Home Building Act 1989 (NSW)

Home Building Act 1989 No 147 An Act to make provision concerning the residential building industry and certain specialist work; and for other purposes. Part 1 Preliminary 1 Name of Act This Act is the Home Building Act 1989. 2 Commencement This Act commences on a day or days to be appointed by proclamation. 3 Interpretation Schedule 1 provides for the interpretation of expressions used in this Act. 3AA (Repealed) 3A Application of provisions to developers (1) For the purposes of this Act, an individual, a partnership or a corporation on whose behalf residential building work is done in the circumstances set out in subsection (2) is a developer in relation to that residential building work. (1A) Residential building work done on land in the circumstances set out in subsection (2) is, for the purpose of determining who is a developer in relation to the work, deemed to have been done on behalf of the owner of the land (in addition to any person on whose behalf the work was actually done). Note— This makes the owner of the land a developer even if the work is actually done on behalf of another person (for example, on behalf of a party to a joint venture agreement with the owner for the development of the land). The other person on whose behalf the work is actually done is also a developer in relation to the work. (2) The circumstances are— (a) the residential building work is done in connection with an existing or proposed dwelling in a building or residential development where 4 or more of the existing or proposed dwellings are or will be owned by the individual, partnership or corporation, or (b) the residential building work is done in connection with an existing or proposed retirement village or accommodation specially designed for the disabled where all of the residential units are or will be owned by the individual, partnership or corporation. (3) A company that owns a building under a company title scheme is not a developer for the purposes of this Act. 3B Date of completion of residential building work (1A) This section does not apply to residential building work to which section 3C applies. Note— Section 3C provides for the date of completion of new buildings in strata schemes. (1) The completion of residential building work occurs on the date that the work is complete within the meaning of the contract under which the work was done. (2) If the contract does not provide for when work is complete (or there is no contract), the completion of residential building work occurs on practical completion of the work, which is when the work is completed except for any omissions or defects that do not prevent the work from being reasonably capable of being used for its intended purpose. (3) It is to be presumed (unless an earlier date for practical completion can be established) that practical completion of residential building work occurred on the earliest of whichever of the following dates can be established for the work— (a) the date on which the contractor handed over possession of the work to the owner, (b) the date on which the contractor last attended the site to carry out work (other than work to remedy any defect that does not affect practical completion), (c) the date of issue of an occupation certificate under the Environmental Planning and Assessment Act 1979 that authorises commencement of the use or occupation of the work, (d) (in the case of owner-builder work) the date that is 18 months after the issue of the owner-builder permit for the work. (4) If residential building work comprises the construction of 2 or more buildings each of which is reasonably capable of being used and occupied separately, practical completion of the individual buildings can occur at different times (so that practical completion of any one building does not require practical completion of all the buildings). (5) This section applies for the purposes of determining when completion of residential building work occurs for the purposes of any provision of this Act, the regulations or a contract of insurance under Part 6. 3C Date of completion of new buildings in strata schemes (1) This section applies to residential building work comprising the construction of a new building in a strata scheme (within the meaning of the Strata Schemes Management Act 2015) where the issue of an occupation certificate is required to authorise commencement of the use or occupation of the building. Note— Section 3B provides for the date of completion of other residential building work. (2) The completion of residential building work to which this section applies occurs on— (a) the date of issue of an occupation certificate that authorises the occupation and use of the whole of the building, unless paragraph (b) applies, or (b) the occurrence of some other event that is prescribed by the regulations as constituting completion of the work. (3) If a contract to do residential building work (the primary contract) comprises the construction of 2 or more separate buildings, the date of completion of that work is to be determined as if there were a separate contract for each separate building (with each contract on the same terms as the primary contract) so that the work for each building will have a separate completion date. For the purposes of this section, a building is separate if it is reasonably capable of being used and occupied separately from any other building. Note— Separate buildings can still have the same completion date if they are completed at the same time. (4) This section applies for the purpose of determining when completion of residential building work occurs for the purposes of any provision of this Act, the regulations or a contract of insurance under Part 6. (5) In this section— building means any structure that, as a new building, requires the issue of an occupation certificate to authorise its use and occupation. occupation certificate means an occupation certificate under the Environmental Planning and Assessment Act 1979. Note— A swimming pool, tennis court or detached garage can be a building for the purposes of this section