Important Information for Builders and Owner-Builders
From 20 November 2003 the Housing Indemnity Act 1992 is amended in the following way:
* Threshold limit for building work - increased from $5,000 to $12,000;
* A deposit of 10% can be charged for building work valued at less than $20,000 - only 3% deposit can be charged for building work valued at $20,000 or more;
* Value of insurance is increased from $50,000 to $200,000; and
* Homeowners can only claim on a housing indemnity policy upon the death,
disappearance or insolvency of the builder - previously a homeowner could claim for a loss even if the builder was still trading.
Builders
If a builder carries out building work valued at $12,000 (from 20 November 2003) or more on a residential property on behalf of an owner, he/she must:
* take out an Housing Indemnity policy with an approved insurer; and
* give a copy of the insurance certificate to the local Council when applying for
building approval.
Building work includes:
* building a new house on behalf of an owner, or building a house on land owned by the builder which is to be sold or let;
* extending or renovating an existing house;
* carpentry and joinery work (including built-in wardrobes);
* wall or roof cladding; window replacement; kitchen packages; and
* the dismantling, removal and installation of a relocated building.
Housing Indemnity
Where a builder has died, disappeared, or has become insolvent, homeowners may claim on their Housing Indemnity insurance for loss arising from:
* building work not being completed; and
* defective building work caused by the builder.
The cover commences when the building work starts and extends for six years after completion of the building work.
Approved Insurer
Only insurers approved by the Minister can offer Housing Indemnity Insurance.
Telephone Consumer Affairs and Fair Trading on 1300 65 44 99, or visit the web site www.consumer.tas.gov.au for information on approved insurers.
Owner-Builders
A person who carries out building work on his or her own house is not required to take out a housing indemnity policy.
This includes an owner who employs subcontractors to carry out the building work.
The Act does not provide protection against faulty work or the failure to complete work by owner-builders as they have elected to take responsibility for the building work carried out.
An owner-builder must arrange housing indemnity insurance if any building work
performed on the house to a value greater than $12,000 was completed up to six years prior to the date of the sale.
Owner-builders will need to have building work inspected by a qualified person before an insurer will provide insurance cover. An approved insurer will provide more
information.
Prior to sale the owner-builder must provide to a prospective owner a copy of the
inspection report and the certificate of insurance obtained from the approved insurer.
If an owner-builder does not provide the certificate and inspection report to a prospec-tive purchaser before entering into a contract, the purchaser may avoid the contract.
