Trades contracting directly with homeowners, do you need a major domestic building contract?

Did you know? Most building work completed in Victoria over $16,000.00 needs a major domestic building contract?

While most builders know this, this applies to some trades too if they choose to contract directly with the homeowner. This happens a lot!

Any trade contracting directly with a homeowner for work over $16,000.00 has to enter a major domestic building contract if they meet the definition of a ‘builder’ under the Domestic Building Contracts Act. But what is a builder?

It is:

“A person who, or a partnership which, carries out or intends to carry out domestic building work;”

Yep that’s right, it isn’t just registered builder!

AND:

“Domestic building work” is a broad definition and includes the erection or construction of a home and the renovation, alteration, extension, improvement or repair of a home.

That’s right – renovation trades can be caught by this!

There are some exclusions in section 6 of the Domestic Building Contracts Act and regulation 7 of the Domestic Building Contract Regulations. Like some trades who do only one type of work don’t have to enter a major domestic building contract, with those types of work being:

• attaching external fixtures (including awnings, security screens, insect screens and balustrades);

• electrical work;

• glazing;

• installing floor coverings;

• insulating;

• painting;

• plastering;

• plumbing work as defined in section 221C of the Building Act 1993;

• tiling (wall and floor);

• erecting a chain wire fence to enclose a tennis court;

• erecting a mast, pole, antenna, aerial or similar structure.

There’s still lots of trades that don’t fall into the exclusions like cabinetry. If a cabinet maker entered a contract with a homeowner directly, $16,000.00 is a fairly low threshold of work before they have to enter a major domestic building contract for that work.

So why does it matter? Because major domestic building contracts have their own set of requirements including:

• A Builder can’t enter one unless you’re registered (section 29 of the Domestic Building Contracts Act)

• A Builder must get domestic building insurance – it’s an offence not to! (section 43B of the Domestic Building Contracts Act)

• The contract has to be in writing (section 31(1)(a) of the Domestic Building Contracts Act)

• Sets out the warranties implied into the contract (section 31(1)(q) of the Domestic Building Contracts Act)

There can be big consequences for both homeowner and builder for doing work which requires a major domestic building contract without making sure all the requirements are met, but we see it happen frequently!

Homeowners, builders and trades should be considering if they need to be entering a major domestic building contract when doing work for over $16,000.00 and can reach out to the team at Brockhill & Usherwood if they have questions.

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tagged as:

• building law
• regulatory compliance