New Penalties for Builders Who Fail to Obtain Domestic Builder Insurance
The passing of the Building Legislation Amendment (Domestic Building Insurance New Offences) Act 2024 (Vic) (the Amendment) has introduced new penalties for Builders who fail to obtain Domestic Builder Insurance (DBI), hence, strengthening consumer protection in the construction industry. The changes are relevant for any Builder engaged in a major domestic building contract.
Legislative changes
The key changes under the Amendment impact the Domestic Building Contracts Act 1995 (Vic) and the Building Act 1993 (Vic), including the penalties associated with a failure to obtain the insurance being strengthened as follows:
There are new offences for a builder who ‘demands or receives money’ under a contract if DBI has not been obtained (s 5 of the Amendment Act)
There are investigation and enforcement powers to ensure that offending is addressed (s 11 of the Amendment Act)
There are sanctions on Builders who are found guilty of certain offences by holding their registration ineligible for a period of time (s 10 of the Amendment Act)
There are additional penalties if the builder’s failure to obtain DBI insurance is ‘knowing and reckless’ (s 5 of the Amendment Act)
These changes seek to address the recent collapse of several builders, and the loss of deposits for the homeowners. For Builders, these charges serve as a caution to always take out DBI for projects valued at $16,000 and above. Further, it is never appropriate for Builders to demand or receive any money from an owner until the builder has taken out the DBI.
To learn more about any of the issues discussed here, or if you require legal assistance, please contact Chris Moshidis, Director and Principal Lawyer on +61 9521 7956 or chris@urbanlawyers.com.au.