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Obligations on NSW Owner Builders

Owner Builder Warranty Is No Longer Available in NSW

Insurance under the Home Building Compensation Fund is no longer available for owner-builder work done by an owner-builder.

Owner-builders who sell properties built under owner-builder permits are no longer required to provide insurance to the subsequent purchaser. The cover is no longer mandated under the Home Building Act 1989. The Home Building Compensation Fund (HBCF) ceased issuing cover from 15 January 2015 to owner-builders who sell their properties. There is also no longer a requirement on owner-builders to attach certificate of insurance to contract for sale for intending purchasers of owner-builder work.

Should an owner-builder or a successor in title to that person decide to sell their home within 7 years and 6 months after an owner-builder permit was issued, the contract for sale must include a note (a consumer warning) stating that: an owner-builder permit was issued in relation to the land on the date it was issued.

If the consumer warning is not included in the contract of sale, the purchaser can void the sale contract before settlement.

Warning! – As an owner-builder you are guaranteeing the work you undertake. The next immediate owner of the property is entitled to the benefit of the statutory warranties set out in the Home Building Act 1989, and can take you, the owner builder, to the Tribunal to enforce their statutory warranty rights. This may result in a money order against you.

Each licensed contractor (builder, tradesperson or project manager) who contracts directly with an owner-builder to undertake residential building work must provide insurance under the Home Building Compensation Fund (HBCF) when the total contract sum exceeds $20,000 (including material supplied by the contractor).

The certificate of insurance should be provided to the owner-builder by the licensed contractor before taking any money on the contract and before starting any work.

The statutory warranty for owner-builder works continues. Information in relation to statutory warranty can be obtained at Fair Trading’s website www.fairtrading.nsw.gov.au

Further information on the amendments to the Home Building Act impacting on owner-builders is available on the website of NSW Fair Trading which administers the legislation and owner-builder obligations.

Note: This blog was originally posted on buildersbroker.com.au

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