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  2. The promotion commences at 12pm AEST (Sydney time) on 14th April 2015 and ends at 5pm AEST (Sydney time) on 14th May 2015.
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Your guide to becoming an owner-builder

In Victoria, an “owner-builder” is someone who carries out their own domestic building work or manages a sub-contracted party for the same purpose.
Owner-builders enjoy reduced costs, flexibility and control when they D.I.Y. However, there are risks and you should consider the following before taking the plunge:

1. The Law

The most important thing to remember is that an owner-builder assumes the same legal responsibilities as a registered builder.
Pursuant to the Domestic Building Contracts Act 1995 and the Building Act 1993 an owner-builder is responsible for the following:

  • Domestic building insurance;
  • Permits and Inspections;
  • Occupational Health and Safety compliance; and
  • A defects Inspection report if he or she decides to sell their property within 6 years and 6 months of completing the domestic building works.

Additionally, in 2005, legislation was passed by the Victorian Parliament to limit the building activity of owner-builders such that you can only obtain one building permit for one house in any three-year period. Also owner-builders must obtain a certificate of consent from the Building Practitioners Board to apply for a building permit to carry out domestic building works in excess of $12,000.

2. Insurance

Domestic building insurance protects any subsequent purchaser an owner-builder dies, disappears or becomes insolvent.
In order to obtained the requisite insurance, you will need to provide the following to your insurer:

  • Defects report; and
  • Domestic building insurance certificates given to you by builders or any party you have sub-contracted to perform the domestic building works.

You should note that domestic building insurance only becomes effective when the contract of sale has been signed and that all claims are capped at a $200,000 for the following:

  • structural defects, for six years; and/or
  • non-structural defects, for two years.

It is also worth noting that domestic building insurance does not cover defects or incomplete work identified in the defects inspection report.

3. Permits and Inspections

As a rule of thumb, you should never sign a building permit as an owner-builder if you have sub-contracted a party to do the domestic building works.
This is because the latter may be unregistered and/or trying to avoid their legal responsibilities.

Remember, even if you become an owner-builder, your sub-contractor will still need to provide you with a written contract for domestic building work in excess of $5000 and domestic building insurance for work in excess of $12,000.

Also, there are mandatory notification stages in a building project. At each of these stages the owner-builder must notify their respective local council so that an inspection can be carried-out. Usually, these stages are listed on the building permit.

4. Occupational Health and Safety

As an owner builder, not only do you need to understand the technical, administrative and legal aspects of domestic building, but you also need to understand your duty to comply with Victorian occupational health & safety regulations.

Pursuant to section 26 of the Occupational Health and Safety Act 2004 an owner-builder has a duty to ensure that the workplace and the means of entering and leaving the workplace are, so far as is reasonably practicable, safe and without risks to health.

This may include providing adequate facilities, information, and training to employees, as well as ensuring that the workplace environment and any equipment are safe and without risks to health.

5. Selling your property

As briefly mentioned above, if you intend to sell your property within six (6) years and six (6) months of completing your own building work, you  will be required to provide the following:

  • Defects inspection report not more than six months old from a registered building practitioner for all work regardless of value, including extensions, renovations, garages and verandas; and
  • Domestic building insurance for work over $12,000, to protect the person who buys your property. This is the case even if a registered building practitioner carried out the work under a major domestic building contract that is covered by his or her own domestic building insurance. You still need your own domestic building insurance to cover your work.
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Things to Check before entering into a Domestic Building Contract

Before you sign a domestic building contract, there are a number of things that you should check.

1. When should I enter a domestic building contract?

In Victoria, the law requires you to enter into a domestic building contract when you carry out one or more of the following domestic building works and the total cost is $5,000 or more:

  • Building;
  • Repairs;
  • Improvements;
  • Maintenance;
  • Demolition; and/or
  • Removal.

However, as a precaution, it is best to enter a domestic building contract when carrying out any domestic building work – regardless of size or cost.

