Home building laws in every state or territory ensure tradespeople are appropriately qualified for the work they perform on residential properties. However, the home building laws do not cover all trades. If you are a tradesperson in Western Australia (WA), the Home Building Contracts Act 1991 (WA) (“the Act”) may apply to you. This article will explain when and how you comply with home building laws in WA.

How Does the Act Define Home Building?

The Act defines home building as two categories that include:

  1. home building work; and
  2. associated work.

Home building work means the total or partial construction or re-construction of a dwelling. That work can cover the altering, improving, repairing or placing of an existing dwelling or strata-titled dwelling. The Act defines a dwelling as a place that is intended or has been occupied for residential purposes.

Associated work includes:

  • site works;
  • swimming pools;
  • spas;
  • pergolas;
  • carports;
  • garages;
  • sheds;
  • fencing;
  • retaining walls;
  • paving;
  • driveways; and
  • landscaping.

For example, if you are installing a carport or a driveway for a block of apartments, you will likely be carrying out associated work on a dwelling which forms part of the definition of home building work.

The Act does not specify what trades are included or excluded as part of the definition of home building work. Therefore, if you carry out any of the work listed above on a residential property, regardless of your type of trade, you will have to comply with the Act. 

What Does the Act Exclude? 

The Act excludes home building contracts where:

  • the contract value is less than $7,500 or more than $500,000;
  • cost-plus contracts (with limited exceptions); or
  • the builder is then obliged to carry out works under another contract.

Cost-plus contracts involve builders charging for extra costs for performing work or acquiring materials not included in the original contract price plus an additional sum.

Therefore, if your home building contract falls outside of those exemptions, you will be covered by the Act.

Contract Requirements

The Act requires you to comply with certain contractual requirements. These points are set out in a consumer-friendly notice. You must give that notice to the homeowner when you sign the contract.  Some important requirements include:

  • ensuring the contract is in writing and dated;
  • checking if both parties sign the contract;
  • setting out any variations to the scope of work in writing and the process for addressing them; 
  • avoiding any misleading or deceptive conduct, as well as any conduct that is harsh or oppressive;
  • obtaining relevant building permits for works valued over $20,000;
  • charging a maximum deposit of 6.5% or less of the contract price;
  • issuing progress payments for work that you have completed or materials that you have purchased;
  • keeping the contract price fixed, unless the contract needs the cost adjusted to add government taxes, comply with new laws or the homeowner delays the construction for 45 or more days;
  • ensuring any estimated prices for additional items of work under the contract reflect the actual price of the items;
  • taking out home indemnity insurance and giving the homeowner a certificate that confirms the insurance cover; and
  • ensuring the contract does not contain ‘rise and fall’ clauses.

Home indemnity insurance is a policy that protects homeowners against financial loss if the builder fails to complete the work properly or cannot answer a valid claim for poor work because of death, insolvency or disappearance.

A rise and fall clause allows builders to change the contract price of a home building work to reflect future labour material costs.

Licences

Several organisations help to issue licences to tradespeople or require registration for construction work. The types of trades that require registration or a licence include:

  • builders (registration with the Building Commission);
  • building surveyors (registration with the Building Commission);
  • painters (registration with the Building Commission);
  • plumbers (licensed with the Plumbers Licensing Board);
  • electricians (licensed with EnergySafety);
  • gas workers (licensed with EnergySafety);
  • high-risk demolition workers (licence issued by Worksafe); and
  • pest controllers (licensed with the Department of Health).

For example, if you are a plumber, you will have to apply for a plumbing licence with the Plumbers Licensing Board. You can choose between six different licences. If you apply for one of the licences (such as a tradesperson licence), you have to supply evidence of your qualifications. In addition, you have to answer questions on your past disciplinary record and financial history.

Key Takeaways

The Act does not expressly exclude any trades from its coverage. Therefore, you will be covered by the Act as long as you perform home building work and associated work on buildings. The Act has many requirements and you must notify the homeowner of those points before they sign the contract. However, only certain trades require a licence or registration. If you have any questions, get in touch with LegalVision’s building lawyers on 1300 544 755 or fill out the form on this page.

Robert Nay
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