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Chapter 14 - Building industry regulation
Building industry regulation - QLD

BUILDING INDUSTRY REGULATION

QUEENSLAND

Licensing | Contract formalities | Statutory warranties | Insurance | Remedies

In Queensland the primary piece of legislation regulating the building industry is the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).

Licensing

All builders must be licensed under the QBCC Act whether they perform domestic building work or commercial building work. The QBCC Act and the Regulations list 72 classes of licence, which may be issued in four categories: contractor, nominee supervisor, site supervisor and fire protection. A licence may be issued authorising a licensee to carry out all classes of building work, or be restricted to one or more of the classes of building work.

Who is entitled to a licence?

An applicant must:

be fit and proper to hold a licence;
have qualifications and experience relevant to the licence class;
meet the relevant financial requirements;
be able to lawfully work in Queensland;
pay the appropriate annual licence fee; and
not fall into one of the exclusions under the QBCC Act.

Where a licensee fails to meet one of these requirements, the Queensland Building and Construction Commission may cancel or suspend their licence. The decision to suspend or cancel is reviewable by the Queensland Civil and Administrative Tribunal (QCAT).

Who must have a licence?

All persons who 'carry out', 'undertake,' or 'cause' building work (including building work services) to be carried out are required to hold a licence under the QBCC Act (except if they perform building work excluded from the ambit of the Act by Regulation). 'Building work services' includes management, advisory, administrative or supervisory services. The definitions are intentionally broad and are designed to require all persons involved in building to hold a licence.

Consequences of doing work without a licence

An unlicensed person who carries out building work acts unlawfully and is subject to a monetary penalty.

Further, a person who carries out building work without a licence of the appropriate class:

is not entitled to any monetary or other consideration for doing so; and
is not entitled to utilise the Building and Construction Industry Payments Act 2004 (Qld).

Contract formalities

Commercial building contracts

Part 4A of the QBCC Act regulates building contracts other than domestic building contracts.

Part 4A:

requires all building contracts to be in writing;
contains provisions regulating giving directions;

sets out limits for retention amounts and securities for contracts and subcontracts;

sets out requirements for notification before exercising set off rights;

regulates the suspension of works;
imposes penalty interest rates for late progress payments;

makes payment provisions void if they provide for progress payments later than 15 business days after submission of a payment claim for construction contracts and later than 25 days for subcontracts; and

contains special provisions for construction management trade contracts and subcontracts and commercial building contracts.

Penalties for breaches of specific provisions of Part 4A are set out in the relevant sections.

Domestic building contracts

Domestic building work is defined as:

the erection or construction of a detached dwelling;
the renovation, alteration, extension, improvement or repair of a home;
removal or resiting work for a detached dwelling; or
the installation of a kit home on a building site.

A detached dwelling is a single detached dwelling or duplex. However, the Court of Appeal in Queensland has held that the singular includes the plural with the consequence that consumer protection provisions apply to contracts for the construction of multiple houses.

Domestic building contracts are regulated under schedule 1B of the QBCC Act.

There are two levels of regulated contract:

level 1 where the contract price is between $3,300 and $20,000
level 2 where the contract price is $20,000 or more.

The building contractor must ensure that a level 2 contract:

is in written form dated and signed by the parties;
contains a description of the works and includes all plans, specifications and approvals;

states the names of the parties and licence number of the builder;
sets out the implied statutory warranties (see Statutory warranties below);

specifies dates, including the date for commencement and completion;
includes the price, or how the price will be determined and a warning as to how the price may change; and
contains a conspicuous notice informing the building owner of the right to withdraw from the contract.

In addition to including the specific terms listed above, the building contractor must also provide:

the consumer building guide (before the owner signs);
details of delays affecting time estimates;
copies of the contract and contract related documents; and
any relevant foundation data (information which may adversely affect the footings or slab).

Cooling off period

Schedule 1B provides for a cooling-off period, which gives the consumer the option to withdraw from the contract within five days of receipt of the signed contract or of receipt of the consumer building guide,, except where legal advice has been obtained or where the parties have previously entered into a similar contract.

Consequences of non-compliance with schedule 1B of the QBCC Act

Monetary penalties apply for a failure to comply with many of the requirements of schedule 1B of the QBCC Act.

Statutory warranties

The following warranties are implied into every contract for domestic building work:

that all materials supplied will be good and suitable for the purpose for which they are used;

that all materials supplied will be new (unless otherwise stated in the contract);
that the work will comply with all relevant laws and legal requirements;
that the work will be carried out in an appropriate and skilful way and with reasonable care and skill;
that once the work is completed, the detached dwelling or home will be suitable for occupation;
that the work will be carried out in accordance with any plans or specifications (as the case may be);

that any provisional sum has been calculated with reasonable care and skill, having regard to all the information reasonably available when the contract is entered into; and

that the work will be carried out with reasonable diligence, if the contract is a cost plus contract and does not have a stated completion date or period.

Warranties cannot be excluded from a contract for domestic building work. Any provision of an agreement that seeks to exclude a warranty is void. The original consumer and subsequent building owners can enforce the statutory warranties.

The statutory warranties apply for:

six years and six months from the date the work is finished (eg. six years six months from practical completion of the work); or

for incomplete work, the stated completion date or period specified in the contract.

Insurance

Part 5 of the QBCC Act sets up a compulsory statutory insurance scheme known as the Queensland Home Warranty Scheme (Scheme). The Scheme requires all builders carrying out residential construction work directly for a home owner with a value of over $3,300 to arrange for appropriate home warranty insurance to cover the work for the benefit of the consumer and subsequent owners of the work.

'Residential construction work' is defined in detail in the Queensland Building and Construction Commission Regulation 2003 (Qld) and includes construction of a new home as well as renovations or extensions.

The scheme provides protection against:

non-completion of the work covered by the contract;
defective construction;
subsidence or settlement of insured work; and
acts of vandalism or forcible removal and fire, storm or tempest.

The insurance is effective for 6 years and 6 months from the date the contract is signed or the date of payment of the insurance premium or the date of commencement of construction (whichever is the earlier). The statutory policy (the terms of which have varied over time) sets strict time limits for notification of claims.

Remedies

The Queensland Building and Construction Commission provides consumers with assistance in resolution of disputes with licensed building contractors.

The Commission performs a disciplinary function and may prosecute builders (licensed or unlicensed) in either the Magistrates Court or QCAT.

Domestic building disputes may be resolved in a Court of appropriate jurisdiction or QCAT. The Commercial Arbitration Act 2013 (Qld) does not apply to domestic building disputes.

Updated October 2016