The recent changes to the Building Act 1993 (the Act) provide that any offence done by a registered builder, who is in a partnership, will mean that each other member of the partnership will also have committed that offence.

Persons in partnerships need to be aware that special provisions apply to them when undertaking domestic building work. The following is a summary of those special provisions that all persons in a partnership should be aware of.

Unregistered person in a partnership

In general a person must not undertake any domestic building work under a major domestic building contract unless they are registered with the VBA.

From 1 July 2018, an unregistered person can carry out domestic building work under a major domestic building contract provided they are:

  • In partnership with a registered builder; or
  • As an employee of a registered builder in the course of their employment; or
  • As a subcontractor of a registered builder in accordance with the contract with the registered builder.

Importantly s169F of the Act allows, in circumstances where the registered building practitioner in a partnership that dies or becomes insolvent before completion, the unregistered person (under the contract) may arrange for another registered building practitioner to carry out the unfinished work under the major domestic building contract. In this arrangement the unregistered person does not commit an offence by continuing to carry out the work under the contract.

Domestic Building Contracts

From 1 July 2018 it is now a requirement that when a registered building practitioner in a partnership enters into a major domestic building contract to construct a new home or undertake  renovations, extensions or improvements on a home, that the names of all the other persons of the partnership (and their addresses) also be included on the contract.

Registration

The VBA when considering registration of a practitioner, will need to be satisfied that each person in a partnership (not just the registered building practitioner) be a fit and proper person (ss171D, 171E) having regard to the personal and financial probity requirements as well as ensuring they are not be an excluded person (s171F).

Furthermore where a court finds that one or more persons of a partnership have also commented offence by carrying out domestic building work in contravention of the Act or entered into a major domestic building contract when not registered, then in addition to any penalty that may be applied, those person(s) may also be ineligible to apply for registration for up to 3 years.

Advertisements

Consistent with s169I of the Act, a registered building practitioner who is in a partnership must in all advertising material, ensure that the name of the registered building practitioner and their registration number(s) be clearly legible and displayed on the advertisement.

Warranty Insurance

Moreover from 1 July 2018 the relevant building surveyor (RBS) is now compelled, before issuing a building permit that all details in relation to the entities are correct and match precisely. The RBS is to ensure, particularly in the case of a partnership, that the names of the persons on the contract are identical to the names on the warranty insurance. Accordingly the RBS must be provided the following documents in relation to the proposed building works:

  • An copy of the major domestic building contract showing the names of the parties of the contract (including all persons of the partnership); and
  • A copy of the certificate of warranty insurance from the insurer

Members should contact the Master Builders on (03) 9411 4555 if they have any questions or wish to seek advice on any of these issues.

A copy of the VBA fact sheet titled: “Responsibilities of people in partnerships” can be found here.