained to carry out building work as an owner-builder on multi-unit developments, such as apartments. What is an owner-builder? An owner-builder is a person who carries out domestic building work on his or her own land, who is not in the business of building. If the land is owned by a body corporate or is the subject of a trust, the owner-builder must be a body corporate director or a trust beneficiary. Body corporate directors and trust beneficiaries will need the written permission of the body corporate or trust to apply for a Certificate of Consent and to carry out the domestic building work. Similarly, if the land is owned by more than one person, the owner-builder will need the written permission of all other owners. Owner-builders are responsible for: Obtaining all permits required Supervising building work and/or carrying out the work themselves 4 Ensuring the work meets relevant building regulations, standards and other laws Arranging for building inspections as required by law at particular stages of the building work Obtaining an occupancy permit or certificate of final inspection from the relevant building surveyor on completion of work. What laws relate to owner-builders in Victoria? There are particular laws that cover activities of all owner-builders, regardless of the cost of building work. If you plan to carry out domestic building work on your property as an owner-builder, you must work within these laws. Some of the laws covering domestic building work in Victoria are: The Building Act The Building Regulations The Building Code of Australia The Domestic Building Contracts Act. If you wish to carry out domestic building work on your own land, you must be familiar with and act on particular laws before you commence this work. These laws include: Obtaining a Certificate of Consent from the Building Practitioners Board before you can obtain a building permit for domestic building work valued over $12,000 Obtaining a building permit before commencing work Obligations of certain building practitioners to be registered Entering into a written major domestic building contract when engaging contractors to complete work over $5000 Obtaining domestic building insurance before selling an owner-built home. As an owner-builder, you should ensure that you have appropriate workplace and public safety insurance policies in place. You should also consider purchasing policies to protect yourself against fire, theft and defective work. When protection works are required, you must also obtain insurance for adjoining property protection during construction, and for twelve months following completion. Before you become an owner-builder you also need to learn about: Risks associated with asbestos and renovations Health and safety obligations under the Occupational Health and Safety Act 1985/2004

5 Tax law requirements related to paying contractors. Information about health and safety obligations and tax law requirements can be found by using the Useful Contacts listed on page 26. What potential risks do owner-builders take? An owner-builder effectively assumes the responsibilities, risks and liabilities of a registered building practitioner. These risks can include: Financial risks Project cost increases as a result of poor estimating Rework due to faulty workmanship and/or non-compliance Variations from the original plans Loss by theft or fire on the site Site protection costs (security, safety) Occupational health and safety claims Adjoining property owner claims Quality risks Adequacy of drawings and specifications Standard of workmanship by others Compliance with regulations (building, occupational health and safety, etc) Technical ability to direct and assess workmanship Time risks Identification and engagement of suitable tradespeople Coordination and continuity of work Completion of work Future risks Cost of insuring prospective purchasers Claims by purchaser within required time period Many of these risks may influence the cost of building work. Risks are reduced where a trade contractor, being a registered building practitioner, provides a major domestic building contract. Where the contract sum exceeds $12,000 and the contractor is required to provide warranty insurance, risks are further reduced. Insurance providers are listed under Useful Contacts on page 26. What is a Certificate of Consent? A Certificate of Consent is written approval from the Building Practitioners Board that enables you to obtain a building permit and carry out domestic building work as an owner-builder on your own land. Obtaining a Certificate of Consent does not guarantee you will be issued with a building permit. Certificates of Consent are covered in detail on page 6. What is domestic building work? Domestic building work¹ includes: The erection or construction of a single dwelling The renovation, alteration, extension, improvement or repair of a single dwelling Any work associated with the above items including landscaping, paving, and the construction of any building or fixture related to the dwelling such as retaining structures, driveways, fences, garages, carports, workshops, swimming pools or spas The provision of lighting, heating, air conditioning, ventilation, water supply, sewerage or drainage to the dwelling or property The demolition or removal of a dwelling Any site work, including work required to gain access to the site The preparation of plans, drawings or specifications needed to carry out domestic building work, unless carried out by an architect or registered engineer or draftsperson. Any work associated with the construction or erection of a dwelling on land zoned for residential purposes and requiring a building permit. What is not domestic building work? Works excluded from domestic building work include: Farm buildings other than homes Buildings intended only for business use Buildings that only house animals Design work carried out by an architect or registered engineer or draftsperson Obtaining foundation data for a domestic building Transporting a building from one site to another Construction of residential buildings of a public nature. Certain types of work carried out as a single trade and completed in isolation from any other domestic building work are also exempt, such as: Attaching external fixtures (including awnings, security screens, insect screens and balustrades) Draining and plumbing work ² Electrical work Glazing Installing floor coverings Insulating Painting Plastering Tiling (wall and floor) Erecting a chain wire fence to enclose a tennis court Erecting a mast, pole, antenna, aerial or similar structure. ¹ For full definitions of domestic building work refer to the Domestic Building Contracts Act 1995 and Domestic Building Contracts and Tribunal (General) Regulations ² As defined under section 85(1) of the Building Control (Plumbers, Gasfitters and Drainers) Act

6 Certificates of Consent When is a Certificate of Consent required? From 14 June 2005, landowners who intend to apply for a building permit to carry out domestic building work, valued over $12,000 in relation to a single dwelling, as an owner-builder, must provide to the relevant building surveyor a Certificate of Consent. You will need to obtain a Certificate of Consent in order to obtain a building permit for any subsequent building work (valued over $12,000) on the same property. When is a Certificate of Consent not required? If you intend to carry out domestic building work as an owner-builder valued under $12,000 you do not require a Certificate of Consent in order to obtain a building permit. Date of Issue: Property Address: Description of domestic building work: Property owners: Owner builder Certificate of Consent How long is a Certificate of Consent valid for? A Certificate of Consent is valid for three years from the date it is issued. Unless special circumstances exist, only one Certificate of Consent to carry out domestic building work for a single dwelling will be issued in any three-year period. There is no limit to the number of Certificates of Consent you may obtain to carry out subsequent domestic building work valued over $12,000, in relation to, or ancillary to, the single dwelling during the three year period. Who is not eligible for a Certificate of Consent? Generally, you will not be able to obtain a Certificate of Consent if: The domestic building work does not relate to a single dwelling You do not reside in or intend to reside in, or will not continue to reside in, the dwelling In the previous three years³ a building permit was issued to you as builder to carry out domestic building work on any land owned by you, a body corporate of which you are a director, or a trust of which you are a beneficiary In the previous three years³ a co-owner of the land has been issued with a building permit to carry out domestic building work as builder on that or any other land he or she owned (unless that building permit related to the same dwelling as the Certificate of Consent) In the previous three years³ a co-owner of land was issued with a building permit to carry out domestic building work as builder on that land You are in the business of building. Carolyn Lloyd Chair Peter Brilliant Registrar If you believe special circumstances exist you may ask the Building Practitioners Board for an exemption. If you are unable to undertake work as an ownerbuilder you can engage a registered building practitioner or become a registered building practitioner. For more information visit Finding an RBP at www. buildingcommission.com.au. ³Note: The three-year limitation applies only to permits issued on or after 14 June

