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Building indemnity insurance
This is insurance taken out by building work contractors when performing domestic building work costing $12,000 or more that requires council approval. This includes when you are:
- building a house
- doing renovations
- building an extension.
Before work begins, a copy of the certificate of insurance must be given to the building’s owner or their agent and the local council. A claim can be lodged against this insurance up to five years from the date the building work was completed.
This insurance can only be taken out by a person or company that holds a builder’s licence.
Domestic building contracts
A written contract must be drawn up for any building work valued at $12,000 or more. This contract must:
- be in writing
- set out all terms and conditions
- show your business name and licence number
- be signed by the contractor and the owner or their agents
- stipulate a fixed price, a rise and fall clause if appropriate, and payment terms.
A copy of the building contract rights and obligations (form one) must be given to the building owner or their agent along with the contract. This provides information about:
- building indemnity insurance
- cooling off rights
- pricing information - eg rise and fall clauses.
Some contract clauses that you can include in the contract include:
- rise and fall clauses - these allow you to pass on increases or reductions in the cost of performing work after the contract has been signed - eg for materials
- prime cost items - this allows you to charge the building owner for items that are of a higher standard than those that would normally be provided - eg kitchen stoves
- provisional sums - fair and reasonable estimates of the cost of carrying out particular aspects of the building work - eg earthwork costs to level a site.
You are legally required to provide certain warranties when performing domestic building work. Regardless of the terms of the contract the work must:
- comply with plans, specifications and all legal requirements
- be completed within a reasonable timeframe
- consist of good and proper materials
- be fit for human habitation if constructing a house
- be performed with reasonable diligence.
Claims against these warranties can be made up to five years after the work was completed. You are liable for any defective building work for ten years.
More information about statutory warranties is available on the Consumer and Business Services website.
Advertising and signage
When advertising you must include:
- your name or registered business name as it appears on your licence, and
- your licence number or numbers if in partnership.
You don’t need to include these details on advertising aimed solely at other building work contractors or if you are offering employment.
A sign must be placed in a prominent position on every building site you are working on unless you are employed as a sub contractor.
Statements of compliance
Licensed contractors are responsible for issuing statements of compliance for building work that requires approval.
Any questions about these statements should be directed to the local council or to Planning general enquiries.
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