2. Why do I need a domestic building contract?

Trusting your builder without having the correctly drafted contract in place will leave you unprotected and is in fact a gamble with your money. Having a domestic building contract ensures that you and your builder are crystal clear about what works are to be carried out and, therefore, reduces the likelihood of confusion and disagreement later down the track. It will save you having to sue and also protect you should there be a disagreement.

3. Is my builder registered and do they have insurance?

Only builders that are registered with the Victorian Builders Association can carry out domestic building works and enter into domestic building contracts and of course these builders are the only builders that would be provided with insurance. To confirm that your builder is registered, you can conduct a practitioner search on the Victorian Builders Association website. The results of this search should match the details contained in your domestic building contract and your Building Permit.

Also, if the cost of your domestic building works is $12,000 or more, your builder will need to obtain home warranty insurance and provide you with a copy of this policy. Your domestic building contract will also need to include details about this.

4. What should be included in my domestic building contract?

At the risk of stating the obvious, your domestic building contract must be written in plain English. It must include a full description of the works to be carried out and be accompanied by plans and specifications of sufficient detail so that a building permit may be granted.

Your domestic building contract should also include details about the following:

  • Date of contract;
  • Names and addresses of the parties to the contract;
  • Home warranty insurance;
  • Commencement and completion date;
  • Cooling-off period;
  • Right to access;
  • Implied warranties;
  • Damages;
  • Termination; and
  • Definitions.

Finally, an approved checklist should also be included in your domestic building contract.

5. What shouldn’t be included in my domestic building contract?

You should make sure that your contract does not contain any illegal or unfair terms such as:

  • Compulsory arbitration;
  • Builder’s caveat or interest in land;
  • Limitation or exclusion of implied warranties;
  • Cost escalation of rise and fall (unless the cost of domestic building works is $500,000 or
  • more); and/or
  • Payment by a cost-plus method if your building contract is $500,000 or less.

It is also worth mentioning that your builder must give you sufficient time to review your domestic building contract.

Some builders may tell you that your domestic building contract is the ‘standard contract used by everyone’. While this may be true, do not lower your guard. Make sure you read through your contract very carefully and if you have any queries or concerns seek independent legal advice as soon as possible.

Also, you should never sign a domestic building contract and then forward to your builder to do the same. This is because your builder may add or remove items from the contract without your knowledge.

6. Are there any additional fees and/or charges? 

In addition to the contract price, there may be a number of fees and/or charges that are applicable to your domestic building contract.

These may include, but are not limited to the following:

  • Building fee: This varies from builder to builder and may or may not be included in the cost of inspections carried out by the building surveyor;
  • Permit fee;
  • Council lodgement fee;
  • Asset protection fee: This paid directly to the local council and is refundable at the end of the project providing no damage has been done to council property;
  • Inspection fee: This is also paid directly to the local council and is used for the cost of their inspection of council assets and is non-refundable;
  • Government levies: These levies are calculated on the total cost of your works and are usually advised by your building surveyor. It is important to note that owner-builders are not exempt from paying these levies.

7. Are there any other documents that I may need to sign?

Yes. It is not uncommon for a builder to ask you to sign any one of the following before signing a domestic building contract:

  • Preliminary agreement;
  • Quote;
  • Order;
  • Estimate; and/or
  •  Authority to proceed.

You should be aware that work carried out as a result of you signing one or more of these documents may or may not constitute domestic building work. If you are unsure about the distinction or any other aspect of your domestic building contract, you should consult a legal practitioner as soon as possible CALL BOUTIQUE MELBOURNE LAWYERS 1300 556 140.

As a developer, what should you do before signing a domestic building contract?

As a developer, there are a number of things that you should do before signing a domestic building contract.

Know your builder

As a developer, you take a number of risks when you employ a builder so it is very important that you do some background work.

Questions that you may want to ask your builder may include:

  1. How long they have been in the industry?
  2. How many properties they have built?
  3. Whether you can inspect them?
  4. Whether you can speak to past clients?

