Who is an owner-builder?

An owner builder is someone who takes on the responsibilities of a builder for domestic building works completed at their property without engaging a registered builder. This role involves overseeing or managing building works, which range from the construction of a new home to carrying out significant renovations. You may also be classed as an Owner Builder, despite engaging a registered builder or company to complete works on your behalf. We see from time to time, permit applications submitted to the local Council, where the owner of the property is classified as the builder instead of the registered builder or company engaged to conduct the works. When this occurs, you are deemed an “Owner Builder”. Care should be taken when engaging a registered builder or company to apply for a permit on your behalf.

When is an Owner Builder Report required?

If you plan on selling your property within six years and six months of the certified date of the commencement of works, or seven years from the date of issue of the final inspection or occupancy permit, you will need to arrange for an Owner Builder Report to be prepared by a qualified building inspector, which highlights any issues with the building works. This Owner Builder Report must be included in the Section 32 Vendor Statement which forms part of the Contract of Sale, alongside the domestic building insurance if works exceed $16,000.00.

Common types of domestic building works:

• Significant renovations such as updating a bathroom or kitchen, erection of a pergola and/or deck, extension to an existing structure including additions of new rooms, changing the layout, or extending the footprint of the property.

• Major landscaping projects, especially those involving the erection of retaining walls, swimming pools, or significant earthmoving.

• Erecting special structures such as sheds, garages, decks, and pergolas. • Structural works, involving construction or alteration of a building. Many of the above works also require permits to ensure the works meet safety, structural and environmental standards.

Before commencing any domestic building works, you should check with your local Council to see if a permit is required.

Things to consider if you plan on completing domestic building works:

• Owner builders cannot complete demolition works or subfloor work, such as restumping.

• Owner-builders must obtain an owner-builder certificate of consent from the Victorian Building Authority (VBA) before applying for a building permit if the works will exceed $16,000.00. This certificate confirms the eligibility to undertake the proposed work as an owner builder, along with understanding the technical requirements and ensuring that all building works meet the Building Code and other relevant Australian Standards.

• When engaging tradespersons or subcontractors, owner builders must ensure that these Contracts comply with legal requirements. Written Contracts are required for any work above $10,000.00 to safeguard all parties involved.

• It is mandatory for contractors, sub-contractors and owner builders to obtain domestic building insurance for any works exceeding $16,000.00. This insurance provides protection to future property owners against defective work and must comply with the Ministerial Order under the Building Act 1993 and provide coverage for non-structural defects for two years and for all other defects for up to six years after the completion date.

Issues surrounding the absence of an Owner Builder Report when selling?

Section 137B of the Building Act 1993 states: “It is an offence for an owner builder to sell a building without an Owner Builder Report or insurance”.

If you fail to provide an Owner Builder Report in the Section 32 Vendor Statement, several complications can arise, impacting both the sale process and legal obligations. For instance:

• The enforceability of the Contract of Sale. The purchaser may have grounds to rescind the Contract at any time before settlement occurs.

• Failing to disclose owner-builder works by providing an Owner Builder Report is a serious breach that could lead to legal disputes or financial compensation. A purchaser has the right to receive full disclosure, including any defects and compliance issues.

• Without an Owner Builder Report, future buyers lack protection against any defects or non-compliance issues in the construction work, potentially leading to financial loss and safety concerns. Being an owner-builder offers both opportunities and responsibilities. While it enables owners to take direct control of their building projects and potentially reduce costs, it also demands a thorough understanding of building regulations, excellent management skills, and a readiness to address any challenges that arise.

If you are considering attending to domestic building works as an owner builder, you should undertake careful planning, seek necessary Council approvals, and consult with professionals when needed to navigate the complexities of the building process.

For more information on Owner Builder requirements, please visit the regulatory body – Victorian Building Authority (VBA): www.vba.vic.gov.au/owner-builders

Shae Treacy is a Director at Adroit Conveyancing, based in Bendigo, Victoria.

This article is intended to provide general information and should be used purely as a guide. It does not constitute legal advice and should not be relied on as such. You should seek legal advice for your specific circumstances.