April 22, 2024
Building or renovating a home is a significant and costly investment. As a homeowner, the biggest draw and common trap for engaging an unlicensed builder is that they can often significantly outbid the competition. Whether motivated by cost savings or the convenience of engaging a ‘friend of a friend’, the risks are significant.
As explored throughout this series, a person carrying out building work without an appropriate builder licence commits an offence under the Queensland Building and Construction Commission Act 1991 (QBCC Act). Importantly, engaging unlicensed builders (whether knowingly or unknowingly) exposes a homeowner to compromised quality, safety hazards, legal complications and lack of insurance coverage. The promise of savings can obscure the hidden traps that lie beneath, and it is crucial to tread cautiously, as the choices made today will shape the outcome of your project tomorrow.
Implications of engaging unlicensed builders
Poor workmanship
Engaging unlicensed builders can have a significant impact on the quality of workmanship on your project and completion timeframes. Unlicensed building will typically use substandard materials, employ unskilled workers or cut corners to complete the job quickly which may result in the works not meeting the required standards of safety, quality and compliance with building codes and regulations. Work carried out by an unlicensed builder may also void the warranty of any products which have been installed.
Further, in the event of disputes arising from the construction project, homeowners may have little recourse or legal remedies against an unlicensed builder and may be forced to pay for defects or repairs themselves, as they will not have access to the dispute resolution mechanisms provided by the QBCC.
No insurance coverage
Typically, homeowners are afforded protection under section 67X of the QBCC Act through the QBCC Home Warranty Insurance Scheme. This statutory insurance scheme provides assistance to homeowners for loss associated with residential construction work that is defective or incomplete. The builder is required to collect a premium from the homeowner prior to works commencing, which is then paid to the QBCC on their behalf; however, if they are unlicensed they will be unable to do so.
In order to make a claim under the scheme, section 68H(1)(a)(ii) of the QBCC Act requires the construction contract to be with a licensed contractor unless (among other things) the homeowner has entered into a contract for construction work with a builder who fraudulently claims to be licensed (see section 68H(1)(c)). Further, knowingly contracting with an unlicensed builder to perform residential building work means that you will (if faced with defective or incomplete work), be unable to make a claim under this insurance scheme. Even if the builder has its own insurances in place (which is unlikely), an insurer confronted with a claim for indemnity will likely decline the claim because of the illegal actions of the builder in performing unlicensed building work.
Therefore, if your building contract is for more than $3,300 (including labour, material and GST) and your builder has not mentioned the QBCC Home Warranty Insurance or included the cost of the insurance premium in the quote or contract sum, it is likely that the work carried out will be uninsured. You should check the status of their building licence or insurance coverage with the QBCC prior to engaging them.
What do I do now?
If you discover your builder is unlicensed, it is important to act. You can complete and submit a Notice of Offence form to the QBCC who will investigate and take the appropriate action.
The QBCC requires a number of details to allow them to adequately investigate the issue, including:
- Details of the complaint;
- Your details and the unlicensed builder’s details;
- Location of the site and details of the building work being undertaken; and
- Any relevant evidence including contracts, invoices, plans and specifications, quotes, correspondence.
Once completed and signed, the form (and any attachments) can be submitted via email to [email protected] or to the QBCC in person.
Note, the QBCC requires a complaint to be made within 2 years of the date of the offence.
Steps to prevent?
To steer clear of unlicensed builders, we recommend implementing these five easy steps when looking to engage a builder for your next project:
- Ask the builder to show you their QBCC builder’s licence;
- Perform a licence check through the QBCC licence search facility which can be found here;
- Ensure the licence is appropriate for all types of work they are providing;
- Check the ABN number for the builder and/or entity is correct and the name on the quote and resulting invoice matches the ABN registration; and
- Request to see Certificates of Currency or other written evidence that insurance premiums are paid to date (i.e., Public Liability, Professional Indemnity and Workers Compensation etc).
Lamont Project and Construction Lawyers
If you think you have engaged a builder who is performing building work that it is not licensed to perform or if you think that the work performed is defective, LPC Lawyers can assist you.
If you would otherwise like to discuss any matters raised in this article as it relates to your specific circumstances, please contact use today.
The content of this article is for information purposes only and does not discuss every important topic or matter of law, and it is not to be relied upon as legal advice. Specialist advice should be sought regarding your specific circumstances.
Contact: Peter Lamont or Stephanie Purser
Email: [email protected] or [email protected]
Phone: (07) 3248 8500
Address: Suite 1, Level 1, 349 Coronation Drive, Milton Qld 4064
Postal Address: PO Box 1133, Milton Qld 4064