The Building Legislation Amendment (Domestic Building Insurance New Offences) Act 2024 (Vic) (Amendment Act) introduces new offences for builders and new conduct which can result in immediate suspension or disqualification. The Amendment Act commenced on 28 February 2024.
Amendments to definitions
- Builder
The definition of builder under section 3 of the Domestic Building Contracts Act 1995 (Vic) (DBCA) no longer includes people or partnerships that manage or arrange the carrying out of domestic building work.
Managing or arranging building work is now specifically listed as a type of building work covered by the DBCA and this is reflected in the Building Act 1993 (Vic) (Building Act).
- Major domestic building contract
A major domestic building contract now means a contract under which the builder will receive under the contract is more than the amount fixed by the regulations.
The previous definition referred to contract price rather than how much a builder will receive. There may be situations in which these amounts are different.
New offences under the DBCA
The Amendment Act introduces the following offences related to major domestic building contracts requiring domestic building insurance (DBI) under s 135 of the Building Act:
Offence 1:
- It is now illegal for a builder to demand or receive money from an owner (or their representative) if they know or should have known the works are not covered by DBI.
- Penalty: This offence carries a penalty of 500 penalty units for individuals ($96,155) or 2500 penalty units for a body corporate ($480,775).
Offence 2:
- It is also now illegal under the DBCA for a builder to demand or receive money from the owner (or their representative) if the builder has not ensured that the works are covered by DBI, even if they were unaware of this failure.
- This offence carries the lesser penalty of 240 penalty units for an individual ($39,652.80) or 1200 penalty units for a body corporate ($230,772).
Proceedings for either offence can be commenced by the Victorian Building Authority (VBA) or an individual authorised by the Minister or the VBA.
Ground for immediate suspension
If a builder commits either of the new offences, this is a ground for immediate suspension as a registered building practitioner.
Ineligibility for registration
If a person, body corporate or partnership is found guilty of either of the new offences, they can be from applying for registration as a registered building practitioner for up to three years.
Impact and what you need to do
When entering into domestic building contracts, keep in mind the changes to the definition of a major domestic building contract. Some contracts which were previously considered ‘minor’ may now qualify as ‘major’. There are different content requirements for major and minor contracts under the DBCA.
To avoid committing an offence, being suspended or banned from registration, it is crucial that builders ensure that DBI is taken out and remains in effect on all projects which require it.
More information
For information about this summary or for advice, please contact:
Damien Simonetti, Principal Lawyer
(03) 8600 0708 or dsimonetti@kcllaw.com.au
Author
This Construction and Infrastructure case note was authored by Felicity Irwin, Paralegal.
Note: This update is a guide only and is not intended to constitute legal advice.