Section 137B owner-builder resale rules in Victoria

What it is

Section 137B of the Building Act 1993 (Vic) restricts an owner-builder from selling a home on which they carried out domestic building work within 6 years and 6 months of completion of that work. The restriction protects a downstream purchaser from inheriting defective work without the statutory protections that apply to work delivered by a registered builder. It operates alongside section 137C, which implies the warranties in section 8 of the Domestic Building Contracts Act 1995 into the contract of sale for the same window.

Section 137B is still in force. The Building Legislation Amendment (Buyer Protections) Act 2025 amended section 137B(2)(b) from 1 July 2026 so that the vendor must have complied with the requirements of the new statutory insurance scheme rather than simply holding the old DBI cover. The section itself, the report requirement and the warranty transfer are unchanged.

The two sections work together. Section 137B sets the procedural gate the owner-builder must pass to legally complete the sale. Section 137C sets the substantive warranty the purchaser receives. A failure on the first makes the contract of sale voidable at the purchaser's election before completion. A failure on the second exposes the owner-builder to direct claims for the cost of rectification.

The section 137B requirements

Before signing a contract of sale for a property on which the owner-builder has carried out domestic building work in the past 6 years and 6 months, the owner-builder must take three steps.

First, obtain a defects report from a prescribed building practitioner. The inspector must hold a current registration in a class authorised to inspect the type of work performed. The report must identify all defects in the work and the items that are incomplete. It has a six month shelf life and must be obtained not more than six months before the contract of sale.

Second, attach the report to the section 32 vendor statement. The Sale of Land Act 1962 vendor statement must include the report as an annexure. Failure to attach lets the purchaser rescind before settlement under section 32K of the Sale of Land Act 1962.

Third, hold the required statutory insurance for the work and disclose it in the section 32. Which product applies turns on the date of the work.

• Owner-builder work done under a certificate of consent from 1 July 2026 is covered by the new first-resort statutory insurance scheme, the same Home Warranty scheme that replaced DBI. It is required where the domestic building work was done under a certificate of consent and valued at more than $20,000. It is first resort, so the purchaser can claim for incomplete, defective or non-compliant work without the owner-builder having died, disappeared or become insolvent. The cap is $400,000. The owner-builder buys the cover from a distributor appointed by the Building and Plumbing Commission (BPC) and discloses a notice of cover in the section 32 under section 32B of the Sale of Land Act 1962.
• Earlier owner-builder work is covered by owner-builder Domestic Building Insurance (DBI), the last-resort scheme required where the work was valued at more than $16,000. DBI responds only where the owner-builder has died, disappeared or become insolvent. The cap is $300,000 and a certificate of currency is disclosed in the section 32. DBI is now issued by the BPC, which took the function over from the Victorian Managed Insurance Authority (VMIA) on 1 July 2025. Existing DBI policies continue on their terms.

Definition of completion

Completion is the date the relevant building permit was finalised by the relevant building surveyor through the issue of an occupancy permit or certificate of final inspection. Where no permit was required the date defaults to practical completion of the work. The 6 years and 6 months window runs from this date, not from settlement of the original land purchase or from the start of construction. If neither an occupancy permit nor a certificate of final inspection is issued or required, section 137B(7) sets the window at seven years from the building permit, or six years and six months from the commencement date the owner declares by statutory declaration where no permit was required.

The section 137C warranty

Section 137C implies the section 8 warranties of the Domestic Building Contracts Act 1995 into the owner-builder's contract of sale. The warranties cover that the work was carried out in a proper and workmanlike manner in accordance with the plans and specifications, that materials supplied were good and suitable for the purpose and that the work complied with the Building Act 1993 and the Regulations in force at the time.

The warranty runs in favour of the immediate purchaser and any subsequent purchaser whose interest arises within the unexpired portion of the window. The owner-builder cannot exclude or limit the warranty by terms in the section 32 vendor statement, by special conditions in the contract of sale or by a side deed. A purported exclusion is void under section 132 of the Domestic Building Contracts Act 1995.

Enforcement and TradeLens risk

Consumer Affairs Victoria investigates section 137B breaches and the Building and Plumbing Commission cross-references owner-builder permits against property transactions recorded by Land Use Victoria. A sale within the window that lacks the report on the section 32, or that misstates the insurance position, triggers a regulatory referral and a potential rescission claim from the purchaser.

For TradeLens clients the section 137B framework applies whenever a director or related party has held an owner-builder certificate of consent. The risk pattern repeats. The owner-builder applies for a certificate of consent and a building permit, completes the work, lists the property within five or six years and is told at settlement that the required insurance is not in place or that the section 32 quotes the wrong scheme. Settlement collapses, the buyer claims damages and the vendor faces a Consumer Affairs Victoria complaint. TradeLens flags any property held in a related entity where the owner-builder window is still open against the sale workflow.