Also, you want to make sure that you discuss your expectations with your builder and have them detailed in the contract. This is very important as it leaves less room for disagreement and disappointment.

Finally, make sure your builder is registered with the Building Practitioners Board. Sure, you may know someone who can do it cheaper for you, but does he or she have a practicing certificate? If not, know that it is an offence to knowingly employ an unregistered builder.

Make sure you are insured.

Builders are not immune to insolvency, disappearance or death. Fortunately, you can take steps to protect yourself from this by making sure that your builder has taken out home warranty insurance. It is important that this occurs before work is commenced because you want to allow sufficient time to familiarize yourself with your policy.

It is worth noting that the law does not require an insurer to honor every claim. For example, an insurer is not legally obliged to honor a developer’s claim for completion costs. As such, you should make a note of any clauses that limit your ability to make a claim and seek legal advice as soon as possible.

Read your contract

Building on what has been said above, it is vital that you read your contract.

In particular, you should make note of the completion date. Additionally, you should make sure that you can visit the site during construction and make variations.

Finally, you should know when you are permitted to cancel the contract. For example, can you cancel the contract if the development is not approved by the council? Or, what about if it just isn’t viable? In such cases, you want to make sure that you can elect to cancel the contract with very little to no penalty.

For more information and a free consultation call Boutique Lawyers on 1300 556 140.

10 Questions to ask a Prospective Builder

Before you engage a builder to build or renovate your home, make sure you do your homework and ask these 10 important questions:

1. Are you a registered builder?

Only builders that are registered with the Victorian Builders Association (VBA) can carry out domestic building works and enter into domestic building contracts. To confirm that your builder is registered, you may request to see you builder’s qualifications. Alternatively, you may conduct a practitioner search on the VBA website.

2. Will I be insured?   

If the cost of your domestic building works is $12,000 or more, your builder will need to obtain home warranty insurance and provide you with a copy of the policy.

This will protect you in the event that your builder dies, becomes insolvent or disappears before the works have been completed.

3. Have you been involved in any domestic building disputes?

To get an idea of your builder’s reliability and professionalism, find out whether they have been involved any disputes.

To do this, you may ask your builder directly. Alternatively, you may check with the Victorian Builders Commission. However, to be sure, you may want to do both.

4. Have you ever declared bankruptcy? 

If your builder confirms that he or she has declared in the past, remember:

  •  Old habits die hard; and
  •  Proceed with caution!

The last thing that you want is your builder declaring bankruptcy half-way through completing your works.

5. Do you specialise in my type of building work?  

This is very important because building and/or renovating requires you to take a leap of faith. You want to be certain that your builder has the necessary knowledge, skill and experience to perform the works.

6. Who will be performing the works?

Having your builder on-site is vital if you want your works to run smoothly and according to time.
When on on-site, your builder should be supervising and coordinating the work – particularly if any work is being sub-contracted.

7. Who you can contact?

Depending on which builder you choose, you may be dealing with the same person throughout the entire project. Conversely, you may have to deal with several different people – from receptionists, estimators, project managers, superintendents and/or sub-contractors.

Whatever the case may be, ensure that you know how your builder works and who you can contact if you have any queries or concerns.  Not only will this allow you to compare and contrast with other builders and determine who is right for you, but it will also ensure that everyone is clear about what works need to be performed.

8. Can I view your past work?

Make sure you ask to view some of your builder’s past work. This will give you an opportunity to inspect the quality of his or her workmanship and to speak to former clients about their experience with the builder.

You should be very cautious of builders who refuse your request to view their past work. Remember, a good builder will not have anything to hide and won’t have an issue with this.

9. What other projects are you working on?

Needless to say, if a builder is committed to an overwhelming number of projects at once, it is very unlikely that he or she will be in a position to give your project the necessary attention and dedication.

10. Can you achieve what I want?

By asking your builder this question, not only will immediately know if the work you want performed is realistic and feasible, but also, if your builder is in a position to deliver.