7 Can a building permit be obtained without a Certificate of Consent? Domestic building work valued less than $12,000 does not require a Certificate of Consent in order to obtain a building permit. For domestic building work valued over $12,000 you must have a Certificate of Consent before you can obtain a building permit. However, obtaining a Certificate of Consent does not guarantee that you will issued with a building permit for your proposed work. Information on obtaining a building permit is detailed on page 10. What happens if I carry out domestic building work without a Certificate of Consent? If you carry out domestic building work valued over $12,000 without a Certificate of Consent and/or building permit, you could be prosecuted. Penalties range from approximately $5,000 to $10,000. Do I need to be registered with the Building Practitioners Board? No, you do not need to be registered with the Building Practitioners Board if you have received a Certificate of Consent. However, refer to information on Engaging builders and tradespeople on page 14. Applying for a Certificate of Consent To be eligible for a Certificate of Consent you must: Be an individual Be the sole owner or co-owner of the land, or the director of the body corporate that owns the land and has written authority from the body corporate to apply and carry out the work, or the beneficiary of the trust that owns the land and has written authority from each trustee to apply and carry out the work 4 Reside at the property and continue, or intend to reside there. How do I apply for a Certificate of Consent? To apply for a Certificate of Consent, you must: Read this Information and Education Kit Complete the statutory declaration on page 34 Complete the application form on page 29 Send or deliver the completed application form, with any supporting documents, to the Building Practitioners Board, together with the $75 application fee. What information may be required for an application? You must complete the questions in the application form on page 29. The Building Practitioners Board may request further information that is reasonably required to decide on granting an application. Can I appeal against a decision of the Building Practitioners Board? You may appeal to the Building Appeals Board if the Building Practitioners Board: Refuses to issue you with a Certificate of Consent Fails to make a decision on your application within a reasonable time. The Building Appeals Board will consider your appeal and in making a decision may agree with, overturn, set aside or vary the Building Practitioners Board s decision. Appeals must be made within 60 days of the decision by the Building Practitioners Board. If the Building Practitioners Board s decision is set aside, the Building Appeals Board may: Put in place its own decision Require the Building Practitioners Board to reconsider your application in accordance with any directions or recommendations that it considers appropriate. If the appeal is against the Building Practitioners Board s failure to make a decision on your application for a Certificate of Consent, then the Building Appeals Board may exercise the Building Practitioners Board s power to either issue or refuse to issue the Certificate of Consent. 4 Body corporate directors and trust beneficiaries who apply for a Certificate of Consent must also reside and continue to reside at the property, or intend to reside there. 7

8 Preparing to start building work Permits You may need a planning permit, a building permit or both for your building project. Your building surveyor, architect or builder will be able to give you some initial advice about the permits required but it is essential to get independent advice before commencing your project. Your local council is the best place to advise whether or not you will need permits. Generally, a building permit is required for all significant building work, which includes the construction and demolition or removal of a building. Any work to be carried out on or in connection with a building listed on the Heritage Register will require a building permit and may also require a permit under the Heritage Act The following table lists common types of building work and whether they are subject to a building permit. Please consult your municipal or private building surveyor regarding the technical provisions that apply. Common types of building work ADDITIONS Additions to a dwelling or any other building ALTERATIONS Structural alterations to a dwelling or any other building Removal of or alteration to a load bearing part of a building CARPORTS/GARAGES Freestanding, floor area not exceeding 10m², no more than 3m high, not constructed of masonry and located no further forward on the allotment than the associated building Attached to another building Setback less than the associated building DEMOLITION/REMOVAL Demolition or removal of part or all of a building Owner-builders must provide the relevant building surveyor with evidence that the demolisher has the necessary knowledge, experience, equipment and storage facilities to properly conduct the demolition. Building Permit required? No FENCES Construction of a side or boundary fence less than 2m high Construction of a brick front fence more than 1.2m high Construction of a timber front fence less than 1.5m high Construction of a side or boundary fence more than 2m high Construction of a fence that is more than 1m high, within 9m of the point of intersection of street alignment Construction of a chain wire tennis court fence No No No MASTS/ANTENNAS Height more than 3m above the highest point of a building (if attached to a building) 8m above the ground (if not attached to a building) 8

9 PERGOLAS Construction of a pergola (unroofed) associated with a house, not exceeding 20m² in area, not more than 3m high and located no further forward on the allotment than the dwelling Construction of a pergola (unroofed) associated with any other building RETAINING WALLS Constructed on or near site boundaries (any height) in order to maintain the stability of the adjoining property Construction of a retaining wall 1m or more in height REBLOCKING Reblocking or restumping of an existing building ROOFING Replacing of corrugated iron roofing with concrete or terracotta roofing tiles Replacement of corrugated iron roofing with Colorbond or other pre-finished sheeting SIGNS More than 1m above ground level within 3m of the street alignment More than 8m above ground level, and more than 6m² in display area and more than 3m from the street allotment boundary SHEDS Erection of a shed less than 10m² in area, no more than 3m high, not constructed of masonry and located no further forward on the allotment than the associated building Erection of a shed more than 10m² in area SWIMMING POOLS/SPAS Construction of an in-ground swimming pool/spa greater than 300mm in depth VERANDAHS Construction of a verandah attached to any building WINDOWS Replacement of windows with similar type windows, where no structural alterations are required Installation of bay or corner type windows where structural alterations are required WOOD HEATER Installation of a wood heater (solid fuel burning appliance) No No No No No 9

10 How do I apply for a building permit? An application for a building permit may be made to a municipal or private building surveyor. To check the registration of a building surveyor, search on the Building Commission s website at under Finding an RBP or call Some municipal building surveyors issue permits outside their municipal district, whereas private building surveyors may issue building permits in any municipality. To obtain a building permit as an owner-builder: Apply for a building permit through your municipal or private building surveyor Check the experience of the building surveyor and their fees for issuing the permit and carrying out the inspections Pay the appropriate fee and submit at least three copies of drawings, specifications and allotment plans with the completed application form For domestic building work valued over $12,000 you must also provide the relevant building surveyor with a Certificate of Consent. What is the role of the relevant building surveyor? The relevant building surveyor does much more than issue building permits. Other responsibilities include: Deciding what, if any, protection work for the public or for adjoining property needs to be carried out Carrying out all mandatory inspections, or arranging a representative to carry out those inspections on their behalf Determining when it is appropriate to issue the occupancy permit or certificate of final inspection Recording on the occupancy permit or certificate of final inspection all registered building practitioners engaged by the owner-builder for the building work Taking enforcement action, including issuing building notices and building orders, where building work does not comply with the Building Act, the Building Regulations or the building permit. What are building notices and orders? In order to enforce the requirements of the Building Act and Building Regulations in cases of non-compliance, building surveyors may issue building notices and/or building orders. Only municipal building surveyors may issue emergency orders. Building notices are served on a building owner to request an explanation for a contravention of the Act or Regulations or in respect of some form of danger to the public or building occupants. Building orders and emergency orders require the owner or occupiers of a building to take action to attend to the non-complying or dangerous matter or to evacuate the building. If a building order or emergency order is breached, the owner may be prosecuted. What other requirements do I need to satisfy? In addition to satisfying the relevant building surveyor s requirements, you may also need to obtain the consent and report of authorities such as the municipal council or the relevant water authority. You may need to obtain your municipal council s consent to: Construct a building over an easement Demolish more than half the volume of a building over a period of three years or demolish any part of the façade of a building Vary any of the siting requirements set out in Part 4 of the Building Regulations. You must ensure that all necessary consents are obtained before you start the building work. The relevant building surveyor can assist homeowners to obtain consents from reporting authorities, as they cannot issue building permits until they have all necessary consents. Is there a fee or levy payable when applying for a building permit? You will need to pay the relevant building surveyor s fee, as well as a building permit levy if the value of the building work is more than $10,000. The building permit levy is calculated as a percentage of the cost of the building work. Although you are required to state the estimated cost of the building work on the application for the building permit, the relevant building surveyor may review this figure and then calculate how much to pay for the building permit levy. How long are building permits valid for? Generally, domestic building work must start within 12 months of the date the building permit is issued and must be completed within 24 months of that date. Different time limits apply to the construction of swimming pools and the re-erection of certain buildings. The relevant building surveyor must state these time limits on the building permit. 10

