Owner builders who are planning to sell their homes in the next few years are being reminded that they will need to have warranty insurance before placing their homes on the market.
Domestic Building Insurance (also known as Warranty Insurance) is a mandatory type of consumer protection cover in both Victoria and New South Wales. The requirements vary slightly between the two states but in both cases the insurance is for the benefit of the purchaser (not the owner builder).
The insurance is required where an owner builder sells the property on which they have constructed building works (over $12,000 in value) within the prescribed period set by legislation (6 years from completion).
A spokesperson for Archicentre, the building advisory service of the Royal Australian Institute of Architects, recently commented that if the appropriate warranty insurance is not in place, sale proceedings can be delayed. In some cases vendors may find themselves unable to sell their home whilst having already signed to buy another home and paid a deposit.
Mark Brown National Operations Manager of CGU Home Warranty Insurance recently said this form of insurance not only protects owner builders but also provides peace of mind for home buyers.
"Owner builders not aware of their legal responsibilities in relation to this insurance can easily be trapped in an expensive legal minefield being unable to complete contracts of sale after spending thousands of dollars on promotion and agents fees for selling the property," Mr Brown said.
"We urge all owner builders to ensure they maintain a thorough file of all permits and authorisations of tradespeople such as plumbers and electricians, to ensure they can obtain the Owner Builders Warranty Insurance.
"Any work not carried out by appropriately licensed and insured tradespeople may be excluded from any insurance issued," he added.
