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Warning for potential owner builders
Be wary if a builder or tradesperson asks you to sign a building permit as an owner builder, even though they will be doing the work.
This is risky for you and may end up costing a lot more than you expect. The builder may be unregistered and/or trying to avoid their legal responsibilities.
Contact us or your lawyer to get advice before you agree to become an owner builder in these circumstances.
Even if you have signed as the owner builder on the building permit:
- you and a builder, contractor or tradesperson must enter into a written contract for domestic building work more than $5000
- a builder, contractor or tradesperson must give you domestic building insurance for work more than $12,000. This insurance protects you if they die, disappear or become insolvent
- warranties still apply.
Am I an owner builder?
You are an owner builder if you:
- intend to use your own skills to build, extend or renovate your home
- intend to manage sub-contractors to do the work
- are a registered builder who builds, extends or renovates a home on your property.
As an owner builder, you take on many of the responsibilities of a registered builder and accept any associated financial risks. Responsibilities include:
- doing all or part of the work yourself, except work that must be carried out by licensed tradespeople
- contracting out all or part of the work to tradespeople, and checking they are registered and licensed if required
- engaging a building consultant to check the quality of the work
- arranging insurance
- occupational health and safety of workers
- obtaining permits and organising inspections.
Advantages may include:
- more control over the project, including design
- saving the cost of the builder’s margin
- more flexibility.
- spending more money and time than expected
- taking responsibility for the work and finance
- facing complex situations.
View our Owner builders checklist page
Legal rights and obligations of owner builders
Most laws that apply to registered builders also apply to owner builders.
Your rights and responsibilities as an owner builder are governed by the Domestic Building Contracts Act 1995 and the Building Act 1993. You must:
- get relevant planning permits from your local council
- be named as the owner builder on permits
- engage a building surveyor to obtain building permits, including an occupancy permit or certificate of final inspection on completion of work
- get a certificate of consent from the Building Practitioners Board at the Building Commission before carrying out domestic building works over $12,000
- ensure that the work meets building regulations, standards and other laws
- arrange for building inspections as required by law at particular stages of the building work.
We recommend you:
- enter into major domestic building contracts with builders and tradespeople for work over $5000
- use registered builders for work over $5000 or to reblock, restump, demolish or remove a home, regardless of the value of this work.
- ensure any builder engaged for work over $12,000 has appropriate domestic building insurance. This insurance protects you if they die, disappear or become insolvent
- always use licensed electricians and plumbers
- view our Choosing a builder or tradesperson section before engaging contractors
- check whether you must undergo any applicable training. For more information, visit the Induction training page on the WorkSafe Victoria website.
You can get only one owner-builder permit for a single home and associated work on that property, once every three years. More information about the application process is available from the Building Practitioners Board at the Building Commission.
What if I want to sell my owner-built house?
If you sell your property within six years and six months of completing your building work, you must:
- provide a defects inspection report not more than six months old from a registered building practitioner for all work regardless of value, including extensions, renovations, garages and verandas
- take out domestic building insurance for work over $12,000, to protect the person who buys your property. If a registered building practitioner carried out the work under a major domestic building contract, it should be covered by their domestic building insurance; but you also need your own domestic building insurance to cover your work. The insurance covers non-structural defects for two years and other defects for six years. After six years the property is no longer covered by domestic building insurance.
Domestic building insurance
Domestic building insurance, previously known as ‘builders warranty insurance’, protects the buyer if you (as the owner builder) die, become insolvent or disappear.
To get domestic building insurance, ask the insurance provider what documents they require. You will need:
- the defects report
- domestic building insurance certificates given to you by builders or tradespeople for work on your project.
The cover becomes effective once the contract of sale is signed. The buyer can only use the insurance when the owner builder has died, becomes insolvent or has disappeared. It covers costs up to $200,000 to fix:
- structural defects, for six years
- non-structural defects, for two years.
Domestic building insurance does not cover defects or incomplete work identified in the defects inspection report.
Last updated: 24/05/2013