Domestic Building Contracts Regulations 2017

Version No. 002

Domestic Building Contracts Regulations2017

S.R. No. 18/2017

Version as at
26 April 2017

TABLE OF PROVISIONS

Regulation Page

1 Objectives 1

2 Authorising provision 1

3 Revocation 2

4 Commencement 2

5 Definitions 2

6 Major domestic building contract—contract price for the carrying out of domestic building work 3

7 Building work to which Act does not apply—work to be carried out under a contract for one type of work only 3

8 Building work to which the Act does not apply—certain buildings and premises 4

9 Building work to which the Act does not apply—subdivisions 5

10 Type of cost plus contract allowed 6

11 Certain contracts exempt from provisions of the Act 7

12 Certain persons exempt from provisions in the Act 7

13 Progress payments 7

14 Fee for request to chief dispute resolution officer for assessor 8

Schedule 1 9

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Endnotes 12

1 General information 12

2 Table of Amendments 14

3 Amendments Not in Operation 15

4 Explanatory details 16

Version No. 002

Domestic Building Contracts Regulations2017

S.R. No. 18/2017

Version as at
26 April 2017

Domestic Building Contracts Regulations2017

S.R. No. 18/2017

1 Objectives

The objectives of these Regulations are—

(a) to fix the amount of the contract price for thecarrying out of domestic building work for the purposes of the definition of major domestic building contract in section 3(1) ofthe Act; and

(b) to prescribe certain work as building work to which the Act does not apply; and

(d) to allow certain contracts to be cost plus contracts for the purposes of section 13 of the Act; and

(e) to prescribe, with regard to progress payments, the manner in which parties to a contract may agree that section 40(2) and (3) of the Act do not apply; and

(f) to prescribe a fee for requests to the chief dispute resolution officer for an assessor under section 48C(3) of the Act.

2 Authorising provision

These Regulations are made under section 135 of the Domestic Building Contracts Act 1995.

3 Revocation

The Domestic Building Contracts Regulations 2007[1] are revoked.

4 Commencement

(1) These Regulations, except regulation 6 and regulation 14, come into operation on 22April 2017.

(2) Regulation 14 comes into operation on 26 April 2017.

(3) Regulation 6 comes into operation on 1 August 2017.

5 Definitions

In these Regulations—

public construction has the same meaning as in section3(1) of the Project Development and Construction Management Act 1994;

public entity has the same meaning as in section4(1) of the Public Administration Act 2004;

school has the same meaning as in section 1.1.3(1) of the Education and Training Reform Act 2006;

subdivision has the same meaning as in the Subdivision Act 1988;

the Act means the Domestic Building Contracts Act 1995;

university has the same meaning as in section 1.1.3(1) of the Education and Training Reform Act 2006.

6 Major domestic building contract—contract price for the carrying out of domestic building work

For the purposes of the definition of major domestic building contract in section 3(1) oftheAct, an amount of $10000 is fixed.

7 Building work to which Act does not apply—work to be carried out under a contract for one type of work only

For the purposes of section 6(2) of the Act, any ofthe following types of work is not building work to which the Act applies if the work is to becarried out under a contract for only that type of work—

(a) attaching external fixtures (including awnings, security screens, insect screens andbalustrades);

(b) electrical work;

(d) installing floor coverings;

(e) insulating;

(f) painting;

(g) plastering;

(h) plumbing work as defined in section 221C of the Building Act 1993;

(i) tiling (wall and floor);

(j) erecting a chain wire fence to enclose a tennis court;

(k) erecting a mast, pole, antenna, aerial or similar structure.

