Western Australian Current Regulations Western Australian Current Regulations[r. 3]
Home Building Contracts Act 1991
NOTICE FOR THE HOME OWNER
This notice
A builder must give a copy of this notice to you, as the owner, before you
sign a contract for home building work that is covered by the Home Building
Contracts Act 1991 .
This notice explains relevant provisions of that Act as required by
section 4(2). The Act itself should be referred to for the exact text. A
copy of the Act can be accessed electronically at
Who are “owners” and “builders”?
In this notice “owner” means the person for whom the home building
work is to be done and “builder” means the person who, in the
course of business, is to do the work or arrange for it to be done.
What the Act covers
The Act deals with contracts for home building work where the contract price
is above $7 500 and below $500 000. The Act also applies to
contracts, within that price range, for associated work (e.g. swimming
pools, carports and landscaping) and for alterations. It makes some
provisions that are implied in all contracts, and also states what is not
allowed in any contract.
Under the Act a builder must not do anything in connection with a contract
that is “unconscionable, harsh or oppressive”. Furthermore,
neither you nor the builder may do anything that is “misleading or
deceptive”.
The Act deals with “cost plus” contracts only to a limited extent
— see later in this notice under “Special rules for cost
plus contracts” .
You may seek appropriate redress through the Building Commissioner for
breaches of the contract and the Act, including for unconscionable or
misleading conduct — see later in this notice under
“Disputes” . The builder’s rights are similar, but do not
extend to any unconscionable behaviour by you.
A person can be prosecuted or fined for not complying with some provisions of
the Act. Some of these provisions apply to owners as well as builders.
Rights conferred by the Act cannot be taken away, diminished or waived and it
is forbidden to make any agreement or arrangement to by‑pass the Act.
Home indemnity insurance
It is compulsory for all home building work except associated work alone
(e.g. swimming pools, carports, pergolas and landscaping), the cost of
which is above $20 000, to be covered by home indemnity insurance.
Home indemnity insurance is also compulsory for associated work if that work
is performed under a contract that includes construction or renovation of a
residence and the total cost of all the building work is above $20 000.
Before commencing work or demanding any payment (including a deposit) from
you, the builder must take out home indemnity insurance and give you a
certificate confirming the existence of the insurance cover.
There may be periods when a builder is exempt from the requirement to take out
home indemnity insurance. During, and in some circumstances after, one of
these periods a builder must give you a notice in a prescribed form.
Home indemnity insurance will protect you and any successive owners against
financial loss due to the insolvency, death or disappearance of the builder
that results in —
(a) loss
of deposit (up to a limit of $40 000);
(b) the
non‑completion of the building work; or
(c) the
failure to rectify faulty or unsatisfactory building work.
Home indemnity insurance generally does not cover an owner for any money paid
in advance other than a deposit. In any event it is a breach of the Act for a
builder to request and receive such a payment — see later in this
notice under “Provisions that are not allowed” .
Note that, with building work carried out under a cost plus contract, the
builder is required to take out home indemnity insurance to cover only the
risk specified in (c) above — see later in this notice under
“Special rules for cost plus contracts” .
Claims may be made under a home indemnity insurance policy at any time before
the end of a period of 6 years after the day of practical completion of
the building work.
Some home building work is exempt from the requirement to obtain home
indemnity insurance. If your work is exempt your builder should give you a
notice informing you that this is so. The Building Commission staff can
provide you with further information in this respect.
Contract — steps to be followed
Everything agreed to between you and the builder must be set out in a written
contract. The contract must be dated and signed by both you and the builder or
your respective representatives . If this is not done you may terminate the
contract — see later in this notice under “Termination of
contract” .
You must be given a copy of the contract as soon as is practicable after it
has been signed and before the building work starts.
It is the builder’s duty to see that all these steps are taken.
