Legal Requirements for Owner Builders in Victoria
By Kim Lovegrove RML, FAIB, Senior Lawyer, Lovegrove & Cotton
Owner builders have certain rights and duties incumbent upon them in Victoria. What do you need to know before building a residence in which you aim to live, also known as being an owner builder?
An owner builder is someone intent on building their own home for the purposes of using the home as their own domestic dwelling. The owner builder, in so far as the construction of such abode is concerned, must not be in the business of building.
It follows that the home cannot be built for commercial objectives such as on selling or renting.
Owner building work can be extensive and can range from renovations, to the construction of driveways, the building of a home, or work associated with the construction of a home.
The owner builder must be able to establish that he or she owns the land or in the case of trust, the owner builder must be a director or beneficiary of the trust (Victorian Building Authority, 2017, Owner Builder Information and Study Guide)
The Consumer Affairs website provides a useful synopsis of what it considers an owner builder to be. It states:
“You are an owner builder if you
- Intend to use your own skills to build or extend or renovate your home
- Intend to manage subcontractors to do the work
- Are a registered builder who builds, extends or renovates a home on your own property”
Owner builders are allowed to carry out building work and are allowed to manage tradespeople save for work that has to be carried out by licensed practitioners such as plumbing work and electrical wiring work that can only be carried out by registered plumbers and licensed electricians.
If an owner builder wishes to carry out domestic building work for more than $16,000, he or she must obtain a certificate of consent from the Victorian Building Authority. This instrument allows the owner builder to carry out residential building permit.
“An owner builder can only build or renovate one house every five years and must intend to live in the house once completed” (Victorian Building Authority, 2017, Owner-Builders Overview)
The certificate of consent
If the building work is for $16,000 or more, a certificate of consent is required.
In deciding whether to issue a certificate, the VBA will consider amongst other things whether the applicant:
- Intends to live in the property upon completion of the building work
- Owns or co owns land for which a building permit has been granted in respect of an owner building project in the past five years
- Has the prescribed knowledge of the duties and responsibilities of an owner builder
What are the duties and responsibilities of an owner builder?
The owner builder will need to ensure that a planning permit is obtained prior to applying for a building permit.
An owner builder has to obtain a building permit from a relevant building surveyor before carrying out any building work and the owner builder will be identified on the building permit as the party that will be carrying out the building work. If there are any changes to the plans that are sanctioned by the RBS, the owner builder will have to ensure that the RBS varies the building permit.
Carrying out building work without a building permit is an offence under the Victorian Building Act 1993 and carrying out building work in contravention of a building permit is also an offence under the Act.
Owner builders have to ensure that the relevant building surveyor is notified to carry out the mandatory inspections under the Victorian Building Act 1993. In the case of renovations, the owner builder will need to ensure that the relevant building surveyor issues a completion certificate once the building work is completed. In the case of a total build, once the building work has been completed by the owner builder, the RBS has to issue an occupancy permit. Occupancy can only occur after the OP has been issued and it is a prosecutable offence to contravene that legislative requirement.
The VBA web site also notes the following must be ensured:
- the work has to be carried out in accordance with the relevant Australian Standards
- the work site is safe
- any defective building work is rectified
- appropriate insurances are in place
- Protection Works Insurances
An owner builder, like any property owner or builder intent on carrying out building work, has to ensure that protection works insurance is obtained with respect to the carrying out of building work in circumstances where there could be an adverse impact upon the adjoining property. The owner builder has to comply with the protection works provisions of the Victorian Building Act. These provisions are quite extensive if the nature of the work is likely to have an adverse impact upon an adjoining property on account of proximity or foreseeable damage. A building surveyor should be consulted at the outset to determine the protection works implications of the proposed building work.
The Work Safe White Card
As owner builders will invariably employ or contract some of the work to tradesmen, the building site will in all likelihood be considered to be a work place under the Occupational Health and Safety Statute. Before the VBA will issue a certificate of consent, evidence of the owner builder having obtained a Construction Induction Card or a Work Safe White Card will need to be forthcoming.
It would be remiss of an owner builder to fail to maintain a public liability policy to provide indemnification for any work place injury sustained by workers or third parties that traverse or work on the building site. The owner builder could be found liable for any workplace injury that emanates from work carried out on the site or dangers posed by the site to third parties such as passersby or vagrants.
Aspiring owner builders also have to log in and complete an eLearning assessment in order to appraise themselves of the import and responsibilities of being an owner builder. The assessment has to be completed before the owner builder can apply for and owner builder certificate of consent. If the applicant makes any misleading statement or provides false information penalties can be visited upon same.
The VBA website states that:
“If your premises becomes a workplace, under Victorian occupational health and safety laws, you will need to ensure that anyone you have employed to perform construction work is provided with a site induction before they start work.”
The process after lodgment of the application for owner builder
The VBA website states that it takes about 21 days to process an application and notes that deficiencies in terms of the provision of apposite information will culminate in a rejection of the application. Applications are assessed by owner builder officers and once said officer has finished his or her assessment, then a recommendation will be made to his or her manager whom will have the final say.
Once the owner builder has successfully obtained an owner builder Certificate of Consent it will be recorded on a public register
The register will stipulate the date upon which the certificate was issued along with a description of the work and the address of the property.
Legal requirements regarding sale of owner builder property
If the owner builder wishes to sell the house within six years and six months of completing the construction of the property, then he or she must ensure that a number of things transpire prior to sale.
A defects inspection report has to be obtained from a registered building practitioner with respect to the abode or the residential building work that was carried out by the owner builder.
If the value of the work exceeded $16,000 and the work was carried out by the owner builder, domestic building insurance will need to be obtained. This insurance provides a measure of insurance protection for prospective purchasers being two years of indemnity for non-structural work and six years for structural work. The amount of cover is limited to $300,000.
A prospective purchaser can only seek indemnity from the insurer if the owner builder has died, become insolvent or has disappeared or vanished as it were.
Lovegrove & Cotton Lawyers to the building industry
For thirty years, Lovegrove & Cotton have represented builders, building surveyors and building practitioners in Melbourne, Canberra, Sydney and Queensland. Doyles Guide ranks Kim Lovegrove as one of the leading construction lawyers in Australia. Justin Cotton, likewise, is a leading Australian construction lawyer and widely respected in the building fraternity as evidenced by his recent elevation to Chairperson of the HIA Industrial Relations and Legal Services Committee, and member of the Regional Executive Committee, for HIA Victorian Chapter. Lovegrove & Cotton can help practitioners resolve any type of building dispute and are preeminent in the area of building practitioner advocacy. If you wish to engage the firm, feel free to contact us via our website or by emailing firstname.lastname@example.org.
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