The Regulation implements and operationalises the Home Building Act’s rules: it sets thresholds and exemptions for when contracting and advertising rules apply, prescribes mandatory contract content and prohibited terms, and creates a tightly regulated alternative indemnity regime with minimum cover, permitted exclusions, claim/notice rules and governance/filing requirements. It also fixes indexed licence/permit fees and penalty amounts. It affects builders, contractors, insurers/providers, licence‑holders, owners/purchasers and the Authority, shaping costs, product design, compliance burdens and consumer protections.
The Home Building Regulation 2014 (the Regulation) is subordinate legislation made under the Home Building Act 1989 (the Act). Its primary function is to flesh out the Act's licensing, contracting, insurance, dispute resolution, and enforcement regime for residential building work and specialist work in New South Wales. It does not create the core statutory warranties or licensing offences; instead it prescribes thresholds, forms, categories, exemptions, and machinery provisions that make the Act operable.
At its core the Regulation does four things. First, it classifies work. Clause 13 prescribes five building work categories (erection of pre-fabricated metal-framed home additions, general building work, kitchen/bathroom/laundry renovation, structural landscaping, swimming pool building) and 22 trade categories (bricklaying through to waterproofing). Clause 14 lists 16 specialist work categories (advanced LP gasfitting through to mechanical services and medical gas work). These classifications determine who needs a contractor licence, supervisor certificate, or tradesperson certificate (cll 15–16, 20 and Schedule 4).
Second, it regulates contracting. Clauses 4–12 set exemptions from the unlicensed contracting prohibition (s 4 of the Act) for exempt corporations, general contractors, and electricity supply authorities. They prescribe the $20,000 threshold for written contracts (cl 5), the $20,000 threshold for the cooling-off period (cl 7), mandatory contractual terms (cl 8 – checklist and Security of Payment Act information), and prohibitions on back-dating commencement (cl 10). Progress payment caps and deposit rules are reinforced by reference to ss 8 and 8A of the Act (cll 11–12).
Third, it governs licensing and permits. Part 3 (cll 13–29) imposes conditions on licences and certificates (e.g. cl 15 requires subcontracting of specialist work unless dual-licensed; cl 16A requires electrical supervisors to follow the Supervision Practice Standard published in Gazette No 266 of 12 July 2024). Owner-builder permit thresholds are set at $10,000 (cl 19), with prescribed interests in land (freehold or registered leasehold) and mandatory White Card training (cl 17). Disqualifications by reference to corresponding interstate laws are listed (cl 21). The Regulation also modifies the for owner-builder permits and restoration applications (cl 22).
Current sections
Direct links to the current provisions in Home Building Regulation 2014.
qualified supervisor, for electrical wiring work, has the same meaning as in the Act, section 14.
Supervision Practice Standard means the Supervision Practice Standard for Apprentices in the Electrical Industry published in Gazette No 266 of 12 July 2024.
Contracting for residential building work and specialist work
Part 2 Contracting for residential building work and specialist work
Part 2 Contracting for residential building work and specialist work
4
Exemptions relating to contracting and advertising
4 Exemptions relating to contracting and advertising
4 Exemptions relating to contracting and advertising
(1) A person is exempt from the requirements of section 4 (Unlicensed contracting) of the Act if the contract concerned is made by or on behalf of—
(a) an exempt corporation and the exempt corporation does not contract to do specialist work only under the contract, or
(b) a general contractor and the general contractor contracts to do specialist work (none of which is residential building work) under the contract and that specialist work is part only of the work to be done under the contract by the general contractor, or
(c) an electricity supply authority and the electricity supply authority contracts under the contract to do only installation, alteration or maintenance work on power lines forming part of an electrical installation.
(2) A person is exempt from the requirements of section 5 (Seeking work by or for unlicensed person) of the Act if the representation concerned is made by or about—
(a) an exempt corporation and the representation does not relate to specialist work only, or
(b) a general contractor and the representation relates to specialist work none of which is residential building work and that specialist work is only part of the work to be done, or
(c) an electricity supply authority and the representation relates only to installation, alteration or maintenance work on power lines forming part of an electrical installation.
general contractor means a contractor who carries on a business the principal object of which is to supply goods or services otherwise than by the doing of specialist work but the supply of which goods or services may incidentally involve the doing of specialist work.
cl 4: Am 2017 No 15, Sch 2.10.