if an occupation certificate is required to authorise its use and occupation. If a structure in a strata scheme does not require an occupation certificate, section 3B will apply to it instead of section 3C. 3D Application of provisions to specialist work In its application to specialist work, this Act is not limited to specialist work that is residential building work and extends to specialist work that is not residential building work (for example, commercial and industrial specialist work). Part 2 Regulation of residential building work and specialist work Division 1 Contracting for work 4 Unlicensed contracting (1) A person must not contract to do— (a) any residential building work, or (b) any specialist work, except as or on behalf of an individual, partnership or corporation that is the holder of a contractor licence authorising its holder to contract to do that work. Maximum penalty—1,000 penalty units in the case of a corporation and 200 penalty units in any other case. (2) The holder of a contractor licence who has contracted to do any residential building work must not contract with another person for the other person to do the work (or any part of the work) for the holder unless the other person is the holder of a contractor licence to do work of that kind. Maximum penalty—1,000 penalty units in the case of a corporation and 200 penalty units in any other case. (3) The holder of a contractor licence must not contract with another person for the other person to do any work (or part of any work) for the holder for which insurance is required under this Act unless the other person is the holder of a contractor licence to do work of that kind. Maximum penalty—1,000 penalty units in the case of a corporation and 200 penalty units in any other case. (4) A developer in relation to residential building work must not contract with another person for the other person to do that residential building work on behalf of the developer unless the other person is the holder of a contractor licence authorising the other person to do work of that kind. Maximum penalty—1,000 penalty units in the case of a corporation and 200 penalty units in any other case. (5) A person is not guilty of an offence against subsection (2), (3) or (4) if the person establishes that the person did all that could reasonably be required to prevent the contravention of the subsection. (6) An individual who is convicted of a second or subsequent offence under a provision of this section is liable to a penalty not exceeding 500 penalty units or imprisonment for a term not exceeding 12 months, or both. 5 Seeking work by or for unlicensed person (1) An individual, a member of a partnership, an officer of a corporation or a corporation must not represent that the individual, partnership or corporation is prepared to do— (a) any residential building work, or (b) any specialist work, if the individual, partnership or corporation is not the holder of a contractor licence authorising its holder to contract to do that work. (2) A person must not represent that an individual, partnership or corporation is prepared to do— (a) any residential building work, or (b) any specialist work, if the person knows that the individual, partnership or corporation is not the holder of a contractor licence authorising its holder to contract to do that work. (3) An individual who is convicted of a second or subsequent offence under this section is liable to a penalty not exceeding 500 penalty units or imprisonment for a term not exceeding 12 months, or both. Maximum penalty—1,000 penalty units in the case of a corporation and 200 penalty units in any other case. 6 Application of requirements for contracts (1) Sections 7–7E apply to a contract under which the holder of a contractor licence undertakes— (a) to do, in person, or by others, any residential building work or any specialist work, or (b) to vary any such undertaking to do residential building work or any specialist work or the way in which any such work is to be done. (2) However, sections 7, 7AAA, 7AA, 7B and 7BA do not apply to a contract to do residential building work or specialist work in such circumstances that— (a) if the work were not to be done promptly, there is likely to be a hazard to the health or safety of any person or to the public or to be damage to property, and (b) the work could not be done promptly if the requirements of sections 7, 7AAA, 7AA, 7B and 7BA were to be complied with before commencing the work. (3) Section 7(2)(f) and (5) do not apply to a contract referred to in subsection (1)(b). 7 Form of contracts (other than small jobs) Note— Section 7AAA applies to contracts for small jobs. (1A) This section applies to a contract only if the contract price exceeds the prescribed amount or (if the contract price is not known) the reasonable market cost of the labour and materials involved exceeds the prescribed amount. The prescribed amount is the amount prescribed by the regulations for the purposes of this section and is inclusive of GST. (1) A contract must be in writing and be dated and signed by or on behalf of each of the parties to it. (2) A contract must contain— (a) the names of the parties, including the name of the holder of the contractor licence shown on the contractor licence, and (b) the number of the contractor licence, and (c) a sufficient description of the work to which the contract relates, and (d) any plans and specifications for the work, and (e) the contract price if known, and (f) any statutory warranties applicable to the work, and (f1) the cost of cover under Part 6 or 6B (if insurance is required under Part 6), and (g) in the case of a contract to do residential building work—a conspicuous statement setting out the cooling-off period that applies to the contract because of section 7BA, and (h) in the case of a contract to do residential building work (other than a construction contract to which the Building and Construction Industry Security of Payment Act 1999 applies)—details of any progress payments payable under the contract, and (i) in the case of a contract to do residential building work—a