Version No. 014 Domestic Building Contracts and Tribunal (General) Version incorporating amendments as at 28 March 2006 TABLE OF PROVISIONS Regulation Page 1. Objectives 1 2. Authorising provision 1 3. Definitions 1 4. Building work to which Act does not apply 2 5. Type of cost plus contract allowed 5 6. Progress payments 7 7. Certain contracts exempt from provisions of Act 8 8. Certain persons not required to make allowance for delays in time estimates 8 9. Exemption for certain contracts relating to multi-storey residential developments 8 SCHEDULE 10 Form 1 Warning to owner change of legal rights 10 Form 2 Progress payments 12 ENDNOTES 13 1. General Information 13 2. Table of Amendments 14 3. Explanatory Details 15 i
Version No. 014 Domestic Building Contracts and Tribunal (General) Version incorporating amendments as at 28 March 2006 1. Objectives The objectives of these Regulations are (a) to prescribe certain work as building work to which the Act does not apply; (b) to allow certain contracts to be cost plus contracts for the purposes of section 13 of the Act; Reg. 1(b) amended by reg. 4(a). (c) to prescribe, with regard to progress payments, the manner in which parties to a contract may agree that sections 40(2) and (3) of the Act do not apply; (d) to exempt certain persons and contracts from various provisions of the Act. 2. Authorising provision These Regulations are made under section 135 of the Act. 3. Definitions In these Regulations "Act" means Domestic Building Contracts and Tribunal Act 1995; Reg. 1(d) reg. 4(b). Reg. 3 substituted by reg. 5. 1
r. 4 Reg. 4 amended by reg. 6(1)(a). Reg. 4(1)(k) reg. 6(1)(b). Reg. 4(1)(l) reg. 6(1)(b). Domestic Building Contracts and Tribunal (General) "public construction" has the same meaning as in section 3(1) of the Project Development and Construction Management Act 1994. 4. Building work to which Act does not apply (1) For the purposes of section 6(a) of the Act, the Act does not apply to the following building work if it is to be carried out under a contract that applies to one only of the following (a) attaching external fixtures (including awnings, security screens, insect screens and balustrades); (b) draining work as defined in section 85(1) of the Building Control (Plumbers, Gasfitters and Drainers) Act 1981; (c) electrical work; (d) glazing; (e) installing floor coverings; (f) insulating; (g) painting; (h) plastering; (i) plumbing work as defined in section 85(1) of the Building Control (Plumbers, Gasfitters and Drainers) Act 1981; (j) tiling (wall and floor); (k) erecting a chain wire fence to enclose a tennis court; (l) erecting a mast, pole, antenna, aerial or similar structure. 2
Domestic Building Contracts and Tribunal (General) (2) For the purposes of section 6(a) of the Act, the Act does not apply to building work carried out in relation to any of the following (a) the official residence of the Governor of Victoria; (b) premises that are used or intended to be used at a school, university or other educational or training institution as accommodation for students or staff; (c) premises that are used or intended to be used as (i) a community service established under section 57 of the Children and Young Persons Act 1989; (ii) a community service approved under section 58 of that Act and that are situated on Crown land or land in relation to which the Secretary to the Department of Human Services or the Director of Housing is registered as proprietor; (iii) a remand centre within the meaning of that Act; (iv) a secure welfare service within the meaning of that Act; (v) a youth residential centre within the meaning of that Act; or (vi) a youth training centre within the meaning of that Act; r. 4 Reg. 4(2) reg. 6(2). 3
r. 4 Domestic Building Contracts and Tribunal (General) (d) premises that are used or intended to be used as (i) a prison established under section 10 of the Corrections Act 1986; or (ii) a community corrections centre established under Part 9 of that Act; (e) premises that are used or intended to be used as (i) a health service establishment within the meaning of the Health Services Act 1988; or (ii) a hostel within the meaning of that Act; (f) premises that are used or intended to be used as (i) a residential institution within the meaning of the Intellectually Disabled Persons' Services Act 1986; or (ii) a residential program within the meaning of that Act; (g) premises that are used or intended to be used to provide accommodation within the Parliamentary Reserve within the meaning of section 46(2) of the Parliamentary Committees Act 1968; (h) movable units within the meaning of the Housing Act 1983 that are constructed for Kids Under Cover Inc. that are used or intended to be used to provide accommodation on a non-profit basis. 4