5
Thresholds for contract requirements
5 Thresholds for contract requirements
5 Thresholds for contract requirements
(1) For the purposes of section 7 (1A) of the Act, the prescribed amount is—
(a) for contracts entered into before 1 March 2015—$5,000, and
(b) for contracts entered into on or after 1 March 2015—$20,000.
(2) For the purposes of section 7AAA of the Act, the prescribed amount is—
(a) for contracts entered into before 1 March 2015—$1,000, and
(b) for contracts entered into on or after 1 March 2015—$5,000.
6
6
6 (Repealed)
7
Thresholds for cooling-off period
7 Thresholds for cooling-off period
7 Thresholds for cooling-off period
For the purposes of section 7BA (1A) of the Act, the prescribed amount is $20,000.
8
Matters for inclusion in contracts to do residential building work
8 Matters for inclusion in contracts to do residential building work
8 Matters for inclusion in contracts to do residential building work
(1) A contract to do residential building work to which section 7 of the Act applies must include the following—
approved form means the form approved by the Secretary.
cl 8: Am 2017 (705), Sch 1 [4]. Subst 2018 No 65, Sch 8.5[1]; 2021 (132), cl 3(1).
9
Conditions to be included in certain contracts (before 1 March 2015)
9 Conditions to be included in certain contracts (before 1 March 2015)
9 Conditions to be included in certain contracts (before 1 March 2015)
(1) For the purposes of section 7E of the Act, a contract to do residential building work must include each of the conditions set out in Part 1 of Schedule 3.
(2) For the purposes of section 16DE of the Act, a contract to supply a kit home must include each of the conditions set out in Part 2 of Schedule 3.
(3) This clause does not apply to a contract entered into on or after 1 March 2015.
10
Terms of contracts to which section 8A of the Act applies
10 Terms of contracts to which section 8A of the Act applies
10 Terms of contracts to which section 8A of the Act applies
(1) For the purposes of section 7E (2) (b) of the Act, a relevant contract entered into on or after 1 March 2015 must not contain a term that provides that residential building work under the contract was taken to have commenced prior to residential building work being performed on the land to which the contract relates.
Note.
The above subclause limits the terms that can be included in certain contracts to do residential building work. It does not limit terms in a contract that relate to associated work that is not residential building work.
(2) In this clause—
relevant contract means a contract to do residential building work where the contract price exceeds $20,000 or (if the contract price is not known) the reasonable market cost of the labour and materials involved exceeds $20,000.
11
Thresholds for maximum progress payments
11 Thresholds for maximum progress payments
11 Thresholds for maximum progress payments
On and from 1 March 2015, the prescribed amount for the purposes of section 8A (1) of the Act is $20,000.
12
Thresholds for residential building work
12 Thresholds for residential building work
12 Thresholds for residential building work
For the purposes of clause 2 (3) (a) of Schedule 1 to the Act, the prescribed amount is $5,000.
Part 3
Contractor licences, certificates and owner-builder permits
Part 3 Contractor licences, certificates and owner-builder permits
Part 3 Contractor licences, certificates and owner-builder permits
Division 1
Categories of work
Division 1 Categories of work
Division 1 Categories of work
13
Categories of residential building work
13 Categories of residential building work
13 Categories of residential building work
For the purposes of sections 21 (1) (a) and 27 (1) (a) of the Act—
(a) the following building work categories of residential building work are prescribed—
(i) erection of pre-fabricated metal-framed home additions and structures,
(ii) general building work,
(iii) kitchen, bathroom and laundry renovation,
(iv) structural landscaping,
(v) swimming pool building, and
(b) the following trade categories of residential building work are prescribed—
(i) bricklaying,
(ii) carpentry,
(iii) decorating,
(iv) dry plastering,
(v) excavating,
(vi) fencing,
(vii) general concreting,
(viii) glazing,
(ix) joinery,
(x) metal fabrication,
(xi) minor maintenance and cleaning,
(xii) minor tradework,
(xiii) painting,
(xiv) roof plumbing,
(xv) roof slating,
(xvi) roof tiling,
(xvii) stonemasonry,
(xviii) swimming pool repairs and servicing,
(xix) underpinning or piering,
(xx) wet plastering,
(xxi) wall and floor tiling,
(xxii) waterproofing.
