Principles of Construction Law and Domestic Building Contracts Act - Coursework Example

PRINCIPLES OF CONSTRUCTION LAW by Student’s Name Code + Name of Course Professor Date Principles of Construction Law The “Domestic Building Contracts Act 1995 (Vic)” (DBCA) and “Building Act 1993 (Vic)” provide consumer protection for a person who engages a builder to construct a new 2 storey dwelling with a value of $300,000. The two acts are the two main pieces of legislations, which control the domestic builders warranty insurers activities in Victoria Australia. The “Domestic Building Contracts Act 1995” was largely devised to regulate the contractual associations between the builder and the domestic building owner. Its purpose is to regulate the domestic building contracts. It is a mechanism for resolving domestic building disputes and necessitates that all the builders to be insured. The Act is important to domestic building work. When a building work is characterized as “domestic building work,” this act applies to all the contracts that carry on the work. A person who engages a builder to build a new 2 storey building worth $300,000 is subject to regulation of this act. The contract signed between the builder and the homeowner imposes an obligation upon the builder to arrange, manage, and undertake the building work. This is a major domestic building contract as the building work contract price is also over $ 5,000 and hence the Act applies. Such contracts for domestic building work are those where the building work price is over $ 5,000. In this case, the homeowner as the employer is engaging the builder as a principal contractor under the contract and hence the DBCA imposes various mandatory requirements: The builder has to be registered (Section 29) The contract has to contract various particular provisions (Section 31( for instance, the implies warranties in section 8) The builder has to obtain foundations data (Section 30) The builder also has to make allowances for work delays The contract also has to have warning that prices may vary in particular circumstances The builder should not undertake the work except if it has the Builders warranty insurance Such provisions under the Domestic Building Contracts Act 1995 would offer consumer protection for the individual engaging a builder to construct a new 2-storey dwelling. On the other hand, the Building Act 1993 is concerned with mandatory standards over buildings construction and providing insurance against incomplete and defective work. In Section 136(2), the Act also requires all the domestic builders to be covered by warranty prior to commencing any building works under a major domestic building contract. This Act also contains provisions on time when a building action may be brought. Section 134 of the Act dictates that a building action cannot be brought either over ten years after the date of issuance of tenure permit for the new homes or after issuance of a final inspection certificate (for renovations and extensions). In case an owner decides to make a compensation claim for incomplete or defective building work under the builder’s warranty insurance policy, the claim period which allows policy response is 6 and a half years from the time of issuance of the occupancy permit and the final inspection certificate. This applies if the policy is issued after 30 June 2002 and 6 years in case, it is after this date. In case the builder fails to notify the insurer of a defect within 180days of the defect becoming apparent, the insurer may reject the claim; the delay prejudices the insurer. The Act also contains a 90-day rule which dictates that in case the builder lodges a claim with the warranty insurer and the decision for the claim is not made within 90 days of claim receipt by the insurer, the claim is taken as accepted as to liability. With these provisions, Building Act 1993 would also offer consumer protection for the individual engaging a builder to construct a new 2-storey dwelling. ‘Domestic Building Contracts Act 1995 (Vic)’ (DBCA) Provisions under the DBCA Act protect the consumers in diverse ways. First, to protect the consumer, DBCA requires the builders to investigate the site thoroughly before they prepare the foundation design or the footing. The contract provisions in the Act also serve to protect the person wishing to build a 2-storey building. Section 31(1) of the act dictates the details, which have to be taken account of in the contract. For a builder to sign a ‘major domestic building contract’ it has to be “in writing” and “set out in full all the terms of the contract” and has “a detailed description of the work to be carried out under the contract; and includes the plans”. The contract should also have “specifications for the work and those plans and specifications contain enough information to enable the obtaining of a building permit” and “states the names and addresses of the parties to the contract”; and “states the registration number (as it appears on the registration certificate and states the date when the work is to start.” In case the commencing date has not yet been established, the contract has to dictate that the builder will do everything significantly possible to make sure that the work starts without delay according to Sec 31 (1) (h). It also has to “state the date when the work will be finished, or, if the starting date is not yet known, the number of days that will be required to finish the work once it is started and; states