 

 

 

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5 Reasons why you need a Lawyer to perform your conveyance

  • So you bought a house or thinking of selling?
  • Thinking about doing your own conveyance or engage a conveyancer?
  • You are thinking what’s the difference between having a lawyer do your conveyance rather than a conveyancer?

Before you decide,  you should know that the process of transferring property ownership from vendor to purchaser can be quite complex.
Here are 5 reasons why a lawyer will better protect one of your most expensive transactions during your lifetime.

 1. Specialised knowledge

A conveyance is a legal transaction and, therefore, it would make sense that it should be performed by  a lawyer that has specialised knowledge of the process. This is particularly important because a conveyance creates a legally binding relationship between a vendor and purchaser and gives rise to legally enforceable rights. Once you are bound to a contract it is very hard to get out of it without having to pay some kind of damages.

Further, unlike a conveyancer, a lawyer help you with more than just the property side of the transaction. For example, if you have been appointed executor of an estate and need to sell a property, a lawyer may be able to advise you on your duties as an executor as well as assist you with obtaining a grant of probate so that you can perform the conveyance. A conveyancer cannot do this because don’t have the specialized  knowledge of the law and are not allowed to provide you with any legal advice.

Lawyers also have an obligation to keep up to do date with changes to the law and current matters which is not required of a conveyancer, and so, your conveyance may not be performed correctly.

2. Training

As well as  specialised knowledge, a lawyer will have undertaken practical legal training in property and contract law, tax, equity and deceased estates. This is very handy as one or more of these areas of law may be applicable to your conveyance.

Conversely, a conveyancer will have only undertaken training in conveyancing, and as mentioned, cannot assist you with anything else.

3. Good value for money

Unlike a conveyancer, when you employ a lawyer to perform your conveyance, a full legal service will be provided to you. This means a consultation, sound legal advice, attention to detail and more importantly, peace of mind. While this may cost you slightly more than what you would pay a conveyancer, remember, you are being protected from any exposure to liability.

Another thing worth noting is that lawyers are very good at spotting issues before they happen. This is important because you may find yourself seeking legal advice about an issue that was not picked up by your conveyancer.

As the saying goes, ‘Don’t be penny wise, pound foolish’.

4. You’re protected

If you are thinking about handling your own Conveyancing matter,  perhaps you should reconsider. Again, it may be cheaper, but know that if you make an error, you will be held personally liable and will have to compensate the other party for any loss or damage they have suffered. You may even be forced to go ahead with the purchase when you cannot or don’t want to.

To avoid this, you need to engage a lawyer. A lawyer has professional indemnity insurance that will protect you from any personal claims made against you

5. Results

There are demands, deadlines and long hours involved in conveyancing. A vendor wants to be 100% certain that their property has been sold, while a purchaser wants to be 100% certain that they have acquired ‘good’ title. A lawyer can ensure that this has been done since they are held  to a higher standard of ethics and professionalism than any other professional, rest assured, you will get results.

So make sure you make the right decision and get a lawyer to perform your conveyance.

Call Boutique Lawyers for a free consultation 1300 556 140.

 

How do I resolve my Domestic Building Dispute?

In Victoria, the usual forum for dealing with domestic building disputes is the Victorian Civil and Administrative Tribunal (“VCAT”). A Domestic Building Dispute is a dispute between an Owner and a Builder ( or architect, builders sub-contractors etc) and an Owner—Builder and Subcontractors, Architect, Consultants, etc.

Building Advice and Conciliation Victoria (BACV) complements the dispute process of VCAT. You don’t need to utilise the BACV, you may choose to lodge your dispute with VCAT immediately. Consumer Affairs of Victoria offers advice and conciliation to some building disputes prior to having an application being lodged at VCAT by either party. If you reach an agreement with the builder during conciliation at the CAV, it will relinquish the need to proceed with your dispute via VCAT. If you opt to seek the advice of the BACV, your dispute will be scheduled for conciliation. The Conciliator will then notify the Builder of the dispute and attempt to settle the dispute between you and the building during the conciliation.

