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Builders Licences and Requirements

Builders Licence Issues

We have become aware of some builders who are operating outside of the conditions put on their builders licence and that should be checked by anyone engaging a builder to undertake building works.

The Department of Fair Trading provides a builders licence, but that licence may have restrictions or conditions placed on it. For example a small builder may be able to build an individual home or addition, but cannot construct a unit building without providing evidence that he has the expertise and finance capacity to undertake such a project.

Some builders will have a condition on their licence that they cannot undertake works where insurance under the Home Building Compensation Fund is required. That is work less than $20,000. A builder cannot enter into more than 1 contract for a project such a splitting of the contract sum.

A builder may well have a full licence when signing a contract, but that can be changed to a restricted licence for a number of reasons. That can include matters brought before NCAT or the builder’s financial position has changed and he may not be able to finance a pending project. While the Home Building Compensation Fund will assist with building works, there are limitations that may affect a payout to complete the works.

Builders Licence Disputes

We have been involved in disputes where the builder has a restricted licence but has undertaken a contract and works for over $250,000. The reason for the restriction was that he had limited expertise and building knowledge and in a larger project this showed up with sub- standard work.

A builder’s licence is required for any building work over $5,000 inclusive of labour and materials. Contracts are required for all building work over $5,000.

A builders warranty is now limited to 2 years for general defects and 6 years for major defects.

The Department of Fair Trading is now taking action against builders who do not have the correct or adequate licence. Where proven, the Fair Trading will impose fines for the first offence. For a second or subsequent offence, the Fair Trading can impose a prison sentence and the contract may not be enforceable.

The advice is to check first on the Department of Fair Trading website that the builder or contractor is adequately licenced to undertake any building work.

If you have further questions or concerns then contact us below.


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