What is an Owner Builder?
An owner builder is someone who has:
- Personally built, altered or extended a building, and/or managed or arranged for building works that have not been completed by a registered building practitioner; and
- Is building on their own land.
As an owner builder, you take on many of the responsibilities of a registered builder and accept any associated financial risks.
These Responsibilities include:
- Doing all or part of the work yourself, unless that work has been undertaken by licensed tradespeople.
- Contracting out all or part of the work to tradespeople, where a thorough check of registration and licensing has been established
- Choosing whether to engage a building consultant to independently advise through the construction period
- Arranging insurance cover
- Occupational health and safety of employees, contractors and workers
- Obtaining permits and arranging necessary inspections
Certificate of consent
If the building work is valued at $16,000 or more, a certificate of consent is required.
The Victorian Building Authority (VBA) will consider to issue a Certificate whereby the applicant has the following:
- Intends to reside in the property upon completion of the building works
- Owns or co-owns the land for which a building permit has been granted in respect of an owner builder project undertaken in the past five years
- Has the imposed knowledge of the duties and responsibilities of an owner builder
Legal rights and obligations of owner builders
Most laws that apply to registered builders also apply to owner builders.
The rights and responsibilities of an owner builder are governed by the Building Act 1993 (the Act).
As an owner builder the following must be adhered to:
- Obtain the relevant planning permits and authorisations from your local council
- Be the nominated person named as the owner builder on permits
- Engage a building surveyor to approve the building permits, including an occupancy permit or certificate of final inspection upon completion of works undertaken
- Ensure that the work undertaken meets all current building regulations, standards and associated rules
Under the Act it is an offence to carryout building work without a building permit. This can carry a fine of up to $82,500 for individuals.
For more information on building permits please read our blog here.
Obligations for owner builders on sale
The primary obligation of an owner builder is to obtain an inspection report.
This report will assess the deficiencies and provide a condition report for the incoming purchaser to ensure they are aware of the condition of the property prior to purchase.
This report should be attached to the contract of sale and cannot be more than six months old at the date of the contract signing.
Domestic building insurance
Domestic building insurance, which was previously known as ‘builders warranty insurance’, protects the buyer upon death, insolvency or order of VCAT.
The insurance will cover costs and charges up to $300,000 to repair structural defects for no more than six years, and non-structural defects for no more than two years.
Domestic building insurance is required as pursuant to Clause 19 of the Domestic Building Insurance Ministerial Order and issued on 23 May 2003 stating:
Prior to entering into an insurable contract of sale of a building, the owner builder must ensure that:
- A policy is issued that complies with this Order; and
- The policy covers the domestic building work on that building
Domestic building insurance is valid for no more than six years from the issuance of the occupancy permit and will rely soley on the construction inspection report.
Risks as an Owner Builder
The legal requirements of an owner builder are complex matters nad need to be strictly adhered to, noting that there may be significant associated costs involved.
The legal responsibilities of an owner builder remain upon the completion of any building project. If the property is sold within six years of obtaining the certificate of final inspection or occupancy permit then a construction inspection report is required as well as domestic builder’s insurance.
A subsequent purchaser can make a claim against owner builder for defects in same way an owner can against a builder. See our blog here on defects claims.
The owner builder will be able to rely on the inspection report to defend any claim, however, expert advice should be sought on this issue.
There are many benefits and advantages in being an owner builder, however it is vital you understand your rights and legal obligations to avoid heavy penalties. This is where our team at Oldham Construction Lawyers can assist you with all your owner builder matters.
Please contact our Director, Daniel Oldham on (03) 9640 0002, or via email firstname.lastname@example.org