When selling your property it is essential that any renovation works that you have carried out during your ownership of the property have been completed and documented properly, whether you had a professional builder carry out the works or you acted as an owner builder and renovated your property yourself, documenting renovation works is a must!
Our article on disclosure and owner builder works is located here. We suggest that if you have carried out any level of modification works to your property during your ownership that you read our article and advise us if you have any queries. If you are employing a builder to carry out renovation works at the sale of your property you are required to disclose evidence of any building permit that was obtained and the date of completion of the works. This is generally provided in the form of a certificate from your municipal council.
Documenting Renovation Works & Entering The Domestic Building Contracts Act
Before you enter into a building contract for the renovation of your home (or for that matter, for the construction of a new home) you should be aware of that any contract for building works on a home over the sum of $16,000 are governed by the Domestic Building Contracts Act (“DBC Act”) which means the contract must have particular terms:
- The DBC Act contains a number of terms that a builder cannot avoid. These terms are generally in an owners favour so a builder should not attempt to avoid them.
- Builders will generally use a standard form contract – the HIA and Master Builders Contracts being the most common. As these contracts have been drafted by builders they are generally “builder friendly”. Another standard form contract is the Australian Institute of Architects contract which tends to be more “owner friendly”.
- Most builders add special conditions that can significantly change the terms of the contract. It is essential that you understand any special conditions.
- Builders must obtain “builders warranty insurance” which is an insurance policy of last resort that allows an owner or subsequent owner of a home to claim on a policy should building works either breach a building contract or fail to comply with statutory warranties AND the builder has either died if they were an individual or gone into liquidation. The exact rules regarding claiming on builders warranty insurance are complex so we suggest you speak to us before attempting to make a claim.
- Builders are not permitted to require you to enter into a “charge” over your property to secure payment of their fees and are not permitted to lodge a caveat over your property. If they request to do so you should advise them they are not permitted to by the DBC Act.
We suggest that before you enter into a domestic building contract either for the renovations or for a new home that you have the contract reviewed by a solicitor. If you wish to discuss anything raised in this article with us, please contact me, I would be happy to assist you with any domestic building related matters.
Will has developed a broad commercial practice in which he advises clients on business acquisition and sale, commercial agreements, commercial and retail leasing, and commercial litigation. Learn more about Will's legal experience.