statement that the contract may be terminated in the circumstances provided by the general law and that this does not prevent the parties agreeing to additional circumstances in which the contract may be terminated, and (j) any other matter prescribed by the regulations for inclusion in the contract. (3) The contract must comply with any requirements of the regulations. (4) If the contract price is known, it must be stated in a prominent position on the first page of the contract. (5) If the contract price is not known or may be varied under the contract, the contract must contain a warning to that effect and an explanation of the effect of the provision allowing variation of the price. The warning and explanation must be placed next to the price if the price is known. (6) A contract must not include in the contract the name of any person other than the holder of a contractor licence as, or so it may reasonably be mistaken to be, the holder's name. (7) This section does not prevent the holder of a contractor licence with a business name registered under the Business Names Registration Act 2011 of the Commonwealth from also referring in such a contract to the business name. (8) This section does not apply to— (a) a contract that is made between parties who each hold a contractor licence and is for work that each party's contractor licence authorises the party to contract to do, or (b) a contract to do specialist work that is not also residential building work. Note— The exception in paragraph (a) applies to a subcontracting arrangement between licensees, and to a contract between licensees for work to be done on premises that one of the licensees owns. 7AAA Form of contracts (small jobs) (1) This section applies to a contract only if the contract is not one to which section 7 applies and the contract price exceeds the prescribed amount or (if the contract price is not known) the reasonable market cost of the labour and materials involved exceeds the prescribed amount. The prescribed amount is the amount prescribed by the regulations for the purposes of this section and is inclusive of GST. (2) A contract must be in writing and be dated and signed by or on behalf of each of the parties to it. (3) A contract must contain— (a) the names of the parties, including the name of the holder of the contractor licence shown on the contractor licence, and (b) the number of the contractor licence, and (c) a description of the work to which the contract relates, and (d) any plans and specifications for the work, and (e) the contract price if known. (4) The contract must comply with any requirements prescribed by the regulations for the purposes of a contract to which this section applies. (5) This section does not apply to— (a) a contract that is made between parties who each hold a contractor licence and is for work that each party's contractor licence authorises the party to contract to do, or (b) a contract to do specialist work that is not also residential building work. Note— The exception in paragraph (a) applies to a subcontracting arrangement between licensees, and to a contract between licensees for work to be done on premises that one of the licensees owns. 7AA Consumer information (1A) This section applies to a contract to which section 7 or 7AAA applies, but does not apply to any of the following contracts— (a) a contract to do residential building work entered into between the holder of a contractor licence and a developer in relation to the work, (b) a contract of a class prescribed by the regulations. (1) A holder of a contractor licence must, before entering into a contract that the holder is authorised by this Act to enter, give to the other party to the contract information, in a form approved by the Secretary, that explains the operation of this Act and the procedure for the resolution of disputes under the contract and for the resolution of disputes relating to insurance. Maximum penalty—40 penalty units in the case of a corporation and 20 penalty units in any other case. (2) (Repealed) 7A Offence A person must not contract to do work under a contract unless the requirements of sections 7, 7AAA and 7E in relation to the contract are complied with. Maximum penalty—80 penalty units in the case of a corporation and 40 penalty units in any other case. 7B Copy of contract A holder of a contractor licence must, not later than 5 clear business days after entering into a contract, give the other party to the contract a signed copy of the contract in the form in which it was made. Maximum penalty—80 penalty units in the case of a corporation and 40 penalty units in any other case. 7BA Cooling-off period: person may rescind a contract for residential building work within 5 days without penalty (1A) This section applies to a contract only if the contract price exceeds the prescribed amount or (if the contract price is not known) the reasonable market cost of the labour and materials involved exceeds the prescribed amount. The prescribed amount is the amount prescribed by the regulations for the purposes of this section and is inclusive of GST. (1) A person who contracts with the holder of a contractor licence for residential building work to be done by the holder of the contractor licence may, by notice in writing, rescind the contract— (a) in the case of a person who has been given a copy of the signed contract—at any time before the expiration of 5 clear business days after the person is given a copy of the contract, or (b) in the case of a person who has not been given a copy of the signed contract within 5 days after the contract has been signed—at any time before the expiration of 5 clear business days after the person becomes aware that he or she is entitled to be given a copy of the signed contract. (2) The notice must state that the person rescinds the contract and must be given— (a) to the holder of the contractor licence personally, or (b) by leaving it at the address shown in the contract as the address of the holder of the contractor licence, or (c) by serving it on the holder of the contractor licence in accordance with any notice