Owner builder works which lead to voided contracts

Article: Owner Builder Works 

Written by: First Class Legal, February 2021 

Unless disclosed, owner builder works can lead to a Contract being voided (i.e. cancelled) at the option of the purchaser.

So many people are renovating but, unless the work is done by a registered builder with a major domestic building contract in place for works over $10,000.00 and builders warranty insurance in place if the works exceed $16,000.00, the works are generally regarded as “owner builder” works. If the renovation works have been done by the owner or the owner managed trades to do the works in the 7 years preceding selling the property, the works need to be disclosed in the Section 32 Vendors Statement. Disclosure entails a current Owner Builder Condition Report (less than 6 months’ old) and, if the value of the work exceeds $16,000, Owner Builder Warranty Insurance is required too.

Owner Builder works include: kitchen and bathroom renovations/makeovers, pergolas and decking. It does not need to be gutting of the house nor structural work. In short, if works were done without a permit (whether a permit was required or not), they are regarded as Owner Builder works except where a permit was not required and a registered builder has done the works with a major domestic building contract in place.

If works are done with a permit and the owner is listed as owner and builder, then the owner is regarded as an Owner Builder.

Please be on guard as non-disclosure before signing of the Contract for Sale gives a purchaser the right to void the Contract right up until settlement. For most people who sell and buy at the same time, their sale falling over at the eleventh hour is a disaster.

There is also provision for an owner who fails to disclose Owner Builder works to be fined.

We have voided a Contract on behalf of purchasers who became aware that the house had been remodelled and landscaping work had also been done including the building of retaining walls. A simple Condition Report and insurance would have ensured that this Contract was legally valid.

It is not about the quality of the work nor whether or not permits were obtained. It is all about disclosure of the works that have been done.

What about commercial property?

Registered builders are not affected but other owner-builder vendors must comply. They must provide an Owner Builder Condition Report and the prescribed period is 10 years.