Know your rights and responsibilities when building or renovating

If you're building or renovating, it is important to do your research before you start.

It may surprise you to know that nearly everything you build on land requires a building permit and sometimes a planning permit. If your building work is over $5,000 then your builder must be registered, and if the building work is over $12,000 then the registered builder is also required to provide you with warranty insurance for the building work.

With the amount of time and investment in creating your ideal home by building or renovating, it is also worth making the effort to understand your domestic building contract. If the work costs more than $5,000, a major domestic building contract is required.  The contract must include a start date, finish date and details about progress payments. 

It is also important that you know what regulations and procedures are in place to ensure your building work is completed successfully and what to do if a dispute arises.

There are also many other things to consider such as whom you should use to manage and complete your building work and what their obligations are to fulfil the job. If you decide to be an owner-builder, you will need to take responsibility for insurance, occupational health and safety and other compliance matters just like a builder, so understanding your rights and responsibilities is paramount.

There are many regulations and initiatives that are there to protect you during the building process. Therefore, understanding the Building Act 1993 and Building Regulations 2006 or seeking advice from professionals who understand them and the building process, will make building or renovating far more satisfying.

• All of Victoria's building work must comply with the Building Act 1993, Building Regulations 2006 and the Building Code of Australia 2006, unless specifically exempted. The innovations introduced by this legislation, have assisted building owners and building practitioners to produce buildings that are healthy, safe, habitable and energy-efficient in a timely and cost effective manner.

The Building Commission, established by the Building Act 1993, provides industry leadership and regulates building quality. Victoria's building legislation is among the best in the world and we want to keep it that way. This means that the Building Commission is constantly looking for ways to improve the State's building regulation system. As a result, amendments to regulations have occurred, on average, twice a year. 

• The Building Act and Building Regulations legislate that most building work is subject to the issuing of a building permit. Building permits are a system of control on construction of building work.

It is important to remember that building legislation is there to protect you and to provide a viable built environment for all Victorians. 

Deposits and progress payments

Knowing your rights when it comes to making deposits and progress payments for work during the construction phase is important. You should be aware that if you make a payment in advance of completion of a progress stage, you could compromise your insurance cover.

The schedule of progress payments is set out under section 40 of the Domestic Building Contracts Act 1995, so make sure you understand this or seek the advice of someone who does. Parties entering their own schedule of payments should seek expert advice.

Based on the Domestic Contract Act 1995, here is an explanation of how deposits and progress payments work:

For a contract price of $20,000 or more, a deposit cannot exceed five per cent. If the price is less than $20,000 then a deposit must not exceed ten per cent.

The main stages of house building are base, frame, lock-up and fixing. The maximum progress payments for each stage of the work (unless otherwise agreed pursuant to section 40(4) of the Domestic Building Contracts Act 1995) are as follows:

• No more than 20 per cent at base stage and 25 per cent at frame stage, if the building is to be carried through to lock-up.
  
  
• No more than 12 per cent at base stage, 18 per cent at frame stage and 40 per cent at lock-up, if the building is to be carried through to fixing stage.
  
  
• No more than ten per cent at base stage 15 per cent at frame, 35 per cent at lock-up and 25 per cent at fixing stage, if the builder is completing all the stages.