Residential Building Contract Requirements in Tasmania

What it is

A residential building work contract in Tasmania is a contract between a building contractor and an owner for residential building work. The Residential Building Work Contracts and Dispute Resolution Act 2016 (Tas) governs what must be in it, how it is signed and what is implied into it whether or not anyone writes it down. Contracts between a builder and a subcontractor or supplier are excluded, as are contracts with an owner builder under the Building Act 2016.

The $20,000 trigger

Section 9(a) sets the boundary. The Act does not apply to residential building work performed for a contract price of less than $20,000, unless a regulation prescribes a higher figure. Above that line every requirement below applies. Below it, none of them do, and the Australian Consumer Law is the fallback.

The threshold is high by national standards. New South Wales requires a written contract once the price exceeds $5,000 and treats work over $20,000 as a large job needing the full contract.

Splitting a job does not help. Section 8 treats two or more separate contracts that could have been a single residential building work contract as one contract, priced at the sum of the parts.

What the contract must contain

Section 13 requires the contract to be in written form when it is entered into, or put into writing as soon as practicable and in any case within 5 business days, and before work begins. Section 14(1) lists what it must carry:

• English, readily legible, and setting out in full all the terms
• the names of the parties
• the builder licence number, where the builder holds a licence under the Occupational Licensing Act 2005
• a description of the work, with any plans and specifications
• the contract price, or a method for calculating it plus a fair and reasonable estimate
• the date of practical completion, or the method for estimating it
• the warranties that form part of the contract under Part 6
• any provisions required by a determination of the Director of Building Control
• a required checklist summarising the contract in readily comprehensible language
• a copy of the Residential Building Consumer Guide, unless already given

Signing and the five business day copy

Section 15 is short and severe. A residential building work contract has effect only if it is signed by the building contractor and the owner or their authorised agents. An unsigned document is not a contract under this Act.

Two handover duties sit either side of signing. Section 39 requires the builder to give the owner the Residential Building Consumer Guide before either party enters the contract. Section 16 then requires a readily legible signed copy of the contract, with the guide attached, within 5 business days of entering it.

The statutory warranties

Part 6 implies warranties into every residential building work contract, and they apply whether or not they appear in the document. The builder warrants that materials will be good and suitable and, unless the contract says otherwise, new (s 23); that the work will comply with all relevant laws and legal requirements (s 24); and that it will be performed in an appropriate and skilful way with reasonable care and skill (s 25). Where the facts trigger them, further warranties cover adherence to plans and specifications (s 27), suitability for occupation (s 28), reasonable diligence (s 29) and the calculation of provisional sums and prime cost items with reasonable care and skill (s 30).

Proceedings for breach must start within 6 years after the date of practical completion (s 32(1)), and the warranties pass to later owners (s 31).

Why the warranties carry the load in Tasmania

Tasmania has no compulsory home warranty insurance, and CBOS describes its Financial Assistance Package as standing in for a home warranty insurance model still being developed. Everywhere else an insurer backstops a builder who dies, disappears or becomes insolvent. In Tasmania the contract and the statutory warranties are what the owner has, which is why section 78 matters. Any exclusion, limitation, modification or waiver of a right conferred by the Act, or of a statutory warranty implied by it, is void. So is any arrangement whose purpose or effect is to defeat, evade or avoid the Act.

What non-compliance costs

Failing to put the contract in writing, leaving out a section 14 item or missing the five business day copy each carries a maximum fine of 800 penalty units for a body corporate and 300 penalty units for an individual. Giving the guide late is 300 and 100.

The commercial consequence is worse than the fine. An unsigned contract has no effect under section 15, and an owner who never received the guide keeps a live withdrawal right.