Introduction: Contracting Requirements under the Home Building Act

Building & Construction Law 21/01/2016 by Sam Roberts

Among other things, the Home Building Act 1989 (NSW) (“the Act“) regulates the contracting requirements for any person making a contract to undertake ‘residential building work‘. Importantly, these requirements apply equally to any contract variations.

The contracting requirements set out below apply to contracts entered into on or after 1 March 2015.

Consequences of Non-Compliance

Significantly, where a person contracts to do residential building work is unlicensed or fails to comply with some of the prescribed contracting requirements the Act provides that (Section 10):

  1. they are not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by the other party, and
  2. the contract is unenforceable by the person who contracted to do the work.

In addition, it is an offence that carries a fine of up to $8,800.00 for a person to contract to do work unless the requirements of Sections 7, 7AAA and 7E of the Act are complied with (Section 7A). These requirements are summarised below.

Unlicensed Contracting

Before dealing with the contracting requirements it is important to note that it is an offence to represent that an individual, partnership or corporation is prepared to do any residential building work and/or to enter into a contract to perform any residential building work unless the individual, partnership or corporation is a holder of a Contractor Licensed authorising it to contract to do that work (Sections 4 and 5 of the Act).

What is Residential Building Work?

The Home Building Act only applies to ‘Residential Building Work‘.

Residential Building Work means any work involved in, or involved in coordinating or supervising any work involved in:

  1. the construction of a dwelling,
  2. the making of alterations or additions to a dwelling, or
  3. the repairing, renovation, decoration or protective treatment of a dwelling.

Roof plumbing work, specialist work (including plumbing and drainage work, gas fitting work and electrical wiring work) and work relating to the installing of fixtures or fixed apparatuses (for example for the heating or cooling of water, air ventilation or the filtration of water in a swimming pool) in connection with the dwelling are specifically included as “Residential Building Work“.

Dwelling” means a building or portion of a building that is designed, constructed or adapted for use as a residence.  If constructed for use in conjunction with a dwelling, swimming pools, spas, garages and car ports, decks, pergolas, workshops, driveways and paths, retaining walls, fences and gates also fall within the definition of “dwelling“.

Please note that the above definitions are not exhaustive.

Are the Contracting Requirements Always the Same?

While some contracting requirements apply to all contracts for residential building work, other requirements and the effect of various provisions of the Act differ depending on the price or estimate of costs of the works to be performed.

As set out below, the requirements vary depending on whether the price of the works will be:

  1. not more than $5,000.00 (inclusive of GST),
  2. more than $5,000.00 (inclusive of GST) but not more than $20,000.00 (inclusive of GST), or
  3. more than $20,000.00 (inclusive of GST).

Exemptions from Contracting Requirements

The requirements for contracts for residential building work detailed below do not apply:

  1. where there would likely be a hazard to the health or safety of any person or to the public or to be damage to property if the work were not done promptly and the work could not be done promptly if the contracting requirements were to be complied with before commencing the work (Section 6(2)), or
  2. to a contract that is made between parties who each hold a Contractor License where each of the parties’ Contractor Licenses authorise the party to contract to do that work or a Contract to do specialist work that is not also residential building work (Section 7(8), Section 7AAA(5)).
Requirements Applicable to All Residential Building Contracts
Residential Building Contracts where the Price Exceeds $20,000.00 (incl. GST)
Residential Contracts where the Price Exceeds $5,000.00 but not $20,000.00
Residential Building Contracts for Works less than $5,000.00

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Disclaimer

The above information is intended as a guide only and does not address all types of contracts regulated by the Home Building Act or Regulation.  This information in no way constitutes or substitutes legal advice.  Roberts Legal accepts no responsibility for any actions taken or not taken on the basis of the information above.

You should obtain specific legal advice on any matters of interests arising from this article.

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