11 If the work does not start or is not completed within the stated time, the building permit will lapse or expire. You can apply to the relevant building surveyor to extend either or both the start and finish date of the building work before the permit lapses or expires. Do I have to comply with the approved plans?, to comply with the building permit the building work must be consistent with the plans, drawings and specifications that have been approved by the relevant building surveyor who issued the building permit. If you wish to carry out work that differs from the approved plans, you must ask the relevant building surveyor to issue an amended building permit that reflects the changes to the building work. What can happen if I do not obtain a building permit? Undertaking building work without obtaining the necessary building permit is a serious offence and can result in severe penalties of up to approximately $10,000 for individuals and $50,000 for bodies corporate. When is a planning permit required? Planning permits are legal documents giving permission for a land use or development and may be required for all work. You should contact the planning department of your local council to assess whether you require a planning permit. If your local council requires you to have a planning permit you must obtain this before you are able to obtain a building permit. Obtaining a planning permit does not entitle you to carry out work on your land. You still need to obtain a building permit. Planning permits can only be obtained from your municipal council. Building Standards All building work carried out in Victoria, including domestic building work undertaken by owner-builders, must comply with: Local council planning schemes The Building Act The Building Regulations The Building Code of Australia (BCA), which sets out technical standards to meet performance requirements Relevant Australian Standards referenced in the BCA. The Building Regulations cover requirements for the siting of dwellings and other domestic building work including setbacks from boundaries, fence heights and overlooking. Siting may also be governed by the planning scheme that relates to your land. Local council planning schemes that set out different requirements to the Regulations must be complied with over and above the Regulations. You should discuss the matter with your local council s planning or building department to find out which requirements apply to your land. The Regulations set out extra requirements for building work in particular areas that are unsewered, subject to flooding, termites or bush fire and for alpine locations. Your local council can tell you if your land is in any of these areas. If it is, then you must comply with the additional requirements set out in the Regulations. What can happen if I do not comply with the Building Act, Building Regulations or building permit? If you carry out building work that does not comply with the Building Act, the Building Regulations, the Building Code of Australia or the building permit, you may be prosecuted. The maximum penalty is $10,000 for individuals and $50,000 for bodies corporate. Council local laws Each municipal council has the power to make local laws in relation to building work and may impose requirements for: Protection of the council s assets, such as roads and footpaths Fencing of building sites Provision of sanitary facilities for workers, which is also governed by health legislation Disposal of refuse Access to footpaths Noise restrictions Construction of vehicle crossings. If you do not comply with the applicable local laws, you may be fined or prosecuted in a court by your local council. Protection of adjoining property Your relevant building surveyor may require you to carry out protection work to adjoining properties from any damage that might result from the building work you intend to carry out. Protection work includes work such as underpinning, shoring up or providing overhead protection to the adjoining property. 11

12 What must I do if protection work is required? If protection work is required you must notify the owner of the adjoining property in writing of the proposed protection work and obtain that owner s agreement to the work. This is done by completing and exchanging a Protection Work Notice and a Protection Work Response Notice as prescribed by the Building Regulations. Adjoining owners may ask for more information in order to decide whether they agree or disagree with proposed protection work. If the owner agrees to the protection work, you can proceed to carry out that work. If not, the relevant building surveyor may determine whether or not the protection work is appropriate. If you or the adjoining property owner disagrees with the relevant building surveyor s determination, you can appeal against that determination to the Building Appeals Board. Do I need to prepare a survey of adjoining property? If protection work is required, a full survey of the adjoining property must be prepared by the owner together with the adjoining owner. The survey must be a record of all existing cracks and defects. This record must be signed or acknowledged as an agreed record of the condition of the adjoining property before the commencement of any protection work. Disputes about insurance cover or the adequacy of the survey can be referred to the Building Appeals Board for a resolution. What happens if I do not carry out the required protection work? You must carry out the protection work before commencing the building work as determined by the: Relevant building surveyor, or Building Appeals Board, in cases where the relevant building surveyor s determination has been appealed. If you do not carry out the protection work or commence the building work without carrying out the protection work, you may be prosecuted. The penalties are approximately $10,000 for an individual or $50,000 for a body corporate. The Building Commission can require emergency protection work to be carried out. In this case you do not need to notify the adjoining property owner of the protection work nor obtain that owner s consent. Insurance Do I have to obtain insurance for protection work? Insurance for protection work is the only compulsory insurance you need to take out before or during carrying out building work on your land. Insurance must be obtained before commencing any protection work and must cover the period from the time the protection work is carried out to 12 months after the building work is completed. This insurance must cover you against: Damage caused by the protection work to the adjoining property Any liabilities likely to be incurred by the occupiers of the adjoining property or members of the public while the building work is being carried out and for 12 months after the work is completed. The contract for insurance must be with an insurer for an amount agreed between the owner and adjoining owner. A copy of the insurance policy must be provided to the adjoining owner before building work commences. If you fail to comply with this requirement you may be prosecuted. Penalties are approximately $10,000 for individuals and $50,000 for a body corporate. What other insurance may be required? You may need to obtain domestic building insurance if you sell your home in the future. Refer to the insurance section under Selling your home on page 25. There is no legal requirement for any other insurance, although you do face a number of risks when carrying out work as an owner-builder. These risks include: Damage to or the destruction of the building work or adjacent/existing building fabric Theft of materials and equipment Injuries to workers Public liability claims. It may be appropriate to obtain insurance to protect yourself against these risks. If you are borrowing money for the work, most financial institutions will require a suitable construction and public liability policy to be in place prior to the releasing of funds. You should consult an insurance adviser or broker to discuss your options and to determine a cost effective way of managing these risks. 12

13 Carrying out building work Inspections Once building work has commenced, the relevant building surveyor is required to inspect the building work to ensure that it is being carried out in accordance with the Building Act, the Building Regulations and the building permit. Mandatory inspections must be carried out at certain times including: Prior to placing a footing Completion of the framework Prior to pouring an in situ (fixed or installed) reinforced concrete member nominated by the relevant building surveyor When all work covered by the building permit is complete. The relevant building surveyor may vary these stages to suit the type of building work being carried out. The building permit must set out the inspection stages for the work covered by the building permit. What are my legal obligations? You must notify the relevant building surveyor when you reach one of the mandatory inspection stages listed in the building permit. Once you have notified the relevant building surveyor that you have reached a mandatory notification stage in building, the surveyor must inspect, or direct a representative to inspect, the building work. The relevant building surveyor may require building work to be demolished, opened, cut into or tested if necessary to carry out the inspection. If the relevant building surveyor directs you to stop carrying out the building work at a mandatory inspection stage, you must comply. If you fail to comply with any of these requirements, you may be prosecuted. The maximum fine for each offence is $1,000. The relevant building surveyor or a representative may direct you or any other person in charge of carrying out the building work to do certain other work to make the building work comply with the Building Act, the Building Regulations or the building permit. You must comply with any of these directions, regardless of whether it is given orally or in writing. If given orally, the person who gave the direction should confirm it in writing. Asbestos Asbestos is a silicate mineral made up of tiny fibres. When it is disturbed, it produces a dust that contains asbestos fibres. Fibres breathed into the lungs can cause a range of health problems including asbestosis, lung cancer and mesothelioma. You may legally remove asbestos from your property. However, it is recommended that only a licensed professional remove loosely bound asbestos. If you plan to handle asbestos material, you need to take precautions to minimise the release of asbestos fibre. If you do not feel confident to remove the asbestos material, you should contact a licensed asbestos removalist. What types of asbestos are found in the home? Asbestos can be found in two types, loosely or firmly bound. Loosely bound asbestos is found sealed inside old domestic stoves and heaters. Firmly bound asbestos is a common building material. In older homes, firmly bound asbestos may be found in the following materials: Flat or corrugated sheeting (fibro cement or AC sheeting) Water pipes Flue pipes Roof shingles Flexible building boards Plaster patching compounds Textured paint Vinyl floor tiles The backings of linoleum floor coverings Insulation on hot water pipes Insulation in old domestic heaters Insulation in stoves Ceiling insulation products Information on precautions to be taken when handling and disposing of asbestos are set out by the Department of Human Services at Refer to Useful Contacts on page 26 when dealing with asbestos. 13