14
Categories of specialist work
14 Categories of specialist work
14 Categories of specialist work
For the purposes of sections 21 (1) (b) and 27 (1) (b) and (2) of the Act, the following specialist work categories are prescribed—
(a) advanced liquefied petroleum gasfitting work,
(b) air-conditioning work,
(c) disconnection and reconnection of fixed electrical equipment,
(d) draining work,
(e) electrical wiring work,
(f) gasfitting work,
(g) liquefied petroleum gasfitting work,
(h) plumbing work,
(i) refrigeration work,
(j) water plumbing—fire protection systems,
(k) water plumbing—fire sprinkler systems,
(l) water plumbing—urban irrigation,
(m) water plumbing work,
(n) medical gasfitting work,
(o) medical gas technician work,
(p) mechanical services and medical gas work.
cl 14: Am 2018 No 65, Sch 4.2[1]; 2020 (179), Sch 1[1]; 2020 (643), Sch 1[1].
Division 2
Authorities
Division 2 Authorities
Division 2 Authorities
15
Conditions of certain contractor licences
15 Conditions of certain contractor licences
15 Conditions of certain contractor licences
(1) A contractor licence that authorises work in a category of residential building work prescribed by clause 13 (a) is subject to the condition that the holder of the licence must not do any specialist work involved, and must instead enter into a subcontract with the holder of a contractor licence in the relevant category of specialist work, unless the holder of the first-mentioned licence also holds a contractor licence in the relevant category of specialist work.
(2) It is a condition of a contractor licence that the holder of the licence must comply with an order made by a court or the tribunal under section 48O (1) (c) of the Act.
16
Conditions of supervisor certificates
16 Conditions of supervisor certificates
16 Conditions of supervisor certificates
(1) A supervisor certificate that authorises work in a category of residential building work prescribed by clause 13 (a) is subject to the condition that the holder of the supervisor certificate may not do specialist work other than under the immediate supervision and direction of the holder of a contractor licence or supervisor certificate that permits the doing or supervision of the relevant category of specialist work, unless the holder of the supervisor certificate also holds an authority that permits the holder to do the relevant specialist work.
(2) It is a condition of a supervisor certificate that the holder of the certificate must comply with an order made by a court or the tribunal under section 48O (1) (c) of the Act.
16A
Condition of electrical wiring work authorities—the Act, s 36(1)(a)
16A Condition of electrical wiring work authorities—the Act, s 36(1)(a)
16A Condition of electrical wiring work authorities—the Act, s 36(1)(a)
It is a condition of a qualified supervisor’s endorsed contractor licence or supervisor certificate that the qualified supervisor supervises electrical wiring work in accordance with the Supervision Practice Standard, to the extent the standard does not conflict with the Act.
cl 16A: Ins 2024 (363), Sch 1[2].
17
Education, training and qualification requirements for issue of owner-builder permits
17 Education, training and qualification requirements for issue of owner-builder permits
17 Education, training and qualification requirements for issue of owner-builder permits
(1) For the purposes of section 31 (2) (d) of the Act, an applicant for an owner-builder permit must hold a current general construction induction training card (within the meaning of the Work Health and Safety Regulation 2011) before a permit may be issued.
(2) In addition, if the reasonable market cost of the labour and materials of proposed owner-builder work exceeds $20,000, the Secretary may approve additional education and training requirements that an applicant for an owner-builder permit must complete before an owner-builder permit may be issued.
The holder of an authority that is replaced by the Secretary—
(a) must surrender the original authority if it is recovered, or
(b) in the case of a damaged authority that is replaced, must surrender the damaged authority.
Maximum penalty—10 penalty units.
18A
18A
18A (Repealed)
19
Owner-builder permits
19 Owner-builder permits
19 Owner-builder permits
(1) For the purposes of the definition of owner-builder work in section 29 (1) of the Act, the prescribed amount is $10,000 (inclusive of GST).
(2) For the purposes of section 29 (3) of the Act, a person has a prescribed interest in land (so that the person is an owner of land for the purposes of Division 3 of Part 3 of the Act) if the person individually, jointly or in common, either at law or in equity—
(a) has a freehold interest in the land (such as where the person is duly registered under the Real Property Act 1900 as the proprietor of an estate in fee simple, whether unconditionally, for life or in remainder), or
(b) has a leasehold interest in the land that is registered under the Real Property Act 1900.
