Home renovation with unregistered builder

Hi OzB

I'm planning major renovations to my house in WA on a cost-plus basis. I am looking at engaging a builder to to do this, who be carrying out the normal duties of a professional builder on a renovation project including engaging and supervising subcontractors, taking delivery of materials, scheduling etc. and possibly even doing some of the labour himself. This builder has done similar projects for, and was recommended by, other family members of mine, so is someone I trust. However, the builder is not registered and so in order to obtain a building permit I need to be an owner-builder. I broadly understand the process and responsibilities of an owner-builder, but my key question is how I should be structuring the arrangements between myself as the owner-builder and the unregistered builder to minimise my risks/exposure if something goes wrong?

For example, it makes sense to me that I should agree with the unregistered builder that I am entitled to hold independent inspections during key stages of the build and if defects are found then they must be remedied at the unregistered builder's cost.

Another example is where key subcontractors are involved (work that involves a material sum of money), me sighting their insurances and agreeing in writing with them in regard to the quote and scope/spec of their work directly, rather than going through the unregistered builder. However, is there risk to me in those subcontractors being directly engaged/employed by the unregistered builder?

On the topic of insurance, I am looking into taking out my own construction insurance.

Is there anything else specifically I should be looking at to protect my interests?

Comments

  • +7

    "Is there anything else specifically I should be looking at to protect my interests?"

    Yes, ditch this guy and engage a licensed builder!

    • In this instance there is a level of trust given the builder has performed work on properties owned by other members of my family. In addition although unlicensed has an ABN which has been active for 20 years.

      Obviously it would be preferable for the builder to be licensed, I guess what is almost equally important to me is a personal recommendation from someone that is trusted (a family member).

      Just looking for ways in which you would structure the arrangements such that if something goes wrong (which could be beyond anyone's control) then my risks would be minimised.

      • +4

        Unlicensed builder = uninsurable property, also if it doesnt meet the building code you are entirely responsible for the works done and the cost associated.

      • although unlicensed has an ABN which has been active for 20 years

        The obvious question is;
        Why is the person unlicensed, if they have been in business for 20 years ?

        • It sounds like he's a home handyman that does big jobs.

          I have no idea about WA but if it was NSW it affects insurance. That's why you see the ads on Gumtree "Home hamdyman, no job of $5000" as over $5k insurance is required. (It might be more now, last time I looked it was $5k).

      • In this instance there is a level of trust given the builder has performed work on properties owned by other members of my family. In addition although unlicensed has an ABN which has been active for 20 years.

        Personally, for me it would be "get proper insurance then come and talk to me" family member/friend or not, I would want to be protected.

        Why are they unlicensed? I know some people do a bit of building on the side and have been renovating and buying properties for many years so the ABN is simply for tax purposes. This person may have no idea what they are doing.

        Also, the fact remains they have no insurance so that would be up to you.

        I suggest you see a lawyer and have a contract drawn up clearly stating milestone dates, who is responsible if something goes wrong just after you move in etc

        Your family friend would be better suited as the project manager, then the individual contractors should have insurance.

  • I guess all you can really do is have a contract drawn up clearly stating what he is responsible for, any associated warranty/rectification of works and the associated costs. I'm assuming it would be a fair amount of money so you'd need a contract anyway.

    I don't see why the contractors cannot be organised by the unregistered builder, he is effectively acting as a project manager while you are the (owner) builder.

  • Are you making any structural changes?
    E.g. knocking out load bearing walls?

  • Just don't.
    So many potential pitfalls which could lead to life altering financial issues.

  • The scope of what "major renovations" can be rather dizzying. Without knowing exactly what you're doing, I think the advise above is reasonable.

    I wouldn't change any load bearing structure without a licensed builder. Drywall framing, changing windows/doors etc. is easy and perfectly okay for an unlicensed builder (in Vic) to complete.

    Also, regardless of licensed or not, I always ensure the flashings are done correctly. Seems like wood rot is an underestimated issue in Australia.

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