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EXPLAINED – Owner Builder Warranty Inspections & S137B of the Victoria Building Act 1993

EXPLAINED – Owner Builder Warranty Inspections & S137B of the Victoria Building Act 1993

You’re an owner builder and it is time to sell your home. The last thing you want is for your hard work to be a hindrance to potential purchasers who have reservations about quality or compliance, just because the works weren’t part of a major domestic build.

Victorian legislation states that prior to selling owner built constructions, section 137B of the Victorian Building Act 1993 requires the building work to be inspected and reported on by a licensed building practitioner. The Report then forms part of the section 32 transfer documentation at the time of sale.

If you want to sell your owner-built-house within six years and six months of completing the building work, there are two steps that must be completed to ensure a smooth sale:

  1. Provide a defects inspection report not more than six months old from a registered building inspector for all work regardless of value, including extensions, renovations, garages and verandas.
  2. Take out domestic building insurance (previously known as ‘builders warranty insurance’) for work over $16,000 to protect the person who buys your property. If a registered building practitioner carried out the work under a major domestic building contract, it should be covered by their building insurance, but you also need your own domestic building insurance to cover your work. The insurance covers non-structural defects for two years and other defects for six years. The domestic building insurance expires after six years.

An Owner Builder Warranty Inspection completed by Jim’s Building Inspections gives insurers the information they need to issue a policy for the benefit of the purchaser. Owner builder home warranty obligations vary from state to state because of differing government and insurers requirements but they are currently mandatory in VIC, NSW and WA.

Jim’s Building Inspections are experts in owner builder inspections and would identify:

  • Defective building work
  • Incomplete building work
  • Use of second hand or recycled materials

This report then goes to your insurer who issues a policy in favour of the purchaser. The policy covers the purchaser in the event you abscond or are otherwise unable to provide compensation for defects in the construction as an Owner Builder.

It sounds like a complicated process but Owner Builder Warranties are put in place to promote buyer confidence, ensure peace of mind for both Vendor and potential purchasers and facilitate smooth sales.

Section 137B legislation applies to owner builders, for work with a building permit completed within the last six years and six months. If NO permit was issued at this time, it applies to work completed within the last 10 years.

If you are an owner builder thinking of selling your blood, sweat and tears… it is worth getting in touch sooner rather than later.

Jim’s Building Inspections can be contacted on 131 546.

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