In our last article, we looked at the definition of residential building work, which covers a surprisingly broad range of building work including jobs such as tiling a room, repairing a swimming pool, pouring concrete for a new driveway, and putting up new fences.
Where the reasonable market cost of the labour and materials involved in residential building work exceeds $20,000, some messy insurance considerations arise. In this article, we are focusing on the things you need to know as an owner-builder.
An owner-builder is a person who does building work or supervises construction work on their own land under an owner-builder permit. To obtain a permit, a person needs to have a general construction induction training card (also referred to as Safework Whitecard or a Safework Statement of Training) and evidence that they have completed an owner-builder course.
Home Owner Warranty insurance cannot be obtained by an owner-builder (unless the building work is done by a contractor to the owner-builder). As a result, when an owner-builder comes to sell land on which they have completed residential building work, they must include a consumer warning in the contract for sale stating that an owner-builder permit was issued in relation to the land, specifying the date on which the permit was issued, and warning that work done under an owner-builder permit is not required to be insured.
7 years and 6 months – why this timeframe is important?
- If it hasn’t yet been 7 years and 6 months since an owner-builder permit was issued, there can be serious consequences for a person who exchanges contracts for the sale of land without including the consumer warning.
- After 7 years and 6 months has passed since an owner-builder permit was issued, there is no requirement for a contract of sale to disclose the owner-builder work or include the consumer warning.
The requirement for a contract of sale to include a consumer warning also applies to someone who purchased a property from an owner-builder and is now selling that property (known as a ‘successor in title’).
Next week, we will look at how the insurance requirements apply to developers.
If you have any questions about property contracts or insurance requirements for residential building work, give our property team a call on 1800 650 656. We’re here to help!
Aaron Strickland | Solicitor