8 Building work to which the Act does not apply—certain buildings and premises

For the purposes of section 6(2) of the Act, work carried out in relation to any of the following is not building work to which the Act applies—

(a) the official residence of the Governor of Victoria;

(b) premises that are used or intended to be used at a school, university or other educational or training institution as accommodation for students or staff;

(i) a community service established under section44 of the Children, Youth and Families Act 2005; or

(ii) a community service registered under section46 of that Act, which is situated on Crown land or land in relation to which the Secretary to the Department of Health and Human Services or the Director of Housing is registered as proprietor; or

(iii) a remand centre within the meaning of that Act; or

(iv) a secure welfare service within the meaning of that Act; or

(v) a youth residential centre within the meaning of that Act; or

(vi) a youth justice centre within the meaning of that Act;

(d) premises that are used or intended to be used as—

(i) a prison established under section10 of the Corrections Act 1986; or

(ii) a community corrections centre established under Part 9 of that Act;

(e) premises that are used or intended to be used as—

(i) a residential institution within the meaning of the Disability Act 2006; or

(ii) a residential treatment facility within the meaning of that Act;

(f) premises that are used or intended to be usedto provide accommodation within the Parliamentary reserve within the meaning ofthe Parliamentary Precincts Act 2001;

(g) a movable unit within the meaning of theHousing Act 1983 that is constructed forKids Under Cover Inc. that is used orintended to be used to provide accommodation on a non-profit basis.

9 Building work to which the Act does not apply—subdivisions

For the purposes of section 6(2) of the Act, work is not building work to which the Act applies if it is work for the design, construction, extension, repair, replacement, maintenance, demolition or removal of all or any of the following works in relation to a subdivision of land—

(a) the provision of roads, access ways, footpaths, bridges, dams, reserves, open spaces, or ornamental or decorative works associated with such works, within the subdivision;

(b) works for sewerage, drainage, water supply,power, gas or telecommunications toconnect the subdivision to the system serving properties outside the subdivision, excluding works to connect any particular property to the system for the subdivision;

(i) the planning scheme made under the Planning and Environment Act 1987 applying to the land; or

(ii) a permit granted under that Act for the subdivision;

(d) works required for the issuing of any certificate of environmental audit or statement of environmental audit under theEnvironment Protection Act 1970 forthe subdivision.

10 Type of cost plus contract allowed

For the purposes of section 13(1)(a) of the Act, the following classes of cost plus contracts are allowed—

(a) contracts for work entered into before 1August 2017 that it is reasonably estimatedwill cost $500000 or more;

(b) contracts for work entered into on or after1August 2017 that it is reasonably estimatedwill cost $1000000 or more;

11 Certain contracts exempt from provisions of the Act

(1) Sections 15(3), 31(2), 33(3), 34 and 35 of the Act do not apply in relation to a major domestic building contract for public construction.

(2) Section 31(1)(d) of the Act does not apply to a major domestic building contract—

(a) which relates solely to the preparation of plans and specifications for the carrying out of domestic building work; or

(b) under which the preparation of plans and specifications for domestic building work is a component of the domestic building work to be carried out under the contract.

12 Certain persons exempt from provisions in the Act

Sections 15(2), 31(1), 32 and 33(2) of the Act donot apply to a builder who enters into a major domestic building contract for public construction.

13 Progress payments

(1) For the purposes of section 40(4) of the Act, when parties to a major domestic building contract agree that section 40(2) and (3) of the Act do not apply to that contract, the manner of agreement is to include in the major domestic building contract—

(a) a warning in the form of Form 1 in Schedule1, which is signed by the building owner before the building owner signs the major domestic building contract; and

(b) a clause in the form of Form 2 in Schedule 1, which is signed by the building owner and the builder before they sign the major domestic building contract.

(2) Despite the revocation of the Domestic Building Contracts Regulations 2007, for the period commencing on 22 April 2017 and ending on 31July 2017, it is sufficient compliance with subregulation (1) if a person complies with regulation 12 and Forms 1 and 2 in the Schedule to the Domestic Building Contracts Regulations 2007 as in force immediately before their revocation.

14 Fee for request to chief dispute resolution officer for assessor

For the purposes of section 48C(3) of the Act, the prescribed fee to accompany a request to the chief dispute resolution officer to direct an assessor is 77 fee units.