Special rules for cost plus contracts
A “cost plus” contract is one under which the builder is entitled
to recover actual costs incurred plus an extra amount for profit. A costs plus
contract —
(a) must
be headed “cost plus contract”; and
(b) must
contain a statement in which both you and the builder acknowledge that it is a
cost plus contract and that the Act does not apply to it, except in relation
to the requirement for a builder to take out home indemnity insurance in the
situation explained just below.
If the contract does not comply with these requirements you may terminate the
contract — see later in this notice under “Termination of
contract” .
As mentioned above, the Act does not in general apply to a cost plus contract.
However, if you have a complaint about the building work carried out under
such a contract, you can make a complaint to the Building Commissioner about
the work — see later in this notice under “Disputes” .
The builder is required to take out home indemnity insurance in relation to a
cost plus contract to cover you and any subsequent owner against financial
loss where an order made against the builder is not enforceable due to the
insolvency, death or disappearance of the builder.
Provisions that are not allowed
The builder cannot include in a contract a requirement for you to make a
payment other than —
(a) a
deposit before the work begins of —
(i)
if the Home Building Contracts Regulations 1992
regulation 3A applies to the contract — no more than 20% of
the contract price; or
(ii)
otherwise — no more than 6.5% of the contract
price;
and
(b)
progress payments after the work begins for work done or goods supplied.
If any such provision is included you may terminate the contract —
see later in this notice under “Termination of contract” .
The builder may also be prosecuted and fined for demanding, or receiving, any
payment after the work begins other than a progress payment as set out in (b)
above.
The builder must not include provisions in the contract that are
“unconscionable, harsh or oppressive”. If you think this has
occurred, you may make a complaint to the Building Commissioner —
see later in this notice under “Disputes” .
Prime cost/Provisional sum
Where a contract refers to “prime costs” it means fittings or
equipment that may vary in price (e.g. bathroom tiles). The builder must
estimate the cost of such items at or above the lowest amount that they could
reasonably cost and the cost must not be understated in the contract. If it
is, the builder may be prosecuted and fined. This also applies to estimates
for “provisional sums” such as site works.
Contract price must be fixed
A contract must not contain a “rise and fall” clause. A rise and
fall clause allows the builder to pass on price increases for labour or
materials that occur after the contract is signed.
However, the builder can include a clause in the contract that allows for a
price increase to cover an increase in actual costs that results from
—
(a)
government taxes or charges increasing after the contract is signed;
(b) the
builder having to comply with a State or Commonwealth law; or
(c) work
not starting within 45 working days after the contract is signed if the delay
is not caused by the builder.
If (c) applies and the price rise is more than 5%, you may terminate the
contract within 10 working days of receiving written notice of the
increase — see later in this notice under “Termination of
contract” . You can also choose to make a complaint to the Building
Commissioner within this period.
Varying the contract
1. Steps to be followed
All changes to the building work to be carried out
under a contract, including the cost of the change, must be put in writing and
be dated and signed by both you and the builder or your respective
representatives.
A copy must be given to you as soon as is possible
after both you and the builder have signed, and before the start of the work
that results from the change.
The builder must ensure that these steps are
taken.
2. Exceptions
Certain changes may be made without these steps
being taken, namely —
(a)
changes resulting from directions given by a building surveyor or other person
acting under a written law;
(b)
changes arising from unforeseen circumstances (but this does not include
unforeseen labour or material cost increases).
Note also the changes by way of price increase
that are referred to above under the heading “Contract price must be
fixed” and below under the heading “Where approvals are
delayed” .
3. Protection that you have as an owner
If any change referred to in paragraph (a) or
(b) immediately above occurs, the builder must give you certain information in
writing — see section 8(1), (2) and (3) of the Act. Note that,
if you and the builder have a dispute about whether particular circumstances
are “unforeseen circumstances” and you wish to make a complaint to
the Building Commissioner, you must do so within 10 working days after this
information is given to you.
Where approvals are delayed
A contract is conditional on —
(a) a
building permit and the Water Corporation’s approval being obtained
within 45 working days from the date of the contract; and
(b) the
written acceptance within that period by both you and the builder of any
condition attached to the building permit or the Water Corporation approval
that will vary the contract.