the contract price or, in the case of a cost plus contract.” It also has to “state the date the contract is made”; and “set out details of the required insurance under the Building Act 1993 that applies to the work to be carried out under the contract (including any details required by the Director)”. The contract has to be in English and it has to be easily comprehensible. The contract is usually of no outcome if is not signed by the owner of the building as well as the builder. These provisions regarding the contract ensure that the customer does not enter into contracts that are not valid. The consumer is also protected further and offered a cooling off period. This period allows the consumer to withdraw from the contract at any point prior to the end of 5 clear business days after they receive a copy of the contract that has been signed. The contract must contain a written notice which advises the consumer of this period. Like the contract provisions, the variation provisions in the DBCA Act also provide consumer protection to the person wishing to build a 2-storey building. Variations to the contract price have to made in writing by either the consumer or the builder and also have to offer an estimate of the variation costs. In case the person wishes to ‘cool off’ after receiving the signed contract, they simply have to complete the notice and serve it to the builder within five business days. When the consumer withdraws from the contract, the builder is allowed to retain $100 plus all other out of the pocket expenses which has already been paid. All the other money has to be refunded to the consumer by the builder. In case of a variation at the builder’s request, a formal requirement has to be made. The builder has to offer a written variation notice, state why the variation is required and state the duration which will be taken to complete the works. The builder also has to offer the variation cost and state its effect on the contract price. The builder cannot undertake any variation without a signed consent by the consumer unless the building surveyor requires a variation. There are very limited circumstances under which the builder can ask for additional money from the consumer. Sec 37 of the Act dictates that builders are not entitled to recover any funds related to variations except if they can establish that the variation is both required and could not have possibly predicted the variation when the contract was entered into. In case the variations result from the consumer request, the consumer has to serve the builder a written notice. In minor circumstance, the builder is allowed to carry out the variations usually less than 2% of the contract sum. In every other situation, the builder has to serve the consumer a notice, which states whether the variation will require changes to the building permit, whether it will cause any delay and an estimate of the delays, the estimate of the variation cost and its impact on the contract price. Unless the consumer accepts the notice by the builder, the builder cannot continue with the variation. The consumer usually approves the notice by signing and giving it back to the builder. Section 41 of the DBCA Act also protects the person wishing to build a 2-storey building as it regulates the amount that the builder can claim after completing every stage of the building. A builder is not allowed to claim over 5% deposit, 10% Base stage, 35% frame stage and 25% fixing stage in a contract to build all stages of a home. This protects the consumer from the builder claiming a lot of money for the different stages before completion of the building. Before any payment is made, the consumer has to make sure that the builder completes the stages and that they are entitled to the stage payment. In this case, the consumer is also entitled to home warranty insurance as the contract price is over $ 12,000. This insurance covers non-completion of work, defective building work, loss of progress payment or deposit, alternative accommodation as well as the builder breach of the Trade Practices Act 1974. This cover is usually available only if the builder disappears, becomes insolvent, or dies. The building owner has to place the claim within 180 days of the date when he or she becomes aware of the circumstances. The insurance has to reach a decision within 90 days. The consumer also has to insist that the builder to be covered by public liability and contract works insurance. The insurance usually cover liability to other people, for instance neighbours’, damage to the works by calamities such as fire and injuries to other people arising from the works. The consumer is also protected when it comes to final payment. Section 42 dictates that the builder should not ask for final payment until the building work is complete with the specifications and plans and until the consumer obtains a certificate of completion and occupancy permit from the building surveyor. The consumer has to maintain a careful record of all documentation, claims as well as correspondence that accrue from the building project. There are also implied warranties that concern all domestic building work which protect the consumer. These warranties are a component of every one of the domestic building contract. First, the builder has to warrant that all building work will be undertaken in a competent as well as a proper way and in line with the specifications as well as plans specified in the signed contract. The builder also