Licensing requirements | Statutory warranties | Residential building insurance | Remedies

In the ACT the primary pieces of legislation dealing with the regulation and licensing of the building industry are:

In the ACT, a residential building to which the Building Act applies is 'a building intended mainly for private residential use, or a part of a building, if:

  • the building has no more than 3 storeys at any point, excluding any storey used exclusively for parking; or
  • for a part of a building—the part provides structural support, or is a structurally integral adjunct, to the building.'

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Licensing requirements

Who can obtain a licence?

The COA Act sets out licensing requirements for construction practitioners who provide, have provided or propose to provide a construction service. A construction service is the doing or supervision of work in a construction occupation including building.

A person, corporation or
partnership may apply to be licensed in a construction occupation (including building).

The application must be accompanied by information as to the applicant's fitness, ability and capacity to complete any work to be authorised by the
licence. A licensee must have obtained appropriate certificates and have the necessary experience. The precise requirements depend on the class of licence sought by the builder.

Can a licence be suspended?

A licence will be automatically suspended for a period of three months in the following circumstances:

  • where the licensee is bankrupt or applies to take the benefit of any law;
  • where the licence is held by a corporation and it is wound up or is found guilty of certain offences relating to fraud, dishonesty or violence; and
  • where the licence is held by a partnership and where one of the partners licences is suspended or if a partner is found guilty of certain offences relating fraud, dishonesty or violence.

What disciplinary action can be taken against a licensee?

There are a number of grounds under which the registrar can take disciplinary action against a licensee. These include:

  • where the licensee knowingly or recklessly gives a person information that was false or misleading in a material particular;
  • the licensee commits an offence involving fraud, dishonesty or violence and the offence is punishable by imprisonment for at least one year;
  • where the licensee is a corporation or partnership, the licensee has no nominee; and
  • where the licence has been automatically suspended and the cause of that suspension still exists.

Where a disciplinary ground exists the registrar may give the licensee a disciplinary notice containing details of the contravention. Subject to any dispute about the grounds for disciplinary action the registrar may take disciplinary action against the licensee which includes:

  • reprimanding the licensee;
  • ordering the licensee undertake further training;
  • imposing certain conditions on the licence;
  • ordering the licensee to pay a financial penalty;
  • suspending the licensee's licence; and
  • cancelling the licensee's licence and disqualifying the licensee from applying for a further licence for a set period of time.

What is an offence under the COA Act?

The following are offences under the COA Act punishable by fines:

  • pretending to be licensed;
  • not having a nominee whilst advertising to conduct a service;
  • advertising without providing details such as the licensee's name, licence number and ACN;
  • not having a licence or not having a licence allowing certain work to be performed;
  • a person recklessly engages an employee or subcontractor who does not have a licence and the person; or
  • the licensee contravenes a condition of the licence.

Demerit points

The ACT also has a system of demerit points. If a builder incurs 15 demerit points in a three year period the registrar may decide to suspend or cancel the licence or take such other action as is appropriate in the circumstances. Demerit points will be accumulated where a builder has engaged in conduct which attracts the jurisdiction of the ACT Civil and Administrative Tribunal. The number of demerit points depends on the nature of the conduct.

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Statutory warranties

The Building Act requires that every contract to carry out residential building work to which the builder is a party, will contain various statutory warranties regarding the manner in which the work will be performed and the materials used. These are that:

  • the work has been or will be carried out in accordance with the Building Act;
  • the work has been or will be carried out in a proper and skilful way and in accordance with the approved plans;
  • that good and proper materials for the work have been or will be used;
  • where the work has not been completed, and the contract does not state a date or a period for completion, that the work will be carried out with reasonable promptness; and
  • if the principal of the land expressly tells the builder what the particular purpose of the work is, or the result that they expect the work to achieve, showing that the owner is relying on the builder’s skill and judgment, then the work and any material must be reasonably fit for the purpose that they may be reasonably expected to achieve that result.

The statutory warranties expire six years after the completion date for work of a structural nature and two years after the completion date for work of a non-structural nature. A successor in title has the benefit of the statutory warranties for the specified period. The statutory warranties do not apply to work for which an owner-builder's licence has been granted.

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Residential building insurance

Before a commencement notice will be issued the Building Act requires a builder to make sure an insurance policy is obtained for the work.

Where the principal is a developer, the insurance will comply if it insures the principal's/developer's successors in title, even though it does not insure the principal/developer.

The Building Act provides that an insurance policy issued for residential building work may exclude claims other than where the builder is
insolvent, dead or has disappeared. Therefore, in any other circumstance a consumer will be required to make a claim against the builder itself through the court system.

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In the ACT, disputes relating to administrative issues, such as a decision not to issue a certificate of occupancy, may be brought before the ACT Civil and Administrative Tribunal.

General disputes in relation to
breach of contract or negligence may be resolved in a court of appropriate jurisdiction.

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Updated 14 July 2014