Article Category - Property and Conveyancing By Aaron Strickland 10 July 2019

Last week, we explained that Home Owner Warranty insurance for residential building work 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, there are special requirements for them to warn potential purchasers that the building work is not insured. This week, we look at the requirements relating to developers.

A developer is someone that has contracted for residential building work to be done, and who already owns four or more dwellings in that residential development or will own four or more dwellings once the residential building work is complete.

Anyone doing residential building work for a developer under a contract must have Home Owner Warranty insurance if the contract price exceeds $20,000.

If the developer then wants to sell one of the dwellings once the work is complete, the developer must attach a copy of the certificate of insurance to the sales contract (however this is exemption if the work was completed over 6 years ago).

Even if the work is nowhere near complete and the developer wants to sell one of the dwellings “off-the-plan”, the developer must still attach a copy of the certificate of insurance to the contract for the off-the-plan sale.

Fines apply to developers who ignore this requirement. If the developer is a corporation, the maximum penalty for failing to attach a certificate of insurance to the contract is $110,000. In other cases, the maximum is $22,000.

Our property and commercial team can assist developers to ensure that they obtain the required insurance for residential building work and attach the necessary documents to their sales contracts to protect their interests. Developers can contact our property team on 1800 650 656. We’re here to help!

Aaron Strickland | Solicitor

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