If you end up resolving your dispute with the Builder then all parties will be bound by the terms on which you chose to settle the dispute. If you don’t resolve the dispute during the conciliation with the Builder and an experts report is required (usually the case) then a representative of the Building Commission would arrange for a report to be prepared outlining an expert opinion as required by the parties. The builder would then be given directions from the Building Commission to comply with the recommendations made in the experts report, failing which would result in the dispute being unresolved and therefore an application at VCAT being lodged against the Builder ( the Builder could also receive a penalty for failure to comply with the directions of the Building Commission).

You may choose to use the report obtained by the Building Commission or obtain your own experts report if you don’t agree with the recommendations in your first report however bear in mind that the first report must also be provided to VCAT as evidence.

Private use of Alternative Dispute Resolution is now void under the Domestic Building Contracts Act, unless agreed to by all the parties.

Before you embark on resolving your dispute with your builder, you should seek advice from a lawyer who deals with Building Dispute to ensure that you are protected. Call Boutique Lawyers on 1300 556 140.

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WARNING TO ALL HOME OWNERS: Stages and Building

The Domestic Building Contracts Act restricts the Builder as to when and how much he can claim from you by way of progress claims during the construction of your home or renovation.

The usual method used is as follows:

  1. Base Stage 10%
  2. Framing Stage 15%
  3. Lock-up Stage 35%
  4. Fixing Stage 25%
  5. Completion (balance/adjusted)

The most common issue we have come across with homeowners are issues regarding payments to builders prior to the completion of a stage. The Builder cannot claim payment of a stage from you until the stage is complete; a stage is not complete if there are defective works. If this is the case the domestic building insurer may not honor your claim for any payments made prior to deeming the stage complete. You should always have an Independent Building Consultant check works upon the Builder making a claim for completion of that stage.

You may agree to use a different method on how stages are set with your builder if the works the Builder is conducting is out of the ordinary (provided that you sign a consent notice prior), usually when the works involve alterations or large bulk works that can be cut down into smaller parts. It is best, in order to avoid disputes and save you time and money, to seek legal advice prior to the execution of your Contract so that you can make sure you are protected. Call Boutique Lawyers to discuss any aspect of your Contract on 1300 556 140.

DEPOSITS, COOLING OFF PERIODS & CAVEATS

Volume 4

Builders may only request a limited amount of deposit prior to commencing the constructions of your home.  A builder cannot request more than 5% of the Domestic Building Contract price where the contract price is over $20,000 and more than 10% of the contract price where the contract price is less than $20,000. The builder is also not permitted to accept deposit monies from you prior to providing you with a copy of the relevant insurance.

4.1 Cooling Off Period

You can withdraw from your Domestic  Building Contract usually 5 days after you have received a copy of the executed contract. If you wish to withdraw from the Domestic Contract you must serve a written notice to the Builder in accordance with the terms of the Domestic Building Contract. It is important that you provide the builder with the correct notice within the time constraint. We would advise that you seek legal advice from a solicitor who specialises in Building Law prior to the expiry of the cooling off period to ensure that you have complied with the law when exercising your right to withdraw from your Domestic Building Contract.

Once you have exercised your right correctly to withdraw from the Domestic Building Contract, the Builder must refund your deposit less $100 ((and/or out of pocket expenses that has been incurred and agreed upon by you).

You are not entitled to a cooling off period if you have obtained legal advice prior to executing your Domestic Building Contract. Where the builder has failed to provide you notice of the mandatory cooling off period you are then provided with a 7 day cooling off period from the date you noticed that your Domestic Building Contract did not have contain the notice.

4.2 Caveats

The Builder has no right to place any condition in your Domestic Building Contract which allows him to place a caveat on your land to secure his interest. If such condition is placed in your Domestic Building Contract it is void. The Builder cannot secure his interests in such manner but he may seek evidence from you of your capacity to pay the Contract Price, written guarantees from third parties of your obligations pursuant to the Domestic Building Contract.

Call us at Boutique Lawyers now to get into the house you paid for when you intended! 1300 556 140