Owner Builder Obligations under the Sale of Land Act 1932
Pursuant to the Sale of Land Act 1962 (Vic), a vendor is required to disclose in the vendor’s statement whether any building permits have been issued for the property in the last 7 years. Where a building permit has been issued and it lists the vendor as both the owner and the builder, then the vendor is an owner builder for the purposes of the Building Act 1993 (Vic) (Act) and the provisions of section 137B of the Act apply.
Definition of an Owner Builder
An owner builder for the purpose of the Act means any person who has personally built, altered or extended a building and/or caused, managed or arranged for the building works to be completed by another person (including a registered builder who is not nominated on the building permit as the builder).
Subsection 137B(2) of the Act provides that domestic owner builder obligations arise if a contract to sell is entered into within the prescribed period, which is defined in subsection 137B(7) of the Act as being:
1. 6 years and 6 months after the date of completion of the works, where the date of completion of the works, is the date that an occupancy permit has been issued or a certificate of final inspection has been issued;
2. 7 years after the date of commencement of the works, which is the date of the issue of the building permit, if neither an occupancy permit nor a certificate of final inspection has been issued; or
3. 6 years and 6 months after the certified date of commencement of the works, which is the date that you declare in a statutory declaration to be when the works commenced.
What Works are Defined as Domestic Building Works
The Domestic Building Contracts Act 1995 (Vic) applies to the erection or construction of a home, including:
1. Any associated work including, but not limited to, and the erection or construction of any building or fixture associated with the home (e.g. retaining structures, fencing, garages, carports, workshops, swimming pools or spas);
2. The renovation, alteration, extension, improvement or repair of a home;
3. Any work associated with the construction or erection of a building on land that is zoned residential under a planning or its equivalent under a planning scheme pursuant to the Planning and Environment Act 1987 (Vic) and in respect of which a building permit is required under the Building Act 1993 (Vic); and
4. Any work that the regulations state is building works.
Sale of Land Act Requirements
The vendor as the owner builder must make the following statutory warranties in the contract of sale:
1. That all domestic building work carried out in relation to the construction by or on behalf of the vendor of the home was carried out in a proper and workmanlike manner;
2. That all materials used in that domestic building work were good and suitable for the purpose and unless stated otherwise, new; and
3. That the domestic building work was carried out in accordance with all laws and legal requirements including the Act and its regulations.
The vendor must also provide a condition report (Report), which is no more than 6 months old at the time of contract. The Report must be prepared by a prescribed building practitioner such as an architect, building surveyor or building inspection and must be given to the buyer pre-contract. If the value of the building work is more than $12,000.00, then building insurance must be obtained by the owner builder and a certificate of currency given to the buyer pre-contract. The insurance must cover structural defects for 6 years and non-structural defects for 2 years.
Exempt Works from Complying with the Report
Items that do not require a Report include:
- Attaching external fixtures including awnings, security screens, insect screens and balustrades;
- Draining and plumbing works;
- Electrical work;
- Installing floor covering;
- Plastering; and
Separate legislation required that any plumbing work is undertaken by a licenced plumber or a registered plumber and that any electrical work must be undertaken by a licenced electrician.
If the owner builder obligations are not complied with, the purchaser can choose to avoid the contract at any time prior to settlement. Also, the vendor may be prosecuted. If any of the warranties are breached, the purchaser and any subsequent purchaser can take proceedings against the vendor.
Author: Cathy Drake