(3) The Secretary may require an applicant for an owner-builder permit who has a leasehold interest in the land concerned (other than a leasehold in perpetuity) to obtain the written permission of the person who has the freehold interest or leasehold interest in perpetuity in that land to carry out the work for which the permit is required.
20
Work descriptions on contractor licences or certificates
20 Work descriptions on contractor licences or certificates
20 Work descriptions on contractor licences or certificates
(1) Extended descriptions of the work that the holders of various categories of contractor licences, supervisor certificates or tradesperson certificates are authorised to do or contract to do are provided in Schedule 4.
(2) If the work that a contractor licence authorises its holder to contract to do is described in the contractor licence by the use of a work description specified in Column 1 of the Table in Schedule 4, the description is to be taken to refer to the work specified for the work category in Column 2 of that Table.
(3) Holders of contractor licences, supervisor certificates or tradesperson certificates on which are endorsed one or more of the work categories listed in Column 1 of the Table in Schedule 4 are authorised to contract to do or to do, as the case may be, the specialist work or the residential building work more fully described in Column 2 of the Table opposite each such work category.
21
Disqualifications from holding authorities: corresponding laws
21 Disqualifications from holding authorities: corresponding laws
21 Disqualifications from holding authorities: corresponding laws
For the purposes of the definition of corresponding law in section 33A of the Act, the following are prescribed—
(a) the Construction Occupations (Licensing) Act 2004 of the Australian Capital Territory,
(b) the Electrical Workers and Contractors Act, the Plumbers and Drainers Licensing Act, the Dangerous Goods Act (in so far as it relates to gas fitters) and the Building Act of the Northern Territory,
(c) the Queensland Building and Construction Commission Act 1991, the Electrical Safety Act 2002, the Plumbing and Drainage Act 2002 and the Petroleum and Gas (Production and Safety) Act 2004 of Queensland,
(d) the Building Work Contractors Act 1995 and the Plumbers, Gas Fitters and Electricians Act 1995 of South Australia,
(e) the Building Act 2000 and the Occupational Licensing Act 2005 of Tasmania (in so far as it relates to gas fitters),
(f) the Building Act 1993 and the Electricity Safety Act 1998 of Victoria,
(g) the Building Services (Registration) Act 2011, the Plumbers Licensing Act 1995, the Electricity Act 1945 and the Gas Standards Act 1972 of Western Australia.
22
Modification of Part 2 of Licensing and Registration (Uniform Procedures) Act 2002
22 Modification of Part 2 of Licensing and Registration (Uniform Procedures) Act 2002
(a) sections 9 and 10 do not apply in relation to an owner-builder permit,
(b) section 14 (1) is taken to read as follows—
(1) The relevant licensing authority may serve notice on an applicant requiring the applicant—
(a) to provide—
(i) such information further to the original information contained in the application, and
(ii) such documentary or other evidence in support of the original or further information,
as the authority may require to enable it to deal with the application, or
(b) to have his or her photograph taken by the authority, or to provide a photograph in a form specified by the authority,
(c) section 21 is taken to include the following subsection after section 21 (2)—
(2A) Except for the purposes of any proceedings for an offence or relating to a complaint under Part 4 of the Home Building Act 1989, an authority that is the subject of an application for restoration (a restoration application) that has been duly made is to be taken to have continued in force from the time the authority expired until one of the following occurs—
(a) the authority is renewed by the Secretary,
(b) if the Secretary rejects the application,
(c) the restoration application is withdrawn,
(d) section 21 is taken to include the following subsection after section 21 (8)—
(9) Nothing in this section prevents the suspension of a contractor licence (within the meaning of the Home Building Act 1989).
23
Contractor licences that are not required to be cancelled
23 Contractor licences that are not required to be cancelled
23 Contractor licences that are not required to be cancelled
(1) The Secretary is not required by section 22 (1) (h) of the Act to cancel a contractor licence held by a corporation due to circumstances set out in section 33B (1) (a) (xv) of the Act if—
(a) the circumstances set out in section 22B (1) of the Act apply, and
(b) the corporation has not been wound up and is not subject to a winding up order.
