Domestic Consumer Building Guide explained

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The Building Legislation Amendment (Consumer Protection) Act 2016 has introduced
significant changes to the building industry. The changes affect building practitioners,
surveyors and owner builders.

The objectives of the reforms are to enhance consumer protection through stricter
industry regulation and enforcement provisions, and to improve processes under the
relevant Building Act 1993 (Vic) and the Domestic Building Contracts Act 1995 (Vic).
The first two stages of reforms took effect in July and September 2016 with the final
reforms anticipated to be implemented before July 2017.

As part of the changes, builders must now, before a contract for major domestic building
work is signed, provide customers with a copy of the Domestic Consumer Building Guide (the Guide).

This article discusses the contents of the Guide, and particularly those aspects that
relate to some of the recent reforms regarding domestic building practices. Builders are
reminded of the importance of keeping up to date with industry reform and having
systems in place to reduce risk and ensure compliance when issuing building contracts.

What’s in the Guide?

The Guide has been developed to assist customers understand their rights and
responsibilities, and the parties’ roles when entering into a major domestic building
contract. A major domestic building contract is a contract to build, renovate or extend or
carry out other building works exceeding $5,000. Accordingly, many projects will fall
within this definition. Links are provided to Government authorities to assist the client
check information regarding builder registration and whether a builder has been the
subject of any disciplinary action.

The Guide sets out the types of work contemplated in a domestic building contract and
reminds the consumer that the builder must have in place Domestic Building Insurance
for works exceeding $16,000. A copy of the policy documents must be provided to the
customer before a deposit is paid.

Information about the statutory warranties pertaining to building works and the
opportunity for consumers to take legal action against a builder up to 10 years after the
occupancy or final inspection certificate issues, is also included.

The Guide constitutes the ‘information statement’ required under s 29A of the Domestic
Building Contracts Act 1995 and can be downloaded from the Consumer Affairs Victoria
website.

Victorian Building Authority

The Guide refers to the Victorian Building Authority (VBA) which is the newly-appointed
authority (replacing the Builder Practitioner’s Board) pursuant to the recent reforms. The
VBA is now charged with the licensing, regulation and supervision of building
practitioners. It has direct decision-making power with respect to the requirements for
registration and discipline within the industry, and is also responsible for issuing
certificates of consent for owner builders.

The amending Act has introduced increased powers for the VBA to carry out its role and
to implement the various changes contemplated by the reforms. It may issue a ‘show
cause’ direction in anticipation of taking disciplinary action against builders, impose
conditions on registration, or suspend a practitioner’s registration.

Appointing a building surveyor

For major building work, a surveyor must be appointment before applying for a permit
and starting construction. A private or council surveyor may be appointed. The Guide
makes it clear that a builder of a domestic major building contract is now prohibited from
appointing a private surveyor on behalf of the customer. The appointment must be made
by the owner / customer.

The amendments also prevent a private surveyor from accepting an appointment if there
is a conflict of interest. A conflict may arise if the surveyor is related to the builder
through family, business or employment or, in circumstances where the surveyor stands
to make a financial gain regarding his / her decision-making authority.

The surveyor is responsible for inspecting each relevant stage of the building works to
ensure compliance with regulations, and signing off on the final occupancy certificate.
The amending Act has introduced more stringent provisions requiring surveyors to give
‘written directions’ for builders to fix non-compliant works which must be provided to both
the builder and owner.

The importance of clear documentation

Finally, the Guide emphasises that communication is key to resolving disputes.
Professionally prepared contract documents and sound management systems are
essential to avoiding disputes or, at least, asserting a builder’s position if a dispute does
arise.

We recommend that building practitioners use a written contract for all works, whether or
not they exceed the $5,000 threshold. Builders should review contract precedents to ensure that they contain all information required under the relevant legislation. Using
industry-approved contracts that prompt completion of pertinent information, and
attaching the Guide to the contract will assist builders in meeting their obligations and
provide evidence of the agreed scope of works.

Procedures should also be implemented to ensure that customers acknowledge having
received the Guide with sufficient time allowed for customers to review the entire
contract and Guide before signing.

Conclusion

The reforms have introduced many other substantial changes which will affect all
building practitioners. Those involved in the industry are encouraged to acquaint
themselves with these changes and to review work practice and management systems
to ensure compliance.

If you or someone you know wants more information or needs help or advice, please
contact us on 03 9387 2424 or email info@rrrlawyers.com.au.

Posted in: Building & Construction Law