14 Engaging builders and tradespeople As an owner-builder you may: Undertake all or part of the building work yourself, except in areas that require licensed tradespeople, such as electricians and plumbers Contract out all or part of the work to registered building practitioners or tradespeople Engage a supervisor to oversee the work. If you choose to engage a building practitioner to complete any building work valued over $5,000, the practitioner must comply with the Domestic Building Contracts Act 1995 by: Being a registered building practitioner Entering into a written major domestic building contract with you. If you choose to engage a building practitioner to complete any building work valued over $12,000, the practitioner must also be covered by domestic building insurance. Registered building practitioners can be checked on the Building Commission website at under Finding an RBP or by calling Who does the Domestic Building Contracts Act apply to? Bathroom renovators Bricklayers Builders Building inspectors Building surveyors Cabinet makers/kitchen repairers Carpenters Concreters Civil Engineers Demolishers Draftspeople Hydraulic Engineers Mechanical Engineers Quantity surveyors Restumpers Roofers These practitioners may have unlimited registration that enables them to complete all building work, or registration that limits them to just one type of work. Are there any trades the Domestic Building Contracts Act does not apply to? Tradespeople carrying out the following specialised domestic building work as a single trade only, are exempt from the requirements of the Domestic Building Contracts Act: Attaching external fixtures (including awnings, security screens, insect screens and balustrades) Draining and plumbing work 5 Electrical work Installation of floor coverings Insulating Painting Plastering Tiling (wall and floor) Erecting a chain wire fence to enclose a tennis court Erecting a mast, pole, antenna or similar structure. However, if more than one trade is carried out by the same tradesperson for more than $5,000 (for example, the plasterer also does the painting) they will be required to be registered and enter into a major domestic building contract. For work valued over $12,000, they must also provide domestic building insurance. Preliminary Agreements A Preliminary Agreement, or pre-contract agreement, is a legal document that is usually signed by a building practitioner and landowner for services required before major domestic building work can commence. What services might a Preliminary Agreement include? Services may include one or all of the following: Soil tests Site surveys Architectural and engineering drawings for the site Information on the type and depth of foundations and footings to be used in construction. You may not wish to engage a building practitioner or tradesperson to construct your entire home, but may wish to engage a geo-technical engineer or building practitioner to provide a Foundation Data Report. This report covers information about the building site and implications for design, drawings and construction of foundations. The report can include architectural and engineering designs and surveying costs. 5 As defined under Section 85(1) of the Building Control (Plumbers, Gasfitters and Drainers) Act

15 It is important to have this information before building starts as it can influence the: Type of foundations used Design Cost of building your home or extension. Be aware that drawings obtained under this agreement may be subject to copyright. If so, you may not be able to keep these drawings for use by a different contractor, or yourself as the owner-builder, despite paying for them. You should discuss the use of the drawings with the practitioner who supplied them. You should seek advice from an experienced building solicitor before signing a Preliminary Agreement. Major domestic building contracts Major domestic building contracts will only apply to you, if you engage a building practitioner or tradesperson to carry out building work valued over $5,000. These laws do not apply if you personally carrying out all building work on your home. If you engage a building practitioner or tradesperson (contractor), you are required by law to have a formal written major domestic building contract for most domestic building work valued over $5,000, including: Construction of a home and associated landscaping, paving, retaining structures, driveways, fencing Provision of lighting, heating, air conditioning, water supply or sewerage Renovations, alterations, extensions and repairs to a home Work associated with the renovation, alteration, extension or repair of a home, such as landscaping, paving, retaining structures, driveways, fencing, garages, workshops, swimming pools or spas Preparation of plans, drawings or specifications for the work Demolition or removal of a home Any work associated with the construction or erection of a building on land zoned for residential purposes and for which a building permit is required. A major domestic building contract is a legally binding agreement you make with a contractor to carry out, arrange or manage your building project. The contract needs to be accurate, detailed and as precise as possible so that there is no uncertainty. A solicitor, who is not acting for the contractor, or qualified independent expert in domestic building matters should examine the contract with you before you sign. If a disagreement arises, the contract will be the primary source of clarification and settlement. What should be included in a major domestic building contract? Under the Domestic Building Contracts Act 1995, a major domestic building contract must be readily legible, written in English and contain the following: Full details of the terms of the contract A detailed description of the work Plans, drawings and specifications of the work Names and addresses of the parties to the contract The contractor s registration number with the Building Practitioners Board The date when work is to start or how that date is to be determined A statement that the contractor will do everything that is reasonably possible to start work as soon as possible if the start date is not known A finish date or the number of days required to finish the work if the start date is not known The contract price, the date of the contract and details of contractor s domestic building insurance cover A notice of your right to a five-day cooling-off period A section including definitions of words used in the contract An approved checklist A statement of implied warranties to be given by the contractor, including the standard of workmanship, materials to be used, compliance with all laws and legal requirements, the dwelling s suitability for occupation, and completion within the stated timeframe. Warranties under the Domestic Building Contracts Act 1995 will carry on to any subsequent owner for the relevant period. If applicable, the contract should include any liquidated damages to be paid by the contractor if construction is not finished by the stated date. The amount of any penalty rates or liquidated damages should be your estimate of costs incurred by you if the work is not finished on time. To avoid any misunderstandings or disputes you will need to include all aspects of your building requirements in the drawings and specifications that are included in your contract. The specifications should include details of materials, quantities, colours and appliances, including make, model number and manufacturer/supplier. If the term the builder s range or similar is used in the contract, the contract specifications should accurately describe what that range is. The contractor is not legally required to undertake work if it is not written in the contract. You should read every detail of your contract carefully before signing it. 15

16 You should also cross out all blank sections in the contract and make sure you have your own, signed copy of the contract, plans and specifications. What should NOT be included in a major domestic building contract? A compulsory arbitration clause A caveat (a warning of some right or interest on the land title) on the building site land The contractor may wish to ensure appropriate security for payment by creating a caveatable interest in a separate document, so consider carefully before you assign a caveatable interest in the contractor s favour. If you are considering this, seek advice from an experienced building solicitor A waiver or negation of implied statutory warranties. These cannot be set aside by any agreement unless the breach of implied warranty was known or should have been known at the time of the contract A cost escalation or rise and fall clause unless the contract price exceeds $500,000. The onus is on the contractor to include in the contract price any likely rise in costs caused by inflation, wage increases. The contractor should include these in the contract before you read and sign it If the contractor wants to include a cost escalation clause, the clause must be approved by the Director of Consumer Affairs Victoria It is recommended not to use the term practical completion in your contract. If you find it in your contract, delete the definition given and insert complete in accordance with the plans and specifications. How much deposit should I pay? Before starting the work described in your contract, the contractor may require you to pay a deposit, which must not be more than: 10 per cent if the contract price is less than $20,000 five per cent if the contract price is $20,000 or more. Ensure that you do not pay more than the amount required by law. Avoid cash payments and always get a dated receipt. Never pay a deposit for building work before the contract is signed. What are stage or progress payments? Stage or progress payments are made when the main stages of house building namely, the base, frame, lock-up and fixing stages are complete. The schedule of payments shown on page 17 may assist you, if you are contracting a building practitioner to complete work to lock-up, fixing or final stages. You will need to pay a deposit for work based on the schedule below and negotiate further contractual payments for the balance of the work. Is there a cooling off period? After receiving a signed copy of the contract, you have five clear business days to withdraw from the agreement. However, you must give the contractor notice of your withdrawal in writing and you cannot withdraw if you have had independent legal advice prior to signing the contract. To avoid any misunderstandings, send your notice by registered mail and keep the mailing record. If you withdraw, the contractor can retain $100 plus agreed out-of-pocket expenses. If your contract does not contain a cooling-off period, you are entitled to withdraw from the contract within seven days of becoming aware that you were not provided with a cooling-off period. If this occurs, you may have to pay the contractor all reasonable expenses for work completed under the contract before you terminated the contract. 16

