Contracting to owner builders

Tradespeople contracting to owner builders for domestic building work should be aware that they have more responsibilities than when sub-contracting to a licensed builder.  These include:

  • Your work will be covered by statutory warranties.  Your customer, or any subsequent owner of the property can claim against you if there is any breach of the following:
    • Your work must be performed in a proper manner, to accepted trade standards and in accordance with the agreed plans and specifications
    • All materials you supply must be good and proper
    • Your work must meet all statutory requirements (such as Building Code of Australia requirements)
    • You must complete your work within the time specified in the contract or, if no time is specified, with reasonable diligence
    • If the owner has made known to you a particular purpose or desired result of the work you are to perform, your work and any materials you supply must reasonably be expected to achieve that result.
  • In relation to any contract with a value of $12,000 or more:
    • You must have a written contract that includes all contractual terms in full and provide a Form 1 notice setting out your customers rights and obligations
    • You must have a policy of Building Indemnity Insurance in place for your work
    • You cannot take a deposit more than $1,000 or 5% of the price, whichever is higher
    • Other payments for your work must be genuine progress payments that are charged after completion of stages or all of your work
    • There are requirements relating to pricing in your contract relating to rise and fall clauses, prime cost items and provisional sums
    • Your customer has a right to “cool off” within 5 clear business days of entering the contract

If you are unclear on any of your obligations, you should contact CBS or your industry association before entering into a contract or as soon as possible if a dispute arises.