You must take out domestic building insurance for all work over $16,000 - You must give your client a copy of the domestic building insurance policy before taking a deposit or starting work
Implied warranties apply by law and cannot be signed away.
Implied warranties and consumer guarantees
The law requires you to meet certain obligations when you carry out building work.
These are called ‘warranties’ in the Domestic Building Contracts Act 1995, and ‘consumer guarantees’ in the Australian Consumer Law. Consumers have similar rights under both laws.
For information about your obligations under the Australian Consumer Law, view our Consumer guarantees that apply automatically page.
Under the Domestic Building Contracts Act, the implied warranties are that you will carry out the work:
- in a workman-like manner
- with reasonable care and skill
- using materials that are suitable for the purpose
- within the date specified in the contract.
These warranties apply when you have a contract with a client, regardless of:
- the cost of construction
- whether there is a written contract.
You or your client cannot sign away their rights to the implied warranties and their protection under a domestic building contract.
The law requires builders and tradespeople to honour warranties and:
- carry out the work in a proper and workmanlike manner, in accordance with the plans and specifications set out in the contract
- ensure all materials supplied by the builder are good and suitable for the purpose and are new, unless otherwise stated in the contract
- carry out the work in accordance with all laws and legal requirements, including the Building Act 1993
- carry out the work with reasonable care and skill and complete works by the date (or within the period) specified by the contract
- ensure new homes, extensions, renovations, repairs and kit homes are suitable for occupation when completed
- ensure other types of work and the material used are fit for the intended purpose.
Implied warranties apply to all building work. The Building Act 1993 allows action to be brought against a builder for up to 10 years from the date the work was completed. This right transfers to a new owner if the property is sold within this time. For more information, seek legal advice – including if the building work is older than 10 years.
Domestic building insurance
You must take out this insurance (previously known as ‘builders warranty insurance’) for your client on works over $16,000. You must provide your client with a copy of the insurance policy and a certificate of currency covering their property before you take a deposit or any other money.
Domestic building insurance protects consumers in the event that you die, become insolvent or disappear, and cannot finish the building project or fix defects. It covers costs up to $300,000 to fix structural defects for six years, and non-structural defects for two years.
In all other cases, it is up to you to fix or complete works, or to pay any costs awarded.
For more information about domestic building insurance, visit the Victorian Managed Insurance Authority website.
Other insurance
Make sure you have all necessary insurance to cover you and your business, such as public liability insurance.