17 Schedule of payments Stages of building included Percentage of total contract price Stage of building when payment is made in your contract the owner-builder is required to pay Contract to build to lock up stage 20 per cent Base stage 25 per cent Frame stage Contract to build to Fixing stage 12 per cent Base stage 18 per cent Frame stage 40 per cent Lock-up stage Contract to build all stages 10 per cent Base stage 15 per cent Frame stage 35 per cent Lock-up stage 25 per cent Fixing stage Base stage Frame stage When foundations such as concrete footings, stumps or a concrete slab have been poured or laid. When the masonary, wooden or steel frame for the building has been erected and approved by a building surveyor. Lock-up stage When the external walls and roof are complete, the flooring is laid and external doors and windows are fixed, even if these are temporary doors and windows. The building is secured from the weather and possible vandalism. Fixing stage When all internal cladding, architraves, skirtings, doors, built-in shelves, cabinets and cupboards in the home are fitted and in fixed position. Should I agree to a different schedule of stage payments? You should not agree to stage or progress payments different from those given in the above schedule unless: Your house is unusual in some way You clearly understand how your house is different and why the change is needed You are sure that different progress payments are completely necessary. Your house may be considered unusual when: It is very expensive to prepare land for building due to a steep or rocky site The house is so large that it will take a long time to finish so immediate progress payments are needed Exceptionally expensive finishes are required resulting in a final payment that is a much larger proportion than usual An architect is engaged to independently assess the value of completed work for progress payments. If your contractor does suggest a different payment schedule, be sure to examine your financial situation carefully. Do not agree to a different payment schedule if you cannot afford to make those payments. Once you sign a contract that includes a different schedule to the one listed, you are obliged to make the payments as set out in your contract. If you agree to different stage or progress payments, the contractor must ensure the contract contains a warning entitled Warning to owner change of legal rights and a clause that states that the progress payments given above do not apply. What if the contractor asks for payments in advance? Do not pay in advance for stages of building work, even if the contractor sends you an invoice before a building stage is complete. You should stick strictly to the schedule listed in your contract. If you pay for stages before they are complete it may be difficult to obtain a partial refund for or get the contractor to fix any defects that occurred at that stage of building. Also, if you have paid for a stage of building before it is complete and then discover problems and make a claim on your domestic building insurance because the contractor has become insolvent, has disappeared or died, the insurance company may refuse to compensate you. 17

18 What if you find problems after making a stage or progress payment? You may discover problems after you have made a stage payment, including: Defects in the work completed for that stage Failure to supply goods Incomplete work. If this happens, seek expert legal advice. What are prime cost items? A prime cost is a reasonable estimate of the cost of supply and delivery of a fitting or fixture, such as a stove, because the actual item has not been selected or the price is not known at the time of the signing of the contract. Where possible, it is advised to negotiate a fixed price contract with minimal, if any, prime cost items and provisional sums. It is wise to keep prime costs to a minimum in your contract. You can do this by choosing any fixtures and fittings before entering into the contract. If you must use prime costs, itemise each one and state the price. If the cost turns out to be more than the estimate, you will pay the difference plus the contractor s profit margin. If the cost turns out to be less, you are entitled to be credited the difference. Contractors may be fined for under-estimating prime cost items or provisional sums. Implicit within this definition is the warranty that the cost estimate will be fair, reasonable and not less than the current market price. The exception is where you supply the item or specify the sum. What are provisional sums? A provisional sum is an estimate of labour costs, such as those associated with foundation work when rock or landfill is discovered, plus the contractor s cost (after making all reasonable enquiries) of supplying any materials needed for the work. The same conditions and implied warranties apply to provisional sums as to prime costs. When do I make the final payment? A contractor cannot demand final payment unless all work is completed according to the plans and specifications drawn up in the contract. When your building is complete according to your entire contract and safe for occupation you must be given a copy of one of two documents: An occupancy permit (if one is required) A certificate of final inspection (if an occupancy permit is not required). The contractor should also supply you with trade certificates for plumbing, glazing, electrical, insulation and termite inspection and treatment. Do not make your final payment until work is completed and you have received a copy of the occupancy permit or certificate of final inspection (as applicable). What are liquidated damages? If the contractor has gone past the stated date for completion of the building, you may be able to deduct penalty rates (also known as liquidated damages) from your final payment, if your contract allows you to do this. When negotiating penalty rates to be included in your contract, ensure they match the true cost to you of any delays. This could include the extra cost of rent you have to pay as a result of not being able to move into your home. Appropriate penalty rates act as an incentive for the contractor to complete the project on time. Consult an experienced building solicitor for advice on penalty rates. What are variations? Once both parties have signed the contract and building has commenced, you or the contractor may suggest changes to the specifications or plans which can cost more and extend the time of the project. These changes are called variations and must be made in writing, itemising the work to be done, the time it will take and the cost. In a major domestic building contract, prime cost items and provisional sums must be set out in a separate schedule for each item or sum in the contract. For contracts up to $5,000, the contractor must give you written details of each item or sum before they enter into the contract. The contractor must also give you a copy of any invoices, receipts or other documents to prove the actual cost of any prime cost items or in relation to any provisional sum. 18

19 When can a contractor make a variation to the original contract? A contractor who wishes to make a variation once work has commenced must give you a written notice that states: Details of the variation the contractor wishes to make Why the contractor wishes to make the variation What effect the variation will have on the entire work being carried out under the contract and whether any changes to permits will be needed Whether the variation will result in any delays and if so, a reasonable estimate of how long those delays will be The cost of the variation and the effect it will have on the contract price. The contractor cannot carry out the variation unless you agree and provide a signed consent to the variation attached to a copy of the contractor s written notice of variation. The only situation when your written consent may not be needed is when all of the circumstances listed below apply: An appropriate authority such as a building surveyor required the variation in a building notice or building order The variation was needed because the contractor ran into problems no one knew of when the contract was signed (for example, discovering white ants, or rock during plumbing excavations) The contractor provided you with a copy of the building notice or building order with the contractor s written notice You failed to advise the contractor of your decision within five business days after receiving the contractor s written notice. The contractor is only entitled to recover the cost of carrying out such a variation plus a reasonable profit when all the conditions listed above have been met and the circumstances causing the variation were not reasonably foreseeable. Alternatively, the Victorian Civil and Administrative Tribunal (VCAT) can decide that you are liable for the cost of a contractor s variation if a finding is made that there are exceptional circumstances or that the contractor would otherwise suffer exceptional hardship and that it is reasonable for you to pay. How can I make a variation? If you wish to make a variation, you must give the contractor a written notice outlining the variation. The contractor may carry out the variation without giving you any notice if they reasonably believe the change will not: Affect any permit Cause any delays Increase the contract price (as stated in the contract) by more than two per cent. In other cases, the contractor must give you a notice stating: The effect the variation will have on the work Whether it requires a variation to a permit A reasonable estimate of possible delays A reasonable estimate of any increase to the original contract price. A contractor who refuses to or cannot carry out the proposed variation must state the reasons in a written notice to you. Can the cost of my contract increase after work commences, if deeper footings are needed? In the past, variation clauses allowing for extra cost for footings were common in major domestic building contracts. The onus is now on the contractor to obtain sufficient foundations data before entering into the contract to identify any problems and extra costs regarding the proposed construction, or alteration of the footings of the building, or which may adversely affect the footings. Where possible your contract should include an agreement about any costs for excavation and extra depth of footings that may be required for your building. This requirement of the Domestic Building Contracts Act is to ensure that contractors bear the risk of deliberate, careless or unreasonable underquoting by preventing them from claiming more money if they would have been able to correctly estimate the cost had they obtained foundations data. As with other aspects of the Act, this law only applies to owner-builders who engage a building practitioner or tradesperson to complete work valued over $5,

