Owner-Builder Works - prior to a property sale

by Sarah Lindsey

MANY VENDORS do minor renovations prior to the sale of a property.

Common examples are the refurbishment or updating of kitchens and bathrooms, or the construction of timber decking or a pergola; a permit may or may not be required for these projects. 

Such improvement work done in the seven years prior to a contract of sale, and not done by a registered builder, may be caught by the owner-builder legislation contained in the Building Act 1993 (Act).

Section 137B of the Act requires that specific warranties, an owner-builder condition report outlining the works done, defects and secondhand materials, and in some circumstances, owner-builder insurance, be included in the contract documentation.

There is a limited range of single trade exemptions, but if the work done is of a value exceeding $12,000, insurance will be required for non-structural work (e.g. cabinetry, painting, tiling) done in the two years prior to the contract of sale, and for structural work (e.g. removal of non-partition walls, increasing window size) done in the six years leading up to the contract.

The legal and practical consequences of non-compliance are drastic.

Firstly, the failure to include the relevant documentation will render the Contract of Sale voidable, at the option of the purchaser, right up to the date of settlement.

Secondly, if a contract is terminated by a purchaser due to the non-provision of the documentation, which is strictly required by the legislation, this may result in the commission being payable to the estate agent in any event, as the agent will have fulfilled his or her obligations to effect a sale of the property.

Sarah Lindsey
Senior Associate
Hicks Oakley Chessell Williams
www.hocw.com.au

 



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