Note that contracts that are only for associated work (e.g. swimming pools,
carports and landscaping) are not subject to these conditions.
Both you and the builder must do what you reasonably can to ensure that these
conditions are met. If they are not met, the rights of the parties depend on
whose fault it was that the condition was not met within the 45 day
period.
|
Builder at fault |
Owner at fault or neither or both parties at fault |
|---|---|
|
Contract remains in force on the same terms and conditions unless you and the
builder agree otherwise. |
Contract remains in force on the same terms and conditions until you and the
builder agree otherwise but — |
| |
(i) the builder may by written notice increase the
contract price; |
| |
(ii) if the increase exceeds 5% you may terminate
the contract within 10 working days after receiving the notice provided you
compensate the builder for all reasonable costs incurred up to the date of
termination — see below under “Termination of contract”
; |
| |
(iii) you may, within 10 working days after
receiving the notice, make a complaint about the matter to the Building
Commissioner. |
Defects — making good
Any defect in work done or materials supplied under a contract must be made
good by the builder if the builder is notified of the defect within
4 months (or a greater period if provided for in the contract) after
practical completion of the building work.
However, you and the builder may agree in the contract that particular defects
are excluded from this provision.
Inspection
A builder must not prevent you (or a person authorised in writing to represent
you) or your lending institution from inspecting the building work as allowed
by the contract or by regulations under the Act. A contract cannot restrict
inspections except by limiting them to normal working hours or forbidding
inspections that would unreasonably impede or interfere with the building
work.
Termination of contract
In various places above it is stated that you can terminate the contract for a
particular reason. To do this you must give notice in writing to the builder
before the building work is finished.
If a contract is terminated, you may make a complaint to the Building
Commissioner claiming financial adjustments between you and the builder.
Disputes
1. Contracts generally
You can make a complaint to the Building Commissioner under the Building
Services (Complaint Resolution and Administration) Act 2011 if there is a
dispute between you and a builder about a contract that falls within the Act.
Such a complaint to the Commissioner must be made within 3 years from
when you became entitled to take legal action.
There are monetary limits on orders that can be made under that Act. The
limits are $100 000 if an order is made by the Building Commissioner and
$500 000 if the order is made by the State Administrative Tribunal
following a referral by the Building Commissioner.
2. Standard of services
You can make a complaint to the Building Commissioner under the Building
Services (Complaint Resolution and Administration) Act 2011 about certain
building services not being carried out in a proper and proficient manner or
being faulty or unsatisfactory.
Such a complaint to the Commissioner must be made within 6 years from the
time the building service is completed. The building service is
completed —
(a) if
the building service is carried out under a building permit, when a notice of
cessation or a notice of completion in relation to the permit has been given
to the relevant permit authority;
(b)
otherwise, on the date on which the building service was last carried out.
There are monetary limits on orders that can be made under that Act. The
limits are $100 000 if an order is made by the Building Commissioner and
$500 000 if the order is made by the State Administrative Tribunal
following a referral by the Building Commissioner.
3. Procedure
Before you make a complaint to the Building Commissioner about a contract that
falls within this Act, written notice that you propose to make a complaint
must be given to the other party together with a description of the remedy
that you propose to seek and the evidence on which you propose to rely. You
must provide a copy of that notice to the Building Commissioner at the time of
making a complaint.
Advice on how to make a complaint to the Building Commissioner and related
matters may be obtained from Building Commission staff or from the Building
Commission’s website at www.buildingcommission.wa.gov.au.
[Schedule 1 inserted: Gazette
2 Sep 2003 p. 3924‑30; amended: Gazette
29 Jun 2007 p. 3191‑2; 8 May 2012
p. 1888-91; 12 Feb 2013 p. 921; SL 2020/66 r. 5;
SL 2022/172 r. 5.]
[Schedules 2‑8 deleted: Gazette 2 Sep 2003 p. 3930.]