Given the depressed Real Estate Market conditions currently being experienced in the Western Australia property market and the added impost of significant stamp duties on property transactions, many home owners are making home renovations as opposed to selling them.
Like new home constructions, home renovations need to be checked throughout the key construction stages to ensure that the work is being done in accordance with the Australian National Construction Code and Australian Standards. Sadly, the view is often that given the renovation work is relatively small why bother with a Building Inspection. In contrast, there are some builders and trades that inappropriately target the smaller renovation market and hence they are just the ones home owners need to be protected from.
The Western Australia the Home Building Contracts Act 1991 provides home owners with a degree of protection and guidance.
Key points include:
1. The Act regulates contracts between any person undertaking home building or associated work for a home owner. This means it covers every person who undertakes home building or associated work not just Registered Builders.
2. Where the costs of the building work exceeds $20,000 or a building permit is required, a Registered Building Contractor is required to be used.
3. The Act basically covers home building work for fixed price work between $7,500 and $500,000.
4. Home Building Work includes:
a. new homes or additions to homes
b. installing swimming pools
c. cabinetry or tiling work for a kitchen or bathroom
d. constructing a garage, shed or pergola
e. similar type work
5. Contracts for the work MUST be in writing. Contracts must contain all the terms, conditions and provisions of the agreement, show the date and be signed by both parties. An oral agreement is not sufficient to comply with the Act.
6. Before a home building work contract is signed by the owner, the Act requires the builder to provide the owner with a copy of the ‘Notice for the Home Owner’, which summarises the requirements of the Act. See https://www.commerce.wa.gov.au/sites/default/files/atoms/files/notice_for_home_owner_aug2013.pdf
7. Under the Act a ‘builder’ is any person(s) who carries on a business which performs home building work or associated work for others. That person may or may not be a registered builder.
8. A home building work contract cannot provide for a payment of deposit prior to the commencement of work that exceeds 6.5 per cent of the total cost of the work
9. Once work has commenced, any progress payment must only be for work actually performed or materials already supplied.
10. Usually, any variation to a home building work contract is to be in writing, show the date and be signed by both parties, with a copy given to the home owner before the variation work commences.
11. A contract cannot restrict inspections except by limiting them to normal working hours or forbidding inspections that would unreasonably impede or interfere with the building work.
12. Builders are liable to make good, at no cost to the owner, defects in home building work where notified in writing within four months of practical completion.
13. Home indemnity insurance (HII) covers the home owner, and subsequent owners, against the loss of deposit (up to $20,000) or the completion or rectification of the building work (up to $100,000) should the builder die, disappear or become insolvent within six years from the date of practical completion. It is compulsory for all residential building work above $20,000 to be covered by HII, except associated work alone (eg swimming pools, carports, pergolas and landscaping).
14. The Building Commission can deal with contractual disputes relating to lump sum home building work contracts between $7,500 and $500,000, provided the complaint is lodged within three years from when the cause of the dispute arose. Complaints about the standard of workmanship can be lodged regardless of the value of the works, provided the complaint is lodged within six years after the completion of the works.
15. There are a variety of remedies defined within the Act.
So, the positive news is that home owners are afforded a degree of protection via the above. However, the real key is to avoid the problems in the first instance. Home owners should ensure that they:
· Review the above information and the linked documents before you start on home renovations
· Make sure you have a Contract for the work you are requesting, especially if in excess of $7,500
· Make sure you appoint a building inspection for the key stages of the construction
Houspect Building Inspectors are all Registered Builders with at least 20 years building and construction experience. They are well versed in reviewing the progress of construction works from home renovations though to entire homes. Houspect can provide quality support through to practical completion, post construction and WA Building Commission State Administration Tribunal complaints if required. Contact Houspect on Ph: 92408855
