Owner Builder Obligations

KEY TAKE OUTS:

• It is important as an owner-builder to understand your responsibilities and obligations
• Be satisfied as to whether you need to have an owner-builder permit for the intended works
• What is required when you sell a property that has been built under an owner-builder permit

When you are deciding to build a dwelling you may consider undertaking the management, including supervision and co-ordination of the building process on your own. This is known being an owner-builder.

In order to undertake this work you must obtain an owner-builder permit through Service NSW or NSW Fair Trading. This is given to those who have the skill or capacity to build and/or supervise the constructions work. Being an owner-builder means that you will be responsible for the building work in the same way that a fully licensed builder would be.

What responsibilities does an owner-builder have?

As suggested above, being an owner-builder means you are responsible for:

• Obtaining all necessary council and authority approvals (including but not limited to Development Consent or Complying Development Certificate, Construction Approval)
• Scheduling, overseeing and supervising all tradespeople
• Obtaining materials and managing the building site
• Compliance with all financial, taxation and insurance requirements set out by law
• Being aware of and ensuring adherence with obligations under the Workers Compensation Act 1987 and the Work Health and Safety Act 2011
• Ensuring all tradespeople and contractors are properly licensed and insured for the work they are contracted to undertake; and
• Warranting that the materials and work undertaken are fit for purpose and allow the dwelling to be occupied.

When is an owner-builder permit required?

• If the residential building work being undertaken exceeds $10,000 (including labour and material); and
• The work requires development consent.

An owner builder permit will not be issued for renovations to an existing apartment, unit, flat or townhouse that is within a strata complex. Further to this owner-builder permits will not be issued for work to property that is not for residential purposes.

How to obtain an owner-builder permit?

An application for an owner-builder permit must be lodged with Service NSW or NSW Fair Trading. These authorities have requirements that must be meet, including but not limited to:

• Evidence of ownership of the property where the work will be undertaken;
• Development Consent or Complying development Certificate;
• Current general construction induction training card (Safework White Card or Safework Statement of Training);
• If the work exceeds $20,000 in value evidence the appropriate owner-builder education requirements must be satisfied; and
• All other land owners must be listed in the application, as they will not be able to apply for a further permit for different land in the following 5 years.

What if you decide to sell after the works are completed?

If you decide to sell the property within seven years and six months you must tell your licenced conveyancer or solicitor acting on your sale. This information is important as they are required to include a clause noting an owner-builder permit was issued in relation to the property and the date it was issued.

This information must be disclosed to any proposed purchaser as the requirement for insurance under the Home Building Act 1989 is not required when the work is completed by an owner-builder. The only exception to this is when a contractor has undertaken an aspect of the works that exceeds the value of $20,000.

If the required clause is not contained in the contract the consequence is that a purchaser can void the contract prior to settlement. This means that the contract comes to an end and the purchaser is likely to be entitled to the deposit.