Published: 28 March 2017
Author: Madlaina Meister
Six common questions from owner builders about conveyancing
Hindsight is a wonderful thing and we are often meeting owner builders who have completed a terrific renovation and are ready to sell their property, However, they are learning the legal requirements too late in the process, which can later become an emotional and financial drain.
The rise of interest in great design and interiors has also led to a rise in conveyancing or property settlement work for our firm. We are increasingly seeing owner builders who after lots of work are ready to sell their property, but come to us when they face legal challenges.
Many clients express their frustration that they didn’t know the information prior, so we thought it may be helpful to share six common enquiries for anyone thinking of owner builder work.
1. Can I provide copies of any certificates of final inspection or occupancy permits?
If you are selling a house to which you have done building work, and that work was completed within seven years of the day of sale, In the Vendors Statement you need to give details of any building permits you have applied for in the last seven years.
While not required by law, it is also good practice to provide copies of any certificates of Final Inspection or Occupancy Permits to show that the building work has been finished and certified as compliant.
Under Section 137B of the Building Act 1993 (the Building Act) as an owner builder you need to comply with additional legal requirements as follows:
- Provide the purchaser with a report prepared by a building surveyor or other prescribed building practitioner in relation to the building work;
- Take out owner builder warranty insurance if the value of the building work was above a certain value (currently $16K but this amount changes from time to time) for any building work completed within;
- Provide the purchaser with a copy of the certificate of insurance as proof of your owner builder insurance; and
- Include the warranties set out in Section 137C of the Building Act in your Contract. These warranties can't be excluded from the Contract. They relate to the quality of the work, the suitability of the materials used and compliance of the work with current building regulations.
If you don't comply with these requirements, a purchaser may be able to walk away from the Contract at any time right up to settlement. Selling a property to which the requirements apply without complying with them is also an offence under the Building Act and you can be fined in excess of $15K.
2. I am shown as an Owner Builder on the building permit, but the work was done by a registered builder. Is this legal?
If the building permit shows you as owner builder the requirements apply to you, regardless of who carried out the actual work.
3. I am a registered builder - do the requirements apply to me?
A registered builder who is selling his or her own house to which he/she has done building work is considered an owner builder and must comply with the requirements for owner builder work.
4. This is a small job and a building permit isn’t required.
The requirement applies regardless of whether a permit was required and/or obtained. Any building work done without a permit is automatically considered owner builder work.
5. The work was done eight years ago but I only got a Certificate of Final Inspection when I put the property on the market.
The time limits for the requirements start from the date the Certificate of Final Inspection issues. If the Certificate is dated less than years ago you will need to comply with the requirements.
6. I got a Certificate of Final Inspection done two years ago – can I use that one?
No, the report can't be older than six months. You will need to obtain a new report.
Contact our friendly conveyancing team if you want to sell your house and need more information about these requirements.