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OK, here is how it all works:
Licencing Requirements
Whether a builder or contractor is:
- Performing residential building work for an Owner-Builder, or
- Supervising / co-ordinating residential building work for an Owner-Builder,
then that builder or contractor must hold the relevant licence.
An entity that has contracted with an Owner-Builder to do or supervise / co-ordinate any residential building work cannot then contract or sub-contract to another entity for that other entity to do all or part of that work unless that other entity holds the relevant licence, either as or on behalf of an individual, partnership or corporation (Example: a licensed builder cannot contract any work out to a sub-contractor, unless that sub-contractor holds the relevant licence).
MAXIMUM PENALTIES FOR NOT COMPLYING
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Individual, Sole Trader or Partnership
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$22,000 |
Corporation
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$110,000 |
Contract Requirements
If a builder performs residential building work for an Owner-Builder (where the value of that work is more than $1,000), the builder must use a written contract that complies with the Home Building Act.
It is recommended that the builder’s contract contain special conditions which clearly identify the scope of the work that the builder has been engaged to do, in order to prevent the builder from having a wider and more onerous role than that which the builder originally thought to have agreed to. These special conditions should also exclude the obligation to supervise other contractors not engaged by the builder, and clearly state that the builder does not warrant work performed by other contractors not engaged by the builder.
If the builder is engaged by an Owner-Builder to merely supervise or co-ordinate the residential building works, and the builder’s fee is more than $1,000, such supervisory work is still deemed to be ‘residential building work’, and therefore a written contract that complies with the Home Building Act must be entered into for this type of service.
The builder should still ensure that his contract, among other things, clearly defines the limits of his responsibilities and that the builder does not assume all of the responsibility for the work being done by other contractors.
Home Warranty Insurance Requirements
Whether the builder contracts with an Owner-Builder to perform residential building work or to supervise / co-ordinate residential building work, and the builder’s fee for this work is more than $12,000, the builder must still take out home warranty insurance for that work, and give a copy of the insurance certificate to the Owner-Builder before accepting or demanding payment (including a deposit), or doing any work (including any supervisory work).
Summary
Just because a builder has been engaged by an Owner Builder, it does not mean that the normal home building laws do not apply to the builder.
All builders should take note of the above legal requirements, and take extra care when performing any work (including supervisory work) for an Owner Builder. |