Domestic Building Contracts and Tribunal (General) (3) For the purposes of section 6(a) of the Act, work is not building work to which the Act applies if it is work for the design, construction, extension, repair, replacement, maintenance, demolition or removal of all or any of the following works in relation to a subdivision (within the meaning of the Subdivision Act 1988) of land (a) the provision of roads, access ways, footpaths, bridges, dams, reserves, open spaces, or ornamental or decorative works associated with such works, within the subdivision; (b) works for sewerage, drainage, water supply, power, gas or telecommunications to connect the subdivision to the system serving properties outside it, excluding works to connect any particular property to the system for the subdivision; (c) engineering works, fencing works, landscaping works or retaining structures required under the planning scheme or the permit under the Planning and Environment Act 1987 for the subdivision; (d) works required for the issuing of any certificate of environmental audit under the Environment Protection Act 1970 for the subdivision. 5. Type of cost plus contract allowed (1) For the purposes of section 13(1)(a) of the Act, the classes of cost plus contracts allowed are (a) contracts for work that it is reasonably estimated will cost $500,000 or more; and r. 5 Reg. 4(3) 146/2004 reg. 3. Reg. 5 amended by 126/1999 reg. 3 (ILA s. 39B(2)). 5
r. 5 Reg. 5(1)(b) amended by 126/1999 reg. 3. Reg. 5(1)(c) 126/1999 reg. 3. Reg. 5(2) 126/1999 reg. 3. Domestic Building Contracts and Tribunal (General) (b) domestic building contracts for public construction as defined in section 3(1) of the Project Development and Construction Management Act 1994 where the Crown or a public statutory authority is a party to the contract; and (c) domestic building contracts described in subregulation (2). (2) A domestic building contract that meets the following criteria is also allowed as a cost plus contract (a) it is entered into on or after 30 November 1999 and before 1 July 2000; and (b) some or all of the domestic building work to be carried out under it might be carried out on or after 1 July 2000; and (c) it contains (i) a clause in the form approved by the Director under section 15(2)(b) of the Act and published in the Government Gazette on 8 November 1999 that has next to it the signature, seal or initials of the building owner, and, before the contract was entered into, the builder gave the building owner a notice in the form approved by the Director under section 15(3)(a) of the Act and published in the Government Gazette on 8 November 1999; or 6
Domestic Building Contracts and Tribunal (General) r. 6 (ii) a provision enabling the builder to be paid any goods and services tax imposed by any law of the Commonwealth in respect of any domestic building work carried out under the contract on or after 1 July 2000 that is payable by the builder to the Commonwealth, and a warning in the form approved by the Director under section 33(2)(b) of the Act and published in the Government Gazette on 8 November 1999 is placed next to the contract price and specifies the provisions of the contract that allow for the change; or (iii) both the things described in subparagraph (i) and the things described in sub-paragraph (ii) and before the contract was entered into, the builder gave the building owner a notice approved by the Director under section 15(3)(a) of the Act and published in the Government Gazette on 8 November 1999; and (d) it does not contain any other provision that makes it a cost plus contract. 6. Progress payments For the purposes of section 40(4) of the Act, the prescribed manner of agreement is to include in the domestic building contract (a) a warning in the form of Form 1 of the Schedule which is to be signed by the building owner before the execution of the contract; and (b) a clause in the form of Form 2 of the Schedule. 7
r. 7 Reg. 7 reg. 7. Reg. 8 reg. 7. Reg. 9 reg. 8. Domestic Building Contracts and Tribunal (General) 7. Certain contracts exempt from provisions of Act (1) Section 15 of the Act does not apply to a domestic building contract for public construction. (2) Sections 31(1)(b), (c), (d), (i) and (n), 31(2), 33, 34 and 35 of the Act do not apply to a major domestic building contract for public construction. 8. Certain persons not required to make allowance for delays in time estimates Section 32 of the Act does not apply to a person performing work under a major domestic building contract for public construction. 