20 How do I include start and finish dates in my contract? It is preferable to include an actual start and finish date in a major domestic building contract. If the contractor is unable to nominate an exact starting date for any reason (for example, a building permit has been delayed), the contract must state: How the start date is to be determined The number of days required to finish the work. The contractor must also do everything reasonably possible to ensure that the work will start as soon as possible. To ensure accuracy, a contractor must allow for bad weather, weekends, public holidays, rostered days off and any other reasonable hold-ups within the time estimate, as well as showing how many days are allowed for each of the categories. In the case of delays, which the contractor cannot accurately estimate, the likely causes of the delays must be identified and explained in the contract. Can I terminate a major domestic building contract? It is not a simple or cheap matter to end a contract and it can become a lengthy process if parties are in dispute. You should consult an experienced building solicitor for professional advice before terminating the contract. In very limited circumstances you can terminate a major domestic building contract if, due to unforeseeable circumstances, the completion time and price exceed those stated in your contract. You may end a domestic building contract if: There is a rise of 15 per cent or more in the contract price (not including the prime cost items or provisional sums) that the contractor could not have reasonably foreseen at the time of signing the contract, or The construction has not been completed within one and a half times the period stated in the contract, due to delays that the contractor could not have reasonably foreseen when the contract was signed. If you experience either of these situations and wish to end the contract, you must give the contractor a signed notice stating your reasons. Once a contract is terminated, the contractor is entitled to be paid a reasonable price for work completed. Terminating a major domestic building contract for other reasons is possible but you should seek the advice of an experienced building solicitor before taking any such action. 20

21 Domestic building contract checklist Check this list and make sure you can tick the yes column for every answer before signing your building contract. Item to check No Is the contractor registered with the Building Practitioners Board? Does your contractor have the correct registration to do the work required on your property? Does the contract include insurance and warranty details? Have you checked that the intended domestic building insurance is current and applies to the work required on your property? Has the contractor carried out tests to assess the site to see that it is suitable for the proposed work before signing the contract? Have you obtained approved finance for the building work? Have you had the contract for long enough to read it thoroughly and have it checked by independent experts? Have you or the contractor obtained required building permits and/or planning permits from a private building surveyor and/or local council? Are the price and progress payments clearly stated in the contract and in accordance with the law? Do you understand how the price is calculated and may be varied? Is the deposit within the legal limit? 10 per cent if the price is less than $20,000 five per cent if the price is $20,000 or more Is the work shown and clearly described in the contract, plans or specifications and any other relevant documents such as engineering computations or soil report? Disputes involving contractors If you have engaged a building practitioner or tradesperson to complete some of the work on your home it is possible that a dispute may arise. If a dispute occurs, good communication is the first step towards finding a resolution. Sometimes all the parties need is to better understand their rights and the laws related to building. If you have a problem with a building practitioner or tradesperson and cannot resolve it, you can contact Building Advice and Conciliation Victoria (BACV) on for the cost of a local call. How can Building Advice and Conciliation Victoria (BACV) help? BACV is a joint service provided by Consumer Affairs Victoria and the Building Commission to help homeowners and building practitioners resolve disputes. At any stage of your building or renovating project, if you have engaged a building practitioner or tradesperson to complete work on your home, you can turn to BACV for free information and assistance in resolving disputes. The service is only available if you have a contract with a building practitioner or tradesperson to carry out work on your home. BACV provides services including: Advice relating to contractual and technical issues Independent technical inspections of building work subject to dispute Professional conciliation. BACV may refer disputes to either Consumer Affairs Victoria or the Building Commission for further action. BACV finds that most disputes can be resolved quickly and cheaply with the right advice. Contact BACV on You may also seek independent legal advice from a specialist building solicitor, or take your case to the Victorian Civil and Administrative Tribunal (VCAT). 21

22 Tips for resolving disputes Identify exactly what your problem is. Is it the workmanship, the service, an individual or a product? If it involves several problems with different people, then deal with each of them separately. Collect all the evidence you need to back up your claim, such as documents, receipts, photographs and warranties. Research your rights and responsibilities. Check the Building and Renovating- BACV web pages at Call BACV on Determine the outcome you want and would be willing to accept. Are your demands reasonable? Have you taken into account your rights and the building practitioner s rights and obligations under law? Act quickly on your complaint. Delays could affect your rights. Your first course of action should always be to contact the building practitioner or tradesperson involved in the dispute. It is best to make face to face or telephone contact first to find out the building practitioner s immediate reaction to your concerns. Always follow up by letter or to ensure you have written evidence of the complaint. Wait until you are not angry or upset to make contact and think about what you want to say beforehand. Explain the problem in as much detail as possible. Remain calm, don t raise your voice or become argumentative. Offer solutions and keep an open mind about the solutions the other person offers. Take notes of your conversation. Include the date and name of the person you spoke to. When an agreement has been reached, be sure to attach it to your contract, signed by all parties involved. It should include the action that will be taken, who will do what, how it will be done, the timeframe and agreed payment. What can I do if a dispute needs conciliation? If you cannot resolve a dispute you can make a written complaint to be assessed by BACV. Complaint forms are available from: Consumer Affairs Victoria website at or by calling Consumer Affairs service counter at 2/452 Flinders Street, Melbourne. Once you have filled out the form, attach a photocopy of your contract and other relevant details and either: Send it to Building Advice and Conciliation Victoria, Consumer Affairs Victoria, GPO Box 123A, Melbourne, VIC 3001, or Deliver it in person to Consumer Affairs Victoria service counter at Level 2/452 Flinders Street, Melbourne. A BACV conciliator will read your complaint and may then work with you and the building practitioner to help you reach a voluntary agreement on how to resolve the dispute or advise you of other more appropriate options. Court action may be taken if Consumer Affairs Victoria identifies possible breaches of law in your case. If your complaint suggests evidence of faulty work and the conciliator is unable to get a voluntary agreement to fix the work, a Building Commission building inspector may make a site visit to decide whether the work is defective. Building practitioners refusing to fix defects may be referred to the Building Practitioners Board for possible disciplinary action or prosecution. If the problem is still not resolved, you may be advised to take your case to the Victorian Civil and Administrative Tribunal (VCAT). How long does the BACV process take? This depends upon your individual case and how willing both parties are to reach an agreement. Many problems are resolved after advice is given or a conciliator is engaged to help. The process may take longer to work through if a building inspector is required to view and assess defective work. 22