(2) The Secretary is not required by section 22 (1) (h) of the Act to cancel a contractor licence held by the director of a corporation due to circumstances set out in section 33B (1) (a) (xv) of the Act if—
(a) the circumstances set out in section 22B (1) of the Act apply, and
(b) the corporation has not been wound up and is not subject to a winding up order.
(3) The Secretary is not required by section 22 (1) (h) of the Act to cancel a contractor licence in circumstances to which section 42A of the Act applies.
(4) The Secretary is not required by section 22 (1) (h) of the Act to cancel a contractor licence in circumstances to which section 33B (1) (a) (v) or (vi) of the Act applies due to an order made under section 48O (1) (c) of the Act.
Division 3
Exemptions from restrictions on who may do certain work
Division 3 Exemptions from restrictions on who may do certain work
Division 3 Exemptions from restrictions on who may do certain work
24
Exemption relating to the doing of residential building work
24 Exemption relating to the doing of residential building work
24 Exemption relating to the doing of residential building work
(1) An individual who does residential building work in connection with a dwelling is exempt from the requirements of sections 12 (Unlicensed work) and 13 (Unqualified residential building work) of the Act if the individual owns the land on which the dwelling is located, the work does not include specialist work and the work does not need to be authorised by an owner-builder permit.
(2) For the purposes of this clause—
(a) if land is owned by a company that is wholly owned by individuals, the land is to be taken (for the purposes of this Division) to be owned by those individuals, and
(b) a reference to an owner of land includes a reference to a person who has a prescribed interest (as prescribed by clause 19 (2)) in the land.
25
Exemption relating to employees of certain corporations
25 Exemption relating to employees of certain corporations
25 Exemption relating to employees of certain corporations
An individual who does residential building work (not being specialist work) is exempt from the requirements of section 12 (Unlicensed work) of the Act if—
(b) the residential building work concerned is done in the ordinary course of the employee’s duties.
26
Exemptions relating to the doing of specialist work
26 Exemptions relating to the doing of specialist work
26 Exemptions relating to the doing of specialist work
(1) An individual who does specialist work is exempt from the requirements of section 12 (Unlicensed work) of the Act if the individual is the holder of an appropriate supervisor certificate and the work is done in connection with—
(a) premises that the holder owns or a dwelling in which he or she resides, or
(b) premises owned or occupied by the holder’s employer.
(2) An individual who does electrical wiring work is exempt from the requirements of sections 12 (Unlicensed work) and 14 (Unqualified electrical wiring work) of the Act if—
(a) the individual is employed by an electricity supply authority principally for the performance of work other than electrical wiring work, and
(b) the electrical wiring work concerned is done in the ordinary course of the employee’s duties.
(3) Subclause (1) does not apply to specialist work that is medical gasfitting work, medical gas technician work or mechanical services and medical gas work.
cl 26: Am 2020 (643), Sch 1[2].
27
Exemption relating to the doing of electrical wiring work by apprentices and trainees
27 Exemption relating to the doing of electrical wiring work by apprentices and trainees
27 Exemption relating to the doing of electrical wiring work by apprentices and trainees
An individual who does electrical wiring work without complying with section 14 (2) of the Act is exempt from the requirement of holding an authority referred to in section 14 (1) of the Act if—
(a) the individual is an apprentice or trainee, and
(b) the course of studies undertaken as part of the individual’s apprenticeship or traineeship includes a study of the kind of electrical wiring work the individual is doing, and
(c) the apprentice or trainee does that work under the supervision, and in accordance with the directions, of the qualified supervisor including any instructions about how the work is to be supervised or checked by the qualified supervisor.
Note—
See clauses 16A and 28 for the requirements for qualified supervisors.
cl 27: Am 2024 (363), Sch 1[3].
28
Exemption relating to supervision of electrical wiring work—the Act, s 140(2)(k)
28 Exemption relating to supervision of electrical wiring work—the Act, s 140(2)(k)
28 Exemption relating to supervision of electrical wiring work—the Act, s 140(2)(k)
A qualified supervisor is exempt from the requirements of the Act, section 14(4)(b) when supervising electrical wiring work if the qualified supervisor supervises the work in accordance with the Supervision Practice Standard.
cl 28: Subst 2024 (363), Sch 1[4].