or service provision in the contract. (3) If a notice is given in accordance with this section— (a) the contract is taken to be rescinded from the time it was signed, but subject to the rights and obligations conferred by this section, and (b) the holder of the contractor licence may retain out of any money already paid to the holder the amount of any reasonable out-of-pocket expenses the holder incurred before the rescission, and (c) the holder of the contractor licence must refund all other money paid to the holder under the contract by (or on behalf of) the party who rescinded the contract at or since the time the contract was made, and (d) the party who rescinded the contract is not liable to the holder of the contractor licence in any way for rescinding the contract. (4) The cooling-off period may be shortened or avoided by a provision in the contract, but the provision does not take effect unless and until the other party to the contract gives the holder of the contractor licence (or the holder's Australian legal practitioner) a certificate that complies with subsection (5). (5) A certificate complies with this subsection if it— (a) is in writing, and (b) is signed by an Australian legal practitioner, other than— (i) an Australian legal practitioner acting for the holder of the contractor licence, or (ii) any other Australian legal practitioner employed in the legal practice of an Australian legal practitioner acting for the holder of the contractor licence, or (iii) any other Australian legal practitioner who is a member or employee of a firm in which an Australian legal practitioner acting for the holder of the contractor licence is a member or employee, and (c) indicates the purpose for which the certificate is given, and (d) contains a statement to the effect that the Australian legal practitioner explained to the other party to the contract the effect of the contract, the nature of the certificate and the effect of giving the certificate to the holder of the contractor licence. (6) A contract can be rescinded under this section even if work has been done under the contract at the time of rescission. (7) If a contract is rescinded under this section, the holder of the contractor licence is entitled to a reasonable price for the work carried out under the contract to the date the contract is rescinded. (8) This section does not apply to any of the following contracts— (a) a contract that is made between parties who each hold a contractor licence and is for work that each party's contractor licence authorises the party to contract to do, Note— The exception in paragraph (a) applies to a subcontracting arrangement between licensees, and to a contract between licensees for work to be done on premises that one of the licensees owns. (b) a contract entered into between the holder of a contractor licence and a developer in relation to the work, (c) a contract that is supplied and fully prepared by or on behalf of the person who contracts with the holder of the contractor licence and no part of which is supplied or prepared by or on behalf of the holder of the contractor licence, Note— The exception in paragraph (c) does not apply to a contract supplied and prepared by the person who contracts with the holder of a contractor licence if any terms or conditions are added to the contract by the holder of the contractor licence or his or her representative. (d) a contract of a class prescribed by the regulations. 7BB Person may rescind a residential building work contract if cooling-off warning not given (1) This section applies to a contract for residential building work to which section 7BA applies. (2) If a contract does not contain a statement relating to the cooling-off period and a person's rights under section 7BA (as required by section 7(2)(g)), a person (other than the holder of a contractor licence) may, by notice in writing, rescind the contract within 7 days of becoming aware that the contract should have contained such a notice. (3) The notice must state that the person rescinds the contract and must be given— (a) to the holder of the contractor licence personally, or (b) by leaving it at the address shown in the contract as the address of the holder of the contractor licence, or (c) by serving it on the holder of the contractor licence in accordance with any notice or service provision in the contract. (4) The notice must be given in the form approved by the Secretary, if any. (5) If a notice is given in accordance with this section the contract is taken to be rescinded from the time it was signed, but subject to the rights and obligations conferred by this section. (6) A contract can be rescinded under this section even if work has been done under the contract at the time of rescission. (7) If a contract is rescinded under this section, the holder of the contractor licence is entitled to a reasonable price for the work carried out under the contract to the date the contract is rescinded. (8) However, a holder of a contractor licence may not recover under subsection (7) more than the holder would have been entitled to recover under the contract. 7C Arbitration clause prohibited A provision in a contract or other agreement that requires a dispute under the contract to be referred to arbitration is void. 7D Interests in land under contract (1) A contract does not give the holder of a contractor licence or any other person a legal or equitable estate or interest in any land, and a provision in a contract or other agreement is void to the extent that it purports to create such an estate or interest. (2) Accordingly, the holder of a contractor licence or any other person may not lodge a caveat under the Real Property Act 1900 in respect of an estate or interest prohibited by subsection (1). (3) However, subsection (1) does not apply to a provision in a contract that creates a charge over land if— (a) the land the subject of the charge is land on which the contract work is, or is to be, carried out, and (b) the charge is in favour of the holder of a contractor licence who is a party to the contract, and (c) the charge is created to secure the payment to the holder of the contractor licence by another party to the contract of money due under the contract, but only if a court or tribunal has made an order or judgment that such payment be made, and (d) in the case of a charge over land under the Real Property Act 1900—the party to the contract against whom the judgment or order is made is the registered proprietor of the land. (4) A charge referred to in subsection (3) over land under the Real Property Act 1900 ceases to operate if the party to the contract against whom the judgment or order is made ceases to be the registered proprietor of the land so charged. 