The Law Handbook 2024

Chapter 6.3: Building or renovating a house 571 Consumers can search the database on the website of the VictorianManaged Insurance Authority (VMIA) at https://dbi.vmia.vic.gov.au/Builder-search) to con­ firm that their builder is eligible for insurance. Owner–builders are not required to carry home warranty insurance unless they sell their home within six-and-a-half years of the date of the occupancy permit. At that time, they must apply for insurance. This requires an inspection report by a registered building inspector. Other insurance Consumers should insist that their builder is covered by contract works and public liability insurance. This insurance normally covers damage to the works (e.g. by fire), liability to others such as neighbours arising during the work, and injury to others arising from the works. Consumers should check these policies to ensure they are named or included in the coverage provided by the policies. Completing works Completion It is important for consumers to ascertain when the contract requires the works to be concluded and compare that date to when the works are actually completed by the builder. Consumers should carefully review their contracts to ascertain what stage and quality the builder must achieve for the works to be concluded. In some contracts the finish date is described as ‘practical completion’ and it is defined as the stage when works have been substantially completed except for minor defects. In other contracts the completion of works is determined by the building surveyor issuing an occupancy permit or Certificate of Final Inspection. Most contracts provide that the works are deemed complete when the consumer assumes occupation of the home. Accordingly, consumers should not hurry to move in, especially in circumstances where a certificate of occupancy has not yet been issued by the building surveyor. Section 42 of the DBC Act provides that a builder must not demand final payment until the work has been completed in accordance with the plans and specifications and the consumer receives an occupancy permit or certificate of final completion, issued by the building surveyor. Consumers should keep a careful record of all claims, documentation and correspondence generated by the building project. Ensure any trade certificates, warranties, manuals and keys are provided on completion of the work. Defects liability period Most contracts provide a period, usually 13 weeks from the completion of the work, during which the consumer can require the builder to return and repair defects. Not all contracts contain such a provision; check your contract and ensure you can require the builder to return and repair defects. Once consumers assume occupation of their new home, they should list all defects and provide these lists to the builder in accordance with the provisions in the contract. Be wary of assuming occupation in cases where major defects exist. It may be difficult to get the builder’s cooperation after final payment. Ending a building contract Contractual provisions Terminating a contract is a serious matter. Consumers shouldobtainlegaladvicebeforeterminatingacontract. Most contracts provide a procedure for termination that must be strictly followed. Normally the procedure requires the consumer to notify the builder in writing of breaches of the contract and require the builder to remedy the breaches within a certain period of time. If the breaches are not remedied within that period of time the consumer is then required to deliver a second notice terminating the contract. A consumer who fails to strictly follow the contractual procedures for the termination of a contract may later be found to have wrongfully terminated the contract and be liable for damages to the builder. For this reason, get legal advice before terminating a building contract (see Chapter 2.1: Legal representation). All contracts entitle the builder to terminate the contract in certain circumstances. Domestic Building Contracts Act Under section 41 of the DBC Act, a consumer may terminate a major domestic building contract if either the contract price rises by 15 per cent or