Lockdown has seen many property owners take advantage of the stay at home rule. Some property owners have chosen to undertake well overdue repairs to their homes. Some have gone all out and undertaken major works on their homes.
Unfortunately, we know that some owners have been struggling financially and are not sitting in a good position with their mortgagees.
As conveyancers we need to know what works if any have been undertaken on the property before completing and releasing the Vendor Section 32 Statement to the client for review and certainly before it is released to the agent.
We also know that Section 137B of the Building Act requires that a Vendor provide a defects inspection report of not more than six months old for all work including extensions, renovations, garages, verandahs, and pergolas regardless of the value of that work.
The warranty insurance is required when the value of the work exceeds $16,000.00. The insurance would cover non-structural defects for a period of two years and other defects for a period of six years and six months.
So who should provide the owner builder’s defects inspection report when the owner builder has died?
S137B 5AA confirms that a person who constructs a building includes:
“..an executor or administrator of the estate of the person who constructed the building..”
Or where the mortgagee has taken possession of the property on which owner builder works have occurred and is proposing a sale of it?
137B 5AA confirms that a person who constructs a building includes:
“a mortgagee in possession of the land on which the building is situated..”.
As a reminder and in an attempt to avoid a Professional Indemnity Insurance Claim Section 137B states:
(2) A person who constructs a building must not enter into a contract to sell the building under which the purchaser will become entitled to possess the building (or to receive the rent and profits from the building) within the prescribed period unless—
a) in the case of a person other than a registered building practitioner—
i. the person has obtained a report on the building from a prescribed building practitioner that contains the matters that are required by the Minister by notice published in the Government Gazette; and
ii. the person obtained the report not more than 6 months before the person enters into the contract to sell the building; and
iii. the person has given a copy of the report to the intending purchaser; and
b) the person is covered by the required insurance (if any); and
c) the person has given the purchaser a certificate evidencing the existence of that insurance; and
(3) A contract entered into in contravention of subsection (2) is not void by reason only of the contravention but is voidable at the option of the purchaser at any time before completion of the contract.
Ask clients relevant questions in relation to building works and ensure the Vendor Statement is equipped with a copy of the required Owner Builder Inspection Report supplied by the Registered Building Inspector or other authorised person.
AIC Vic President