has to warrant that all the building materials that he will supply for usage in the building work will be suitable as well as good for the function they are meant for and except otherwise indicated in the building contract, the materials must be new. The builders also have to warrant that the work will be complying with and undertaken in line with all the legal and law requirements without limiting the warranty generality, the regulations made under the act and the Building Act 1993. The builder also has to warrant that the building work will be undertaken with sound skill and care and will be finished within the set time or period specified by the contract. The builder also has to warrant that in case the work entails construction or erection of a residence, or if work is meant to extend, change, repair, or remove a residence fit for living, the residence will be apt for occupation at the point that the builder completes the work. These warranties ensures that the builder carries out the building work with utmost attention to detail and hence quality building work. When it comes to the ending of the contract, the person who engages a builder to build a new 2-storey building is also protected. Section 41 of the act provides that a consumer may end the major domestic building contract in case the building construction price increases by 15% or more or if the contract is not finished within one and a half times the duration it would have been finished. In addition, in case the added cost and time was not significantly predictable by the builder when the builder and the owner signed the contract. Building Act 1993 (Vic) Provisions under this Act also protect the consumers in diverse ways. Primarily, under this Act, for a person to be defined as a building practitioner, he or she has to register with the building practitioners’ board. An application for a building permit for domestic building work has to be considered before issuance of the permit by the relevant building surveyor, as the building is over $ 12,000. The work has to be undertaken by a registered builder and a registered architect. In addition, the builder should not undertake the building work except if a building permit already exists with respect to the building work and the work is undertaken in line with the Act, the permit, and the building regulations. All building practitioners are also required to carry the needed insurance, except for individuals who are in the building business and those who construct a building in their own land (owner builders). When it comes to the decision on the building permit application, the concerned building surveyor has to decide a building application permit by issuing the permit, issuing the permit however with conditions, or refusing the permit depending on the observed conditions. In case the surveyor does not decide to issue the permit within the prescribed time, the surveyor is taken to have refused the permit. In case a permit issued concerning the building work to be undertaken by the building practitioner or the architect ends, the owner of the building or the building practitioners has to offer the relevant surveyor a written notice of the ending of the engagement. All builders who are engaged in undertaking domestic building work after issuance of a building permit in respect to the building work, have to present the concerned building surveyor with a written notice of engagement which includes the details of the needed cover through which the builder is covered. The surveyor also has to provide the concerned council a duplicate of the permit as well as every document or plan lodged with the application of the permit within seven days after issuance of the building permit. The builder also has to notify the relevant building surveyors immediately after completing every mandatory notification work stage. In case the builder is directed to stop carrying out the building work or any part of the work on completion of a compulsory notification stage, he or she has to stop. When notified of the completion of a compulsory notification stage, the concerned building surveyor has to cause the building work at hand to be inspected. After inspection of the building work, the concerned building surveyor or the individual acting on his behalf may direct the builder to carry out the work in order for the building work to comply entirely or considerably with the building permit that is issued with regard to the Act, the building regulation or this Act as the case requires. In case the builder does not comply with the given directions, the concerned building surveyor might cause a building notice to be issue and may take any other action allowed by the building regulations or the Building Act 1993. A direction is usually given in writing or orally. In case of an oral direction, the individual who gives the direction has to confirm it in writing immediately to the individual to whom the direction was issued. All these provisions ensure that the building work is undertaken in accordance to the conditions stipulated in the building permit especially the notification of the relevant building surveyor immediately after the completion of every compulsory stage of the building work. Reference List Building Act 1993, Version No. 083, No. 126 of 1993-Versions incorporating amendments as at 16 July 2010. Domestic Building Contracts Act 1995, Version No. 070, No. 91 of 1995- Versions incorporating amendments as at 1 January 2011. Read More