23 How can the Victorian Civil and Administrative Tribunal (VCAT) help? When a dispute is clearly not able to be resolved through BACV conciliation, you may be advised to take your dispute to VCAT for mediation or a legal hearing. You can take disputes to VCAT at any time for up to 10 years after an occupancy permit or certificate of final inspection is issued. The Domestic Building List of VCAT hears disputes concerning major domestic building contracts, regardless of the amount in dispute, and has jurisdiction to hear and decide on: Domestic building disputes Disputes relating to owners insurance claims and insurers decisions on such claims Requests to stop building work that doesn t comply with the contract Matters referred under the House Contracts Guarantee Act VCAT also has powers to require mediation, where qualified independent third parties will try to help the parties resolve the dispute, order the payment of money, vary a term of a contract, order defective or incomplete work to be fixed and enforce any right of indemnity against a building practitioner on behalf of an insurer. How can the Building Commission help? If you engage a registered building practitioner and believe the practitioner may have breached professional standards or the requirements of the Building Act, you can make a written complaint to the Building Commission. The Building Commission takes all complaints seriously and may refer the case to the Building Practitioners Board for disciplinary action. The Building Commission also offers a domestic building inspection service that can determine whether building work performed by your contractor is defective. The Domestic Building Contracts Act allows parties to a building contract, who are involved in a domestic building dispute to request an independent inspection and report. You can apply for a domestic building inspection at any stage either during or after completion of building work. The fee for a domestic building inspection is $300. The inspection report may help resolve your dispute as it is an independent assessment of the quality of building work. The inspection report may be used in evidence if the dispute is taken to the Victorian Civil and Administrative Tribunal (VCAT). VCAT has no power to rewrite a poor contract or change a contract purely because of changed economic circumstances, but it can make decisions on whether or not a contract is unjust. The VCAT application fee is $257 for a claim or counterclaim less than $100,000 and $515 if the claim is for $100,000 or more. VCAT also hears claims under $10,000 through their Civil Claims List. 23

24 Completion of building work Upon completion of the building work, you must apply to the relevant building surveyor to obtain either: An occupancy permit (if one is required) A certificate of final inspection (if an occupancy permit is not required). When is an occupancy permit required? The relevant building surveyor will decide whether an occupancy permit is required or not. The building permit must state if an occupancy permit is required. Generally, an occupancy permit will be required, unless the relevant building surveyor considers that the building work is minor or does not make the building unsuitable for occupation. An occupancy permit is not required for: A Class 10 building, such as a garage or shed Alterations to a Class 1a building (single dwelling). You must apply to the relevant building surveyor for an occupancy permit if one is required. The relevant building surveyor must not issue an occupancy permit unless they: Are satisfied that the building is suitable for occupation Have seen a copy of the plumbing compliance certificate required for any plumbing work carried out as part of the building work. Can a building be occupied without an occupancy permit? If the building permit states that an occupancy permit is required for a building or part of a building, then an occupancy permit must be obtained before you can live in it. If you live in the building or part of a building without an occupancy permit, you may be prosecuted. The maximum penalty is $10,000 for individuals and $50,000 for bodies corporate. When is a certificate of final inspection required? If an occupancy permit is not required, then the relevant building surveyor must issue a certificate of final inspection when all of the relevant building surveyor s directions have been complied with. 24

25 Selling your property If you sell your owner-built home within six and a half years after the domestic building work has been completed 6, you must comply with the following additional requirements under the Building Act: Ensure that the contract of sale sets out the compulsory statutory warranties that you are required to give the homebuyer Obtain a defects report on the building work prepared by a prescribed building practitioner Obtain owner-builder domestic building insurance covering the domestic building work (if within six years of completion). These requirements ensure that current and future buyers of your home are covered if the building work carried out by you, or on your behalf, turns out to be defective. A buyer of your home who finds defective building work that did not appear on the required defect report can make a claim against you for breach of statutory warranties. In such cases you may be required to fix the defective work or pay a sum of money to have someone else fix the defective work. Owner-builder domestic building insurance only covers situations where the owner-builder is dead, has disappeared or is insolvent. For how long are these requirements imposed? If you sell your owner-built home within six years of completion 6 of building work, you must provide domestic building insurance and a defects report. If you sell your owner-built home on or after six years, but within six and a half years, of completion 6 of building work, you must provide a defects report only. If no occupancy permit or certificate of final inspection has been issued and you sell your home within six years of commencement of building work, you must provide domestic building insurance and a defects report. If no occupancy permit or certificate of final inspection has been issued and you sell you home on or after six years, but within seven years, of commencement of building work, you must provide a defects report only. What statutory warranties apply? If you sell your owner-built home within six and half years after domestic building work has been completed, you are taken to have assured the buyer that: All domestic building work carried out in relation to the construction by you or on your behalf was completed in a proper and workmanlike manner All materials used in that domestic building work were good and suitable for the purpose for which they were used and that, unless otherwise stated in the contract, those materials were new The domestic building work was carried out in accordance with all laws and legal requirements, including the Building Act and the Building Regulations. The contract of sale is required to contain these warranties, although they are implied into the contract of sale even if they are not expressly referred to in that contract. What reports do I need to obtain? You must obtain a defect report on the building from a prescribed building practitioner. This includes a registered architect, building surveyor, building inspector, engineer or a person recognised by the Minister under the House Contracts Guarantee Act The report must not be more than six months old when you enter into the contract to sell the land and the building. You must give a copy of this report to the homebuyer. What insurance do I need to obtain? You must obtain domestic building insurance to cover against any claims brought against you by current and future homebuyers, based on the warranties referred to above. You must provide the homebuyer with a certificate of the insurance. It is important to remember that domestic building insurance will only come into effect if you die, disappear or are insolvent. Refer to the Useful Contacts on page 26 for more information on insurance. Can I be exempted from any of these requirements? You may apply to Victorian Civil and Administrative Tribunal (VCAT) to be exempted from these requirements if: There are exceptional circumstances, or Full compliance with these requirements is impossible or would cause undue hardship. 6 Completion dates from the issue date of your occupancy permit or certificate of final inspection. 25

26 What happens if I do not comply with these requirements? If you enter into a contract to sell your owner-built home without complying with the requirements to obtain a building report and insurance in respect of the dwelling and set out the warranties in the contract of sale, the purchaser has a right to walk away from the sale at any time prior to settlement. The contract of sale is not automatically void, but is considered to be voidable. You may also be prosecuted, with a maximum penalty of $10,000 applying. You cannot contract out of these requirements. They will apply even if you and the purchaser agree otherwise. Can I sell my home if building work is incomplete?, however it is generally an offence under the Building Act for you to sell an owner-built building prior to completion if you intend to complete the works prior to settlement of the Contract of Sale. That is, you generally cannot sell off-the-plan or before completing building work you intend to complete. Penalties of up to approximately $10,000 apply. Useful contacts Where can further advice be obtained? Information about Building Practitioners Board Telephone this kit Owner-builder training Group Self Build - Office of Housing Telephone and information Department of Human Services Office of Training and Tertiary Education Telephone Holmesglen Institute of TAFE Telephone (03) (Course provider) Building Display Centre Telephone (03) (Course provider) Timber Advisory Centre Telephone (03) (Course provider) Home Ideas Centre Telephone (03) (Course provider) Australian Owner Builders Telephone (03) Building practitioner Building Commission Telephone registration Plumbing Industry Commission Telephone Office of the Chief Electrical Inspector Telephone (03)

