Section 137B of the Building Act 1993
The statutory framework governing owner-builder obligations when selling residential property in Victoria
The Statutory Provision
Building Act 1993 (Vic) — Section 137B: Offence for owner-builder to sell building
(1) In this section, prescribed period means—
(a) if an occupancy permit or certificate of final inspection has been issued in relation to the building — the period of 6 years and 6 months after the date of issue of that permit or certificate;
(b) if a building permit has been issued but no occupancy permit or certificate of final inspection has been issued — the period of 7 years after the date of issue of the building permit;
(c) if no building permit has been issued — the period of 6 years and 6 months after the certified date of commencement of the work.
(2) A person who constructs a building must not enter into a contract for the sale of the building within the prescribed period unless—
(a) the person has obtained a report from a prescribed building practitioner on the current condition of the building; and
(b) the report was obtained not more than 6 months before the contract is entered into; and
(c) if the cost of the domestic building work carried out on the building by the person exceeds the prescribed amount — the person has obtained domestic building insurance in respect of the building and provided a certificate of the insurance to the purchaser.
Penalty: 100 penalty units.
(3) A contract entered into in contravention of subsection (2) is not void by reason only of the contravention but is voidable at the option of the purchaser at any time before the contract is completed.
Note that the section applies to a person who "constructs a building" — this is interpreted broadly to include not only new construction but also substantial renovations and alterations to existing buildings. The section is not limited to the original construction of a dwelling.
The Prescribed Period
The "prescribed period" is the timeframe within which the vendor's obligations under s137B are triggered. The period varies depending on what documentation was issued upon completion of the works:
| Scenario | Trigger Date | Period | Expires |
|---|---|---|---|
| Occupancy Permit or Certificate of Final Inspection issued | Date of issue | 6 years 6 months | 6.5 years after issue |
| Building permit issued, but no Occupancy Permit or Certificate of Final Inspection | Date of building permit | 7 years | 7 years after permit |
| No building permit issued | Certified date of commencement | 6 years 6 months | 6.5 years after commencement |
| Non-residential building (commercial property) | Date of issue / commencement | 10 years | 10 years after completion |
Note: The 6.5-year period is commonly referred to as "6 years and 6 months" in practice.
The Two Mandatory Conditions
Before entering into a contract of sale within the prescribed period, the owner-builder vendor must satisfy two conditions:
Defects Inspection Report
The vendor must obtain a report from a prescribed building practitioner on the current condition of the building. This report must have been obtained not more than 6 months before the contract of sale is entered into.
Who can prepare it?
A registered building surveyor, registered building inspector, or endorsed building engineer
What does it cover?
All owner-builder work, regardless of value — structural and non-structural defects
Domestic Building Insurance (if works exceed $16,000)
If the cost of domestic building work carried out on the building exceeds the prescribed amount of $16,000 (including materials and labour), the vendor must obtain Domestic Building Insurance (DBI) and provide a certificate of that insurance to the purchaser.
Coverage amount
Up to $300,000 for both structural and non-structural defects
When must it be obtained?
Before entering into the contract of sale — cannot be obtained retrospectively
Section 137C — Implied Warranties
In addition to the conditions in s137B, section 137C of the Building Act 1993 implies three statutory warranties into every contract of sale to which s137B applies. These warranties run with the land and can be enforced by successors in title.
Warranty (a) — Workmanship
The vendor warrants that all domestic building work carried out in relation to the construction by or on behalf of the vendor was carried out in a proper and workmanlike manner.
Warranty (b) — Materials
The vendor warrants that all materials used in that domestic building work were good and suitable for the purpose for which they were used and that, unless otherwise stated in the contract, those materials were new.
Warranty (c) — Compliance
The vendor warrants that the domestic building work was carried out in accordance with all laws and legal requirements, including the Building Act 1993 and the regulations.
Important: Section 137C(2) provides that any person who is a successor in title to the purchaser may take proceedings for a breach of these warranties as if that person were a party to the contract. Any provision purporting to restrict or remove this right is void.