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Although owner-builders are required to carry out a short course to obtain their permit, they do not have the skills and expertise of a qualified Queensland Building and Construction Commission (‘QBCC’) licensed contractor (‘licensed contractor’). Furthermore, the Queensland Building and Construction Commission Act 1991 (Qld) (‘the Act’) sets out specific rules that apply when contracting with owner-builders and is aimed at ensuring compliance and protecting both parties.
So, before agreeing to enter into a contract with an owner-builder, make sure you are familiar with these requirements as well as the potential risks and responsibilities.
An owner-builder is an individual who obtains an owner-builder permit from the QBCC to personally manage, supervise and undertake building work (valued over $11,000) on land that they own.
Instead of engaging a QBCC licensed builder, the owner-builder takes on this role themselves. This means they are responsible for engaging and coordinating contractors, as well as scheduling the work.
However, owner-builders are restricted from performing certain types of works such as:
By obtaining an owner-builder permit, the permit holder assumes the role of head contractor for their building project. The work is carried out with the assistance of licensed contractors who are engaged as subcontractors to the owner-builder. For example, an owner-builder must engage a licensed tiler as a subcontractor for tiling work.
Before agreeing to carry out work for an owner-builder, licensed contractors should:
If you are carrying out domestic building work valued over $3,300 including GST you need a written contract, even if the client is an owner-builder. There are no exemptions or special rules for working with owner-builders.
Accordingly, if you choose to work with an owner-builder, both parties must ensure that a written subcontract is in place. While written agreements are always required when subcontracting, they are especially critical in the context of owner-builder arrangements. A clear subcontract ensures the licensed contractor’s scope of work is clearly defined, avoiding any ambiguity regarding roles and responsibilities.
The Project Trade Contract is the most suitable HIA subcontract for use when engaging with an owner-builder.
Disputes in building projects are not uncommon, and can occur on any project, regardless of whether an owner-builder is involved. However, owner-builder projects are frequently known to have disputes regarding recommendation of trades or project scheduling. Owner-builders often have limited building knowledge which can lead to miscommunication, poor coordination, and unrealistic expectations—and when things go wrong, blame is often directed at the licensed contractor.
Owner-builders often lack the experience, systems, or knowledge to manage or obtain trades themselves. They may lean on industry professionals for help. Regardless of this, it is important to understand that these are responsibilities the owner-builder has taken on by obtaining a permit. If they do not want to manage these aspects, they should consider whether an owner-builder arrangement is suitable for them.
The risk in becoming too involved in coordination or referrals is that, if something goes wrong, the owner-builder may try to shift the blame to you for their actions or the actions of another contractor. This is particularly common where the owner-builder later claims they relied on your experience because they lacked the knowledge to make those decisions themselves (e.g. “I’m not a builder - how was I supposed to know that?”).
Builders are also frequently asked to ‘supervise’ or ‘coordinate’ the works, often for an hourly rate. This is particularly risky. If you are paid to supervise and a defect arises or workmanship is poor, the owner-builder may allege that you failed in your supervisory role. Whether you are legally liable depends on the facts of the situation, but these disputes can become time-consuming and costly, especially where the owner-builder is unwilling to accept responsibility.
Charging by the hour may be poor compensation to you for the legal and reputational risk you are being asked to take on. You can still be issued a Direction to Rectify by the QBCC, even though the owner-builder is not entitled to claim under the Home Warranty Insurance Scheme (‘HWIS’).
Owner-builders are not entitled to assistance under the HWIS. This means they are not protected if:
As a result, contractors are not required to pay the HWIS premium when working for an owner-builder.
However, many contractors overlook that they can still be held responsible for defective work performed for an owner-builder. If a complaint is made to the QBCC, the QBCC may investigate and issue a Direction to Rectify. Failure to comply with a Direction to Rectify is an offence under the Act.
Maintain detailed documentation of all communications, instructions, contracts, variations, and photographs of completed work. These records are critical if a dispute arises.
Do not perform work outside your licence class or agreed contract scope. Avoid acting in roles such as project manager, site supervisor, or builder - these are the owner-builder’s responsibilities and create unnecessary risk for you.
If you are unsure about your obligations or a request from the owner-builder, seek legal or industry advice before proceeding.
Align payment milestones with project progress to reduce financial exposure. Ensure you are paid regularly and understand your rights under Queensland’s Security of Payment laws, which may assist in recovering unpaid amounts.
Ultimately, the decision to engage with an owner-builder is a commercial judgment that will depend on your risk appetite and management. While such arrangements may offer worthwhile opportunities for some licensees, it is important to be aware of the potential challenges involved. By understanding these risks in advance, proactive measures can be taken to mitigate and manage them, helping to ensure the best possible outcome for the project.
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