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Licence lending reminder

May 07, 2019

Licence lending involves a registered builder allowing a third party to use their builder’s registration to carry out building work with very little to no involvement by the registered builder. This has always been a reckless activity and with law reforms over the past few years it has become even more dangerous and also easier to detect. Reforms to owner-builder approval laws and registration law changes such as the prohibition on DB-Ls building spec homes have also contributed to an increased demand for lending of a builder’s licence. When you consider how much work is involved in obtaining and retaining your builder’s registration it is extraordinary there are registered builders foolish enough to risk their business and their career by lending their licence.

Sometimes licence lending will be blatant but sometimes it can be more subtle. HIA is noticing that some members with builder’s registration are being approached to be involved in joint ventures, partnerships or similar schemes. While this can be a legitimate business activity the registered builder needs to be careful to undertake due diligence before entering into such proposed businesses. If a member is approached to become involved in a proposed business and the likely reason for the invitation is their holding a building registration then caution is required. Members need to get appropriate legal and accounting advice about the proposed business – and not from a lawyer or accountant recommended by their potential business partner. A legitimate potential business partner will have no reason to object to your getting your own advice. Members also need to consider that while they may not be contributing as much money, if any, to the proposed business; they are contributing a critical asset – being their builder’s registration. They also have more to lose if things go wrong – a risk to their holding domestic building insurance eligibility and builder’s registration. For these reasons a registered builder should be expecting to engage directly with the land owner, deal with all consultants and contractors, control and supervise the building work, and be financially well rewarded for their participation in the business.

For further clarification please call 1300 650 620 to speak with HIA Workplace Services.