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We are asked regularly “Can Owner Builders sign a contract without Warranty Insurance?”

Yes and No. Let me explain.

Owner Builder Warranty - Can you sign a contract of sale without Owner Builders Warranty Insurance

We are asked regularly “Can Owner Builders sign a contract without Warranty Insurance?”

Yes and No. Let me explain.

BUILDING ACT 1993 – Sect 137B Offence for Owner -builder to sell building without report or Insurance

CL 19 of the Ministerial Order S98 says:

  1. Required Insurance

Before entering into an insurable contract of sale of a building, the owner builder must ensure that: (a) a policy is issued that complies with this order (except Part 2); and (b) the policy covers the domestic building work on that building.

So yes, the Owner Builder does not need to provide Warranty, but some owner builders wait until they have a buyer, who has signed the contract, then purchase Owner Builder Warranty.

The problem with that is-

137B (2) A person who constructs a building must not enter into a contract to sell the building under which the purchaser will become entitled to possess the building (Or to receive the rent and profits from the building)within the prescribed period unless-

(b) the person is covered by the required insurance (if any); and

(c) the person has given the purchaser a certificate evidencing the existence of that insurance;

Under the above, insurance is required prior to entering into a contract and;

137B (3) A contract entered into contravention of subsection (2) is not void by reason only of the contravention but is voidable at the option of the purchaser at any time before completion of the contract.

So, if you want to wait until after you have a signed contract, you run the risk of losing the sale, if the purchaser withdraws and there is nothing you can do!

Make sure you fully understand the repercussions of NOT taking out Owner builder Warranty prior to signing the contract.

What Documents are required to obtain Owner Builder Warranty:

  • Building Permit
  • Certificate of Final Inspection or Occupancy Certificate
  • 137B Owner Builder Defects Report
  • Completed Owner Builder Application Form – available from our office
  • Copy of Photo Identification

For further details please call 1300 309 237

 

 

 

Thank you to AOBIS for providing this informative information

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