Has residential owner-builder work been carried out on your land? Include the HBCF warning in your contract for sale

Are you intending to sell land or property on which residential building work under an owner-builder permit has been carried out in the previous 7 years and 6 months? If so, you need to include a conspicuous warning in the contract stating that:

• an owner-builder permit was issued in relation to the land or property and the date it was issued; and
• work done under an owner-builder permit is not required to be insured under the Home Building Compensation Fund (HBCF) unless the work was done by a contractor to the owner-builder.

If you fail to include such a warning:

• you may be liable to a fine up to $110,000.00 in the case of a company and $22,000.00 in the case of an individual; and
• the contract is voidable at the option of the purchaser at any time prior to completion.

To avoid doubt, the requirement to include the warning applies not only to the owner-builder themselves if they sell the land/property, but to each successor in title within 7 years and 6 months of the issue of the owner-builder permit.

Residential building work carried out by the owner of the land under an owner-builder permit cannot obtain insurance under the HBCF which would otherwise apply if the owner had engaged a builder to carry out the works. However, the usual requirement to obtain HBCF insurance applies if the owner-builder engaged a separate tradesperson to carry out part or parts of the works, such as the electrical works. In this case the subsequent purchaser of the land may require a copy of the tradesperson’s certificate of HBCF insurance prior to completion.

This is just one of the many requirements that regulate the obligations of owner-builders and residential building works carried out under an owner-builder permit. If you are an owner-builder you need the right legal advice otherwise your project could be put at risk. Solve legal disputes before they happen by speaking to Hamilton Mott today.