Category : Owner Builders

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7 things you need to know before you become an owner-builder

As an owner builder, you will take on the legal responsibilities and compliance requirements that are associated with a registered building practitioner. Therefore, before you become an owner-builder, it is important that you are aware of the standard, quality of work and obligations attributed to your role.

1. Who is an Owner Builder?

Now as an owner-builder, you have to own or co-own the land with the intention to live in that beautiful new space. Which means that any works carried out on your property should really only be for your personal enjoyment in your own home not for investment purposes.

As it’s simply for your leisure, you will have more involvement in the construction, alterations or repairs conducted and be in complete control of the renovations in your home to have it exactly the way you want it to be, within the legal requirements of course!

Before you register as an owner builder, you should prepare documents which proves that you are the home-owner such as Certificate of Title/Register Search Statement. You may obtain one online at www.land.vic.gov.au.

2. Certificate of Consent

But wait! Before you start construction, there are a number of permits you need to obtain. You’ll need to apply for a certificate of consent from the Building Practitioners’ Board if your proposed building works valuation exceeds $16,000. This valuation of your building works should include all labour, materials and GST.

This permit is not necessary if you are already a domestic builder.

3. Building surveyor and building permit

You must also obtain a building permit in order to start works on your property. It is wise that you first make plans to consult a building surveyor.

The Surveyor can help you determine a correct description of your works and their costs when applying for a Certificate of Consent. A certificate of consent is NOT a guarantee that you will be issued a building permit. The surveyor will check relevant plans and specifications that the building work complies with the requirements of the Building Act and the Building Regulations.

You may appoint a building surveyor by engaging an agent to nominate one on your behalf, apply for your own private building surveyor or simply engage the one from your local council. Only one Building Surveyor may be appointed over a building project. If you decided to use a private independent surveyor, he/she will take over from the municipal building surveyor once a building permit is successfully issued.

In some cases, the appointment of a private building surveyor may be terminated with consent from the VBA.

After a building permit is issued, building works may finally begin!

4. Sub-contracting your building works

Being an owner-builder does not necessarily mean that you have to carry out all building works yourself. In most cases, unless you are a skilled tradesperson or carrying out very minor works, you will not have the skills and expertise to carry out the actual construction of your dwelling. You may engage a building practitioner to take over building on your property and he/she will be responsible for that part of the building works under the contract.

For building works over $5,000 you should ensure that the person(s) you engage are a Registered Building Practitioner AND that they provide you with a domestic building contract. The written contract is necessary to set out the scope of the builder’s work so that both parties know what to expect and minimises future disputes.

For building works over $16,000 the Registered Building Practitioner you engage must enter into a contract with you AND take out domestic building insurance.

Be aware that an unregistered building practitioner will not be able to take out a domestic building insurance and you will not be able to obtain insurance cover. It is important that you obtain the right details of your proposed building practitioner so you may conduct a search on the VBA website.

Notwithstanding contracted works, as an owner-builder, you are still liable for your legal responsibilities under the Building Regulations. Make sure you are aware of these and able to oversee building works.

5. Domestic-building insurance

If you have seen the terms Domestic building insurance, builder’s warranty insurance and home warranty insurance, don’t worry! They are all one and the same merely with different names.

The insurance is a coverage over the builder’s work on your property benefitting you. Currently, VMIA is the only insurer available in Victoria and covers work up to $300,000 for structural defects up to six years and non-structural defects up to two years.

If you have sub-contracted a builder, ensure that the builder provides you with a certificate of insurance as proof that domestic building insurance has been issued for your named property.

Be aware that an insurance claim may be made only where the builder has died, is insolvent or has disappeared.

The insurance extends to a subsequent purchaser of your property if you sell on your house within six and a half years of the completion of building work

6. Occupancy Permit

The last thing you need before you lay your sheets for a first night’s rest at your newly constructed dwelling is a final assurance that it passes health and safety requirements.

In most cases, a building permit will contain a condition that an occupancy permit has to be issued before a building may be occupied. These are issued by the building surveyor when your building is considered suitable for use and occupation. It is an offence to move into your home prior to this consent.

Not to rush every little detail – An occupancy permit may be issued notwithstanding incomplete minor works such as paint jobs or incomplete fittings. However, rest assured that this does not by any means release the builder’s liability in completing the works in accordance with its relevant standards. The builder is still responsible for works under their contract.

7. Advantages of being an owner-builder

With all these numerous hoops and loops to jump through, you may wonder why anyone would take on the responsibility of becoming an owner-builder.

The fact remains that home-owner building has become increasingly popular because of the amount of say that one has over the design and aesthetic of one’s own dwelling. Being in charge of your own building works also gives you control over budgeting and makes your project cost efficient according to your preferred materials and standards. Combining the two, allows for your own time management according to the rate at which you find your home inspiration.

You can finally have in reality that dream home you’ve always wanted and nobody have a better idea of how it is meant to turn out than yourself!

For further information contact Boutique Lawyers on 1300 556 140 for a free 30 minute consult or via our website at www.boutiquelawyer.com.au.

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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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