9. Exemption for certain contracts relating to multistorey residential developments (1) The provisions of the Act set out in sub-regulation (2) do not apply (a) to a major domestic building contract; or (b) a builder in relation to a major domestic building contract or a proposed major domestic building contract if the contract or proposed contract is also a contract for the sale of a home that is part of a multi-storey residential development to which this regulation relates. (2) The provisions of the Act referred to in subregulation (1) are (a) Part 2, except Division 1; and (b) Part 3, except section 29. (3) This regulation applies to a multi-storey residential development that is being constructed, or is to be constructed, by a builder registered under the Building Act 1993 under a construction contract entered into before 1 May 1996 which provides for the completion of the development. 8
Domestic Building Contracts and Tribunal (General) r. 9 (4) In this regulation "multi-storey residential development" means a development consisting of 2 or more homes in which one or more of the homes is above or below any other home in the development. 9
Sch. Domestic Building Contracts and Tribunal (General) SCHEDULE FORM 1 Regulation 6(a) WARNING TO OWNER CHANGE OF LEGAL RIGHTS Section 40 of the Domestic Building Contracts and Tribunal Act 1995 provides that a builder cannot charge more than a fixed percentage of the total contract price at the completion of each stage of building a home. The Act also allows the parties to agree in writing to change the stages and the percentage of the contract price to be paid at the completion of each stage. There are several ways in which a particular contract can vary from the normal, and it is these exceptional cases which have caused the law to allow for these changes. Examples would include where it is very expensive to prepare the land for building for example, where the site is steep or rocky; where the house is so large that it will take a long time to complete, and intermediate progress payments are therefore required; where exceptionally expensive finishes are required, meaning that the final stage will represent a much larger proportion of the whole price; where an architect is engaged to independently assess the value of completed work for progress payments. You should not agree to progress payments different from that provided in the Act unless your house is unusual in some way and you are SURE THAT DIFFERENT PROGRESS PAYMENTS ARE NECESSARY and you understand clearly why the change is needed in the case of your particular house. If you have any doubts, you could contact Housing Industry Association The Master Builders' Association of Victoria Office of Fair Trading and Business Affairs Royal Australian Institute of Architects 10
Domestic Building Contracts and Tribunal (General) Sch.... I acknowledge that I have read this warning before signing the contract Signature of Building Owner 11
Sch. Domestic Building Contracts and Tribunal (General) FORM 2 Regulation 6(b) Progress payments The parties agree (i) that the progress payments fixed by section 40 of the Domestic Building Contracts and Tribunal Act 1995 do not apply; and (ii) that instead the percentages of the contract price and amounts payable are as follows Name of stage If this stage is not the same as a stage defined in section 40(1) of the Domestic Building Contracts and Tribunal Act 1995, what does this stage mean? Percentage of total contract price $ 12
Domestic Building Contracts and Tribunal (General) Endnotes 1. General Information ENDNOTES The Domestic Building Contracts and Tribunal (General), were made on 30 April 1996 by the Governor in Council under section 135 of the Domestic Building Contracts and Tribunal Act 1995, No. 91/1995 and came into operation on 30 April 1996. The Domestic Building Contracts and Tribunal (General) will sunset on 29 April 2007: see the Subordinate Legislation (Domestic Building Contracts and Tribunal (General) - Extension of Operation) Regulations 2006, 33/2006. 13
Endnotes Domestic Building Contracts and Tribunal (General) 2. Table of Amendments This Version incorporates amendments made to the Domestic Building Contracts and Tribunal (General) by statutory rules, subordinate instruments and Acts. Domestic Building Contracts and Tribunal (General) (Amendment), Date of Making: 29.10.96 Date of Commencement: 29.10.96 Domestic Building Contracts and Tribunal (General) (Amendment) Regulations 1999, 126/1999 Date of Making: 30.11.99 Date of Commencement: 30.11.99 Domestic Building Contracts and Tribunal (General) (Amendment) Regulations 2004, 146/2004 Date of Making: 30.11.04 Date of Commencement: 30.11.04 14
Domestic Building Contracts and Tribunal (General) Endnotes 3. Explanatory Details No entries at date of publication. 15