For many builders, registered or not, it is a common mistaken belief that when working for an owner-builder they can approach the job as if they were a subcontractor or a “project manager”.
Actually, if a builder is doing more than $10,000 worth of domestic building work (which includes managing and arranging work) for an owner-builder they are considered legally to be a builder who is doing work for a consumer.
If a domestic builder does not have the correct contract and insurance, then they are committing offences with the risk of fines and loss of registration if registered; or loss of the opportunity to become registered if not.
In the 2016 matter of Owusu-Afriyie v Panoramic Structures and Pools Pty Ltd (Building and Property)  VCAT 485 VCAT considered whether a contractor was a subcontractor or a builder under the legislation. It was found that the contractor was considered to be the “builder” under the Domestic Building Contracts Act 1995 even though the owner was on the building permit as an owner builder and the contractor was specifically engaged as a subcontractor to do concrete works.
Some good news...
Under the new section 25B (1A) of the Building Act 1993 an owner builder must engage a registered builder or trade and have a fully compliant major domestic building contract and if required the corresponding Domestic Building Warranty Insurance. The penalty is $9327.60 for the first offence and $18,655.20 in the case of second or subsequent offence. Master Builders suggests pointing out this offence when approached by an owner builder who is looking to save a few dollars by using unregistered trades or by not signing a compliant domestic contract for works over $10,000.
If you have any questions about doing work for an owner builder, please contact our Legal Department on (03) 9411 4555.