ACT Residential Building Contract Requirements

What it is

The Building Act 2004 (ACT) governs residential building contracts in the Territory, enforced by Access Canberra through the Construction Occupations Registrar. Part 6 is the part that matters: statutory warranties, the standard conditions power, residential building insurance and the fidelity fund scheme.

The surprise for anyone coming from NSW or Victoria is how little Part 6 puts inside the contract. The ACT regulates the insurance and the warranty hard. The document itself is left almost entirely to the parties.

The $12,000 threshold

Section 87 (c) switches Part 6 off below a prescribed amount, and section 37 of the Building (General) Regulation 2008 (ACT) sets it at $12,000. Below that there is no statutory warranty and no compulsory insurance.

ACT Government guidance puts the test in three parts: the work must be on a residential building, it must require a building approval and it must cost $12,000 or more. Structures you cannot live in, such as swimming pools, driveways and fences, sit outside it.

No requirement that the contract be in writing

Nothing in the Building Act 2004 requires a residential building contract to be written down. Section 89B defines a residential building work contract as one to carry out the work, or to sell a residential building where work is involved, or to arrange for someone else to carry out the work. It does not say written.

Guidance recommends writing and lists what should go in: party names, site address, start and completion dates, payment arrangements, plans and specifications, the price and variation provisions, plus signatures. That is advice, not a rule. There is no statutory duty to give the owner a copy of the contract either, though the builder must give the owner evidence of the insurance.

The standard conditions power that was never switched on

Division 6.2A reads like a mandatory contents regime. It is not one yet.

• Section 89C (1) lets a regulation prescribe a standard condition. Section 89C (2) makes entering a contract that omits one a strict liability offence, maximum 10 penalty units.
• Section 89D (1) lets a regulation prescribe documents that must be attached, carrying the same 10 penalty unit offence.
• Section 89E (1) lets a regulation prescribe a prohibited condition, and section 89E (2) makes it void.

Only the third is live. The Building (General) Regulation 2008 prescribes no standard condition at all. For required documents, section 38A prescribes whatever the Minister determines, and no determination has been made. The offences in sections 89C (2) and 89D (2) have nothing to bite on.

Section 38B does prescribe a prohibited condition. For a new class 1 building, or an alteration or demolition of an existing class 1 or class 2 building, a clause letting anyone but the landowner appoint or remove the certifier, or act as the owner's agent with the certifier, is void.

Warranties the contract cannot touch

Section 88 (1) implies warranties by force of the section into every contract to carry out residential building work to which the builder is a party. They do not need to be written in. The builder warrants compliance with the Act, proper and skilful work to the approved plans, good and proper materials, reasonable promptness where no date is stated and fitness for a purpose the owner made known.

Section 88 (3) passes the rights to successors in title. Section 88 (4) and section 38 of the Regulation end them 6 years after completion day for a structural element and 2 years for a non-structural one. Section 91 (3) is the lock: any provision that negatives, limits or modifies the operation of Part 6 is void.

Insurance is the real gate

The builder must hold a policy from an authorised insurer or a fidelity certificate before applying for a building commencement notice, and must give the owner evidence of it. Section 37 (4) makes the certifier check for it. No insurance, no notice, and the work cannot lawfully start.

Cover is at least $200,000 per dwelling, the period is 5 years and a claim must be lodged within 180 days. Insurable buildings are class 1 or class 2, no more than 3 storeys excluding parking levels. The triggers are narrow: insolvency, disappearance or death of the builder, and nothing else.

The owner-builder gap

Section 87 (b) switches all of Part 6 off where an owner-builders licence has been granted. Not the warranty, not the insurance, none of it.

That matters most to the next buyer. Buy an owner-built Canberra home and nothing stands behind the work. The warranty that would have run with the building for 6 years was never created. Check the licence history before exchange, because the contract for sale will not tell you.