Owner Builder who onsells

Would someone please advise on the following relating to Owner Builders in Victoria.

Can an Owner Builder contract a builder to do the work and then onsell the property before completion, intending to then transfer the insurance to the contracted builder who will take over the liability. With the decrease in insurers available due to the withdrawal of insurers form the market this is an option that I have had to take to ensure that the building could get started on time.

However, someone has now pointed out that it may be illegal to do this. :(

Can anyone please advise?

Thanks
Spyglass
 
Spyglass

I have recently posted links to owner builder insurers and other helpful people.

Of course you can sell!!!

You can't pass the insurance to any third person.

You don't need insurance unless you sell within 6.5 years.

However, if you have a contracted builder, or any sub-contractor, they are responsible for their own insurance anyway.

Contact the helpful people at www.buildsafe.com.au or www.ownerbuild.com.au, or the building department at your local council.

BTW - a number of other people in my builder's class are doing the 'owner builder' thing. Some have built multi-unit developments, some have built commercial, some have done major renovations. One of the more experienced 'developers' always buys the land, engages a builder on a fixed price contract, then sells as soon as possible. This chap is not an owner builder ie he does not apply for the building permit himself, but he is the owner who has engaged the builder. The difference here is that he is not fiddling about with insurance, it remains the builders responsibility all the way through.

cheers

Kristine
 
Hi Kristine,

One of the more experienced 'developers' always buys the land, engages a builder on a fixed price contract, then sells as soon as possible.
This sounds very similar to selling off-the-plan.

Mike
 
G'day Mike

Um, yeah, almost

He only does one property at a time, and offers choices in tiles, carpets, paint etc

'Off the Plan' sales usually are retailed from the developer to the consumer. In this instance, the owner has a Major Domestic Building Contract with the builder, who is under the usual obligations regarding warranty insurance for the scope of works.

The owner is just that, the owner, and he remains in the contract with the builder but can sell the property as he sees fit. The contract doesn't settle until after the house is finished.

It is important to note the difference here between 'The Owner', and an "Owner Builder', which this person is not.

How was Brighton?

Cheers

Kristine
 
Insurance

Thanks Kristine,

However the insurance issue to my question is the critical issue.

This is because these events have happened.

i.e. purchased land, contracted builder (who advised that he couldn't get insurance until a previous project was completed due to limited licences available. Therefore he said I could apply as an owner builder, get him to do the work and down the track he would take over the insurance on the property as the builder.) In the meantime the property has been sold before completion and the builder is completing the work. He will soon get the insurance to take over the obligation (before settlement).

So my question relates to whether the above process is legal i.e. an owener builder sells a property to a third party before the building has been completed (but the insurance is still in the owner builders name - but won't be come settlement time).

Also if anyone could please anwer another question - if settlement is delayed and the next door neighbours want a fence replaced, who is responsible for a share of costs - me as vendor or the new purchaser who has signed a contract for the purchase for the property but has not yet settled? (my hope is them as they will get the enduring benefit out of the new frnce which has also not been factored into the contract price).

Many thanks
Spyglass
 
Hi Spyglass!

THANK YOU for listing a location, your question can be answered using the relevant legislation! hehe

OK, your PURCHASER is responsible for the fencing notice as long as the notice is dated AFTER the sale date of the property, that is the date on which BOTH sets of signatures were added to the contract. The only exception to this rule is if Schedule 7 has been specifically excluded from your contract.

There is a thing called The Seventh Schedule to the Transfer of Land Act 1958. It makes quite interesting reading.

In part it says:
15. The purchaser shall assume liability for compliance with any notices or orders relating to the property sold (other than those referring to apportionable outgoings) which are made or issued on or after the day of sale but the purchaser shall be entitled to enter on the property sold (without thereby being deemed to have accepted title) at any time prior to the settlement date for the purpose of complying with any such notice or order which requires to be complied with before the settlement date. The purchaser may also inspect the condition of the property and the chattels at any reasonable time during the period of seven days preceding the settlement date.


Ok, so that means that the purchaser is responsible for the fence, but you have to allow them access to the property to do what they need to do.

This 7th Schedule is otherwise known as the General Conditions of sale of land under the transfer of land act, and is also sometimes refered to as a "Table A".

Anyway, hope this helps. Please don't hesitate to ask if it is still not clear. :)

asy :D

By the way, if anyone is interested, you can read the whole 7th schedule here: http://www.austlii.edu.au/au/legis/vic/consol_act/tola1958160/sch7.html
 
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