Schedule 1

Form 1

Regulation 13(1)(a)

Warning to owner—change of legal rights

Under section 40 of the Domestic Building Contracts Act 1995 (the Act) a builder cannot, under a major domestic building contract, charge more than a fixed percentage of the total contract price at the completion of each stage of building a home.

The Act also allows the parties to a major domestic building contract to agree in writing to change the stages and the percentage of the contract price to be paid at the completion of each stage.

There are several ways in which a particular major domestic building contract can vary from the normal and which might mean that different stages and percentages to those fixed in section 40 of the Act are appropriate for that contract. These are exceptional cases. Some examples of these cases may include—

· where it is very expensive to prepare the land for building for example, where the site is steep or rocky;

· where the home is so large that it will take a long time to complete, and intermediate progress payments are therefore required;

· where exceptionally expensive finishes are required, meaning that the final stage will represent a much larger proportion of the whole price;

· where significant work is required on a later stage of the contract before an earlier stage can be fully completed;

· where an architect is engaged to independently assess the value of completed work for progress payments.

You should not agree to progress payments that differ from those set out in section 40 of the Act unless your home is unusual in some way and you are SURE THAT DIFFERENT PROGRESS PAYMENTS ARE NECESSARY and you understand clearly why the change is needed in the case of your particular home.

If you have any doubts, you could contact—

· Consumer Affairs Victoria; or

· Law Institute of Victoria; or

· Royal Australian Institute of Architects.

I acknowledge that I have read this warning before signing the contract

Signature of building owner ______

Date ______

Form 2

Regulation 13(1)(b)

Progress Payments

The parties agree that—

(i) the progress payments set out in section 40 of the Domestic Building Contracts Act 1995 do not apply; and

(ii) instead the stages and percentages of the contract price and amounts payable are as follows—

Name of stage / Work involved in Stage (Ifthis stage is not the sameasa stage defined in section40(1) of the Domestic Building Contracts Act 1995, describe the work that is involved in this stage.) /
Percentage of total contract price /
Amount of progress payment

Signature of building owner ______

Date ______

AND

Signature of builder ______

Date ______

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Endnotes

1 General information

See www.legislation.vic.gov.au for Victorian Bills, Acts and current authorised versions of legislation and up-to-date legislative information.

The Domestic Building Contracts Regulations 2017, S.R.No.18/2017 were made on 12 April 2017 by the Lieutenant-Governor, as the Governor's deputy, with the advice of the Executive Council, under section 135 of the Domestic Building Contracts Act 1995, No.91/1995 and come into operation as follows:

Regulations 1–5, 7–13 on 22 April 2017: regulation 4(1); regulation 14
on 26April 2017: regulation 4(2); regulation 6 on 1 August 2017: regulation4(3).

The Domestic Building Contracts Regulations 2017 will sunset 10 years after the day of making on 12 April 2027 (see section 5 of the Subordinate Legislation Act 1994).

INTERPRETATION OF LEGISLATION ACT 1984 (ILA)

Style changes

Section 54A of the ILA authorises the making of the style changes set out in Schedule 1 to that Act.

References to ILA s. 39B

Sidenotes which cite ILA s. 39B refer to section 39B of the ILA which provides that where an undivided regulation, rule or clause of a Schedule is amended by the insertion of one or more subregulations, subrules or subclauses the original regulation, rule or clause becomes subregulation, subrule or subclause (1) and is amended by the insertion of the expression"(1)" at the beginning of the original regulation, rule or clause.

Interpretation

As from 1 January 2001, amendments to section 36 of the ILA have the following effects:

• Headings

All headings included in a Statutory Rule which is made on or after
1 January 2001 form part of that Statutory Rule. Any heading inserted in a Statutory Rule which was made before 1 January 2001, by a Statutory Rule made on or after 1 January 2001, forms part of that Statutory Rule.
This includes headings to Parts, Divisions or Subdivisions in a Schedule; Orders; Parts into which an Order is divided; clauses; regulations; rules; items; tables; columns; examples; diagrams; notes or forms.
See section 36(1A)(2A)(2B).