27 Building related disputes Building Advice and Conciliation Telephone Victoria (BACV) Consumer Affairs Victoria Telephone Victorian Civil and Administrative Tribunal (VCAT) VCAT Domestic Building List Telephone (03) VCAT Civil Claims List Telephone (03) Building Appeals Board Telephone (03) Occupational health Workcover Telephone (03) & safety Insurance Insurance Council of Australia Telephone (03) Australian Home Warranty Telephone Building Industry Solutions Telephone Buildsafe Telephone (03) HIA Insurance Services Telephone (03) (Home Owner Warranty) Taxation Australian Taxation Office Telephone Energy efficiency Sustainable Energy Authority Telephone of Victoria (SEAV) Asbestos Environmental Health Officer of your local council Telephone (03) Environmental Health Unit Department of Human Services Environment Protection Authority Victoria Telephone (03) Workcover Telephone (03) Building Standards Australian Building Codes Board Telephone Building Act Information Victoria Telephone and Regualtions 27

28 Application for a Certificate of Consent Application checklist To apply for a Certificate of Consent, you must: Read this Information and Education Kit Complete the application form Complete the statutory declaration, including signature of authorised witness Pay an application fee of $75 Attach a copy of your current driver s licence or passport (as proof of identity) Tear off the completed application form and statutory declaration and send or deliver with any supporting documentation to: By mail Building Practitioners Board PO Box 536E Melbourne VIC 3001 In person Building Practitioners Board Level 27, Casselden Place 2 Lonsdale Street (Cnr Spring & Lonsdale Streets) Melbourne VIC

29 Application for a Certificate of Consent PART A: Applicant Details Applicant family name Given names Title Residential Address Suburb State Postcode Postal Address (write as above if same as residential address) Suburb State Postcode Home phone number Work phone number Mobile phone number Fax number address Body corporate name (if applicable) ABN Trust name (if applicable) ABN Owner details - All owners of the land must be listed or all trustees if applicable (Body corporate members do not need to be listed) Owner/s family name Given names Title (if different from above) Residential Address

30 Suburb State Postcode Postal Address (write as above if same as residential address) Suburb State Postcode Work phone number Mobile phone number Fax number address *You must attach a copy of a current driver s licence or passport as proof of identity 30

31 PART B: Details of Building Work Property Address Lot Street No Street Suburb State Postcode Municipality Lodged Plan or Plan of Subdivision (LP/PS) Volume Folio Description of building work (please tick): Construction of a new dwelling Alteration to an existing dwelling Renovation of an existing dwelling Demolition of a dwelling Removal of a dwelling Extension to an existing dwelling Change of use of an existing building Re-erection of a building Other, give description Cost of building work (including labour, materials and GST): $ 31

32 PART C: General Declaration (please tick or No) No 1. Are you the owner of the property detailed in PART B? Are you the Director of the body corporate that owns the property detailed in PART B? If yes, do you have written authorisation from the body corporate to make this application and carry out the proposed building work detailed in PART B? Are you the beneficiary of a trust that owns the property detailed in PART B? If yes do have written authorisation from each of the trustees to make this application and carry out the proposed building work detailed in PART B? If you are not the owner, do you have each of the owner s written authorisation to make this application on their behalf? 2. Does the domestic building work detailed in PART B relate to a single dwelling? 3. Do you currently reside at the property detailed in PART B and will continue to, or intend to reside there? 4. Have you been issued with a building permit to carrying out domestic building work as an owner-builder on land you or a related body own, other than the property detailed in PART B, in the previous three years*? (A related body is either a body corporate of which you are a director or a trust of which you are a beneficiary) 5. Do you co-own the property detailed in PART B with another person? If yes, has a building permit been issued to that person (the co-owner) to carry out domestic building work as an owner-builder, on property other than the property detail in PART B, in the previous three years*? 6. Have you co-owned land, other than the property detailed in PART B, with another person in the previous three years*? If yes, has the other person (the co-owner) been issued with a building permit to carrying out domestic building work as an owner-builder on that land in that three year period*? 7. Are you in the business of building? * References to a period of three years does not include any period prior to 14 June 2005 Exemptions If you answered yes to questions 4, 5b or 6b the Building Practitioners Board may not be able to grant you a Certificate of Consent, unless it grants an exemption. You may apply to the Building Practitioners Board for an exemption to those requirements in order to obtain a Certificate of Consent. If you require an exemption the Building Practitioners Board may exempt you if it is satisfied that special circumstances exist. 32

33 If you wish to apply for an exemption please give written details of your special circumstances. General declaration Print full name I, declare that the information contained in this application is true and correct. I acknowledge that this declaration is true and correct and I make it in the understanding that a person making a false declaration is liable to the penalties of perjury. Signature of applicant Date PART D: Payment of Fees/Tax Invoice Fees Payable $75.00 (inc. GST) Payment options: In person By mail Building Practitioners Board Building Practitioners Board Level 27, Casselden Place PO Box 536E 2 Lonsdale Street Melbourne VIC 3001 (Cnr Spring & Lonsdale Streets) Melbourne VIC 3000 A cheque or money order for $75.00 is enclosed. (Cheques should be made payable to: Building Administration Fund ) Please debit my credit card: Visa Mastercard Bankcard Credit card number: Expiry date: Amount: $75.00 Cardholders name: Cardholders signature: Date: ABN This document will become a tax invoice for GST purposes when you make full payment. Please keep a copy for your records. 33

34 PART E: Statutory Declaration I, (Full name of owner) of, (Full residential address of owner) declare that the information contained in this Application for a Certificate of Consent is true and correct. I am the owner of the land to which this application applies. I have read this Information and Education Kit and understand the obligations, risks and responsibilities of an owner-builder. I acknowledge that this declaration is true and correct and I make it in the understanding that a person making a false declaration is liable to the penalties of perjury. Signed Declared at Signature of owner Suburb State This Day/Month/Year Before Signature of Witness* Full name and address of witness * A full list of persons authorised under the Evidence Act 1958 to witness this statutory declaration are contained overleaf. 34

35 List of persons authorised to witness statutory declarations The following persons are authorised under the Evidence Act 1958 to witness the signing of a statutory declaration: A Justice of the Peace or Bail Justice A Notary Public A barrister and solicitor of the Supreme Court A clerk to a barrister and solicitor of the Supreme Court A Prothonotary or Deputy Prothonotary of the Supreme Court, Registrar or Deputy Registrar of the County Court, the Principal Registrar of the Magistrates Court or Registrar or Deputy Registrar of the Magistrates Court The Registrar of Probates or Assistant Registrar of Probates The Associate to a judge of the Supreme Court or of the County Court The Secretary of a Master of the Supreme Court or of the County Court A person registered as a Patent Attorney under Part XV of the Patents Act 1952 of the Commonwealth A member of the police force The sheriff or a deputy sheriff A member or a former member of either House of the Parliament of Victoria A member or a former member of either House of the Parliament of the Commonwealth A councillor of a municipality A senior officer of a council as defined in the Local Government Act 1989 A registered medical practitioner within the meaning of the Medical Practice Act 1994 A dentist A veterinary practitioner A pharmacist A principal in the Victorian teaching service The branch manager of a bank A member of the Institute of Chartered Accountants in Australia or the Australian Society of Accountants or the National Institute of Accountants The secretary of a building society A minister of religion authorised to celebrate marriages (not a civil celebrant) A person employed under Part 3 of the Public Sector Management and Employment Act 1998 with a classification that is prescribed as a classification for statutory declarations or who holds office in a statutory authority with such a classification A fellow of the Institute of Legal Executives (Victoria) 35

36 Need more information? Telephone Facsimile Level 27, 2 Lonsdale Street, Melbourne, Victoria, 3000 [email protected] Printed May 2005