7E Terms of contracts (1) A contract must include (and is taken to include) each of the terms set out in Part 1 of Schedule 2. A contract that contains a term that is inconsistent with a term set out in Part 1 of Schedule 2 is unenforceable to the extent of the inconsistency. (2) The regulations may make provision for or with respect to— (a) terms or other matter that must be included in a contract or a class of contracts, or (b) terms or other matter that must not be included in a contract or a class of contracts. (3) If the regulations require a contract or class of contracts to contain a specified term (a prescribed term), a contract of the kind concerned is taken to include the term. A contract that contains a term that is inconsistent with a prescribed term is unenforceable to the extent of the inconsistency. (4) If the regulations provide that any term or other matter must not be included in a contract or a class of contracts, any contract that contains that term or other matter is unenforceable to the extent that it includes or applies to that term or other matter. (5) Any regulation made under this section does not apply to a contract in force at the time that the regulation commences. (6) This section does not limit section 7(3). 8 Maximum deposit for residential building work (1) The maximum amount of a deposit for residential building work is 10% of the contract price. A deposit for residential building work is a payment on account before work is commenced under a contract to do residential building work. (2) A person must not— (a) demand or receive payment of a deposit for residential building work if the amount of the payment exceeds the maximum imposed by this section, or (b) enter into a contract under which the person is entitled to demand or receive payment of a deposit for residential building work if the amount of the payment exceeds the maximum imposed by this section. Maximum penalty—1,000 penalty units in the case of a corporation and 200 penalty units in any other case. (3) The regulations may make provision concerning how a contract price is to be determined for the purposes of this section. (4) This section does not apply to residential building work done under— (a) a contract that is made between parties who each hold a contractor licence and is for work that each party's contractor licence authorises the party to contract to do, or (b) a contract to do specialist work that is not also residential building work. Note— The exception in paragraph (a) applies to a subcontracting arrangement between licensees, and to a contract between licensees for work to be done on premises that one of the licensees owns. 8A Maximum progress payments (other than small jobs) (1) This section applies to a contract to do residential building work when the contract price exceeds the prescribed amount or (if the contract price is not known) the reasonable market cost of the labour and materials involved exceeds the prescribed amount. The prescribed amount is the amount prescribed by the regulations for the purposes of this section and is inclusive of GST. (2) A progress payment for residential building work under a contract to which this section applies is authorised only if it is one of the following kinds of authorised progress payments— (a) a progress payment of a specified amount or specified percentage of the contract price that is payable following completion of a specified stage of the work, with the work that comprises that stage described in clear and plain language, (b) a progress payment for labour and materials in respect of work already performed or costs already incurred (and which may include the addition of a margin), with provision for a claim for payment to be supported by such invoices, receipts or other documents as may be reasonably necessary to support the claim and with payment intervals fixed by the contract or on an "as invoiced" basis, (c) a progress payment authorised by the regulations. Note— Progress payments can extend to variations to the work to be done under the contract. (3) A contract can provide for more than one kind of authorised progress payment. (4) A person must not— (a) demand or receive payment of a progress payment under a contract to which this section applies unless the progress payment is authorised under this section, or (b) enter into a contract to which this section applies under which the person is entitled to demand or receive payment of a progress payment unless the progress payment is authorised under this section. Maximum penalty—1,000 penalty units in the case of a corporation and 200 penalty units in any other case. (5) This section does not apply to a progress payment for residential building work under a construction contract to which the Building and Construction Industry Security of Payment Act 1999 applies. (6) This section does not apply to— (a) a contract that is made between parties who each hold a contractor licence and is for work that each party's contractor licence authorises the party to contract to do, or (b) a contract to do specialist work that is not also residential building work. Note— The exception in paragraph (a) applies to a subcontracting arrangement between licensees, and to a contract between licensees for work to be done on premises that one of the licensees owns. 9 Exhibition homes (1) In this section, exhibition home means a dwelling made available for inspection to persons who are invited, expressly or impliedly, to enter in