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Consumer & Business Advice
Media releases
28 May 2013

The State Government is cracking down on complicated and confusing clauses hidden in home improvement contracts to reduce the risk of home owners being misled or duped into giving up rights over their own property.

Minister for Business Services and Consumers John Rau today announced proposed changes that will see builders, plumbers, gas fitters and electricians provide clearer charging clauses in contracts for residential work.

“Contract issues make up a good portion of South Australian consumer complaints against builders, plumbers, gas fitters and electricians,” Mr Rau said.

In 2012, Consumer and Business Services received 953 enquiries and complaints from consumers about these types of traders, more than a quarter of which related to contract issues.

“Specifically, we received an alarming number of complaints in relation to a solar rental company.

A charging clause contained in the company’s contract obliged home owners to agree that solar panels are an improvement to their land value and effectively allowed the solar company to impose a caveat over their homes.

“This is a very complex clause and most consumers did not understand its effect nor the potential consequences in terms of limitations on what they could do with their own property.

“The changes the Government are proposing will provide greater protection for consumers by ensuring they are informed about the consequences of signing a contract containing a charging clause.

“There will also be a requirement for the charging clause to be separately signed and witnessed.

Proposed amendments to the Plumbers, Gas Fitters and Electricians Act 1995 and regulation, as well as the Building Work Contractors Regulations 2011 include a requirement that the contract clearly explain:
•    the purpose of the charging clause, namely that it seeks to establish a right of charge in order to be able lodge a caveat over the property on which work is being conducted;
•    that the effect of a caveat being lodged over the property may restrict the ability of an owner to register dealings with their property at the Lands Titles Office;
•    that the consumer should seek independent advice if they have any concerns.

“In order to protect themselves from unwelcome surprises down the track, home owners should endeavour to clearly understand what exactly they are getting before signing a contract,” Mr Rau said.

“Consumers who need advice regarding contracts and charging clauses are encouraged to contact Consumer and Business Services.”

Information is available at www.cbs.sa.gov.au or by calling 131 882