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3 Legal Considerations for Residential Building in NSW

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If you are a residential builder operating in New South Wales (NSW), the NSW residential building laws may apply to you. The laws set out certain legal requirements to guide builders and homeowners about what to expect in a residential building contractThis article will address when NSW residential building laws apply, as well as three key legal requirements that apply to residential builders. 

When Do the NSW Residential Building Laws Apply?

The residential building laws will apply if you are working on buildings designed, constructed or used as a residence. The work includes any:

  • construction;
  • alteration or addition; and
  • repairs or renovations

of the residence that you are working on directly. Additionally, the laws apply if you supervise or coordinate the work of other tradespeople at the residence. 

Typical examples of work include:

  • roof plumbing;
  • gasfitting, electrical wiring, refrigeration or air-conditioning work, whether inside or outside the home;
  • water heating or cooling system installation; or
  • air or water ventilation.

The laws will not apply to your work if the cost of labour and materials used does not exceed $5,000 or if you demolish homes. Other exceptions also apply. 

If the NSW building laws apply to you, you will have to comply with certain requirements. Three important questions to consider include:

  1. do you need a licence;
  2. what should you include in a contract; and
  3. what are statutory warranties?

1. Do You Need a Licence?

You will need a contractor licence if you are engaged in:

  • any work where the labour and materials costs exceed $5,000;
  • electrical wiring, plumbing, draining or gasfitting work; and
  • air-conditioning and refrigeration work.

You should obtain a contractor licence before supplying any of the above services. Otherwise, you may face a fine or your contracts with customers will be void. You should apply to the NSW Department of Fair Trading for your contractor licence. 

2. What Should You Include in a Contract?

You will need to provide a written contract to your customer that includes details about the work you will provide. What you should include in your contract will depend on the price of the job.

For small jobs between $5,000 and $20,000, you should include:

  • details of the parties: Include business details, your contractor licence details and the details of your customer;
  • works: Describe the scope of work in detail, including any plans or technical specifications (if necessary);
  • price: Outline the price of the work (if known) clearly to the customer;
  • quality: State you comply with any relevant laws (including the Building Code of Australia), development applications or certificates; and
  • variations: Mention any variations to the contract will only occur if you and your customer agree in writing.

Works that are more than $20,000 will require you to include the above considerations. Additionally, you must also include details on:

  • statutory warranties;
  • how you or your customer can vary the contract price;
  • a cooling-off period; and
  • insurance. 

Furthermore, you are required to provide a checklist of the key considerations in the contract. If your customers are not sure whether the contract meets all 15 points, they are unlikely to sign the contract. Therefore, you should ensure your contract thoroughly covers all the points raised in the checklist. 

3. What Are Statutory Warranties?

Statutory warranties are legal guarantees that ensure products or services are suitable for the purpose that they were made or supplied. These guarantees are implied in all residential work, regardless of the size of the job or whether you have to mention the existence of statutory warranties in a contract.

Statutory warranties include that you will perform the work:

  • in a proper and workmanlike manner;
  • according to any plans or specifications in the contract;
  • according to the law; 
  • with due diligence and based on the timeframe set out in the contract;
  • using work and materials that are reasonably fit for the specified purpose or result; and
  • to ensure the residence is reasonably fit for occupation.
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Key Takeaways

If you are doing residential building work in NSW, you should know when the residential building laws apply to you so that you comply with important legal requirements. Otherwise, you may risk fines from the NSW Department of Fair Trading. 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.

Kristine Biason

Kristine Biason

Practice Leader

Kristine is a Practice Leader in LegalVision’s Commercial Contracts team. She drafts and negotiates commercial contracts, in particular, supply, distribution and manufacturing agreements used internationally. She also assists clients with their information technology agreements, often aiding clients on their business journey by determining the relevant agreements needed for their business, whether that be a SaaS agreement, reseller agreement or a managed services agreement. She has previously worked in the Franchising team and has provided clients with advice on setting up franchises and purchasing franchises.

Qualifications: Bachelor of Laws, Graduate Diploma of Legal Practice, Bachelor of Media, Macquarie University.

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About LegalVision

LegalVision is an innovative commercial law firm that provides businesses with affordable, unlimited and ongoing legal assistance through our membership. We operate in Australia, the United Kingdom and New Zealand.

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