29
Exemption from requirement to return authority when conditions are imposed
29 Exemption from requirement to return authority when conditions are imposed
29 Exemption from requirement to return authority when conditions are imposed
A person is exempt from the requirements of section 44 (Return of cancelled or varied authority) of the Act if the Secretary states in the notice imposing a condition on the authority concerned that there is no need for the condition to be endorsed on the authority.
Part 4
Resolution of building disputes and building claims
Part 4 Resolution of building disputes and building claims
Part 4 Resolution of building disputes and building claims
30
Transfer of proceedings from other courts
30 Transfer of proceedings from other courts
30 Transfer of proceedings from other courts
(1) For the purposes of section 48L of the Act—
(a) proceedings are to be transferred by order of the court hearing the proceedings, and
(b) notice of the transfer is to be given to the principal registrar of the Tribunal by the registrar of the court hearing the proceedings, and
(c) all documents relating to the proceedings in the custody of the court hearing the building claim are to be transferred by the registrar of the court to the principal registrar of the Tribunal.
(2) On receipt of such a notice of transfer and accompanying documents, the principal registrar must serve on all of the parties a notice fixing a date and time for the holding of the hearing or a directions hearing in relation to the proceedings.
31
Warning notice for Tribunal orders
31 Warning notice for Tribunal orders
31 Warning notice for Tribunal orders
For the purposes of section 48R of the Act, the following warning must be included in an order made under Part 3A of the Act—
WARNING FOR HOME BUILDING LICENCE HOLDERS
You must notify the NSW Fair Trading’s Home Building Service in writing when you have complied with an order (for example, when you have done the work or paid the money).
If you do not notify the Home Building Service, your public record will show that you have failed to comply with an order.
If you fail to comply with an order, you could be subject to penalties or disciplinary action.
If you failed to pay an order for more than 28 days after the due date, your licence will be automatically suspended. If you have an outstanding order for work, you will be unable to renew your licence when it expires.
You can be fined up to $22,000 if you falsely claim that you have complied with an order.
Part 5
Advertising
Part 5 Advertising
Part 5 Advertising
32
Display of signs when doing work requiring development consent
32 Display of signs when doing work requiring development consent
32 Display of signs when doing work requiring development consent
(1) A licensee must prominently display a sign on land if the licensee is doing residential building work on that land—
(a) that requires development consent, and
(b) that is authorised by the licence.
Maximum penalty—20 penalty units in the case of a corporation and 10 penalty units in any other case.
(2) The sign must show the following in clear and legible characters—
(a) the name of the licensee shown on the contractor licence,
(b) the words “licensed contractor” or words to that effect,
(c) the number of the contractor licence held by the licensee.
(3) This clause does not apply to the holder of a contractor licence—
(a) who contracts to do work that has been authorised by an owner-builder permit, or
(b) who has entered into a contract with the principal contractor to do the work concerned.
33
Advertising by holders of contractor licences
33 Advertising by holders of contractor licences
33 Advertising by holders of contractor licences
(1) A person who holds a contractor licence who publishes, distributes, displays or exhibits any advertisement of any kind relating to doing or contracting to do residential building work or specialist work by the person must ensure that the details required by this clause are included in the advertisement.
Maximum penalty—20 penalty units in the case of a corporation and 10 penalty units in any other case.
(2) If the licensed person is an individual, the following details are required—
(a) the holder’s name or, if the holder has a business name registered under the Business Names Registration Act 2011 of the Commonwealth in respect of the work to which the contractor licence applies, that business name,
(b) the number of the contractor licence held by the individual.
(3) If the licensed person is a partnership, the following details are required—
(a) the names of all the members of the partnership or, if the partnership has a business name registered under the Business Names Registration Act 2011 of the Commonwealth in respect of the work to which the contractor licence applies, that business name,
(b) the number of the contractor licence held by the partnership.
(4) If the licensed person is a corporation, the following details are required—
(a) the name of the corporation or, if the corporation has a business name registered under the Business Names Registration Act 2011 of the Commonwealth in respect of the work to which the contractor licence applies, that business name,
(b) the number of the contractor licence held by the corporation.
Part 6
Insurance requirements
Part 6 Insurance requirements
Part 6 Insurance requirements
34
Definitions
34 Definitions
34 Definitions
(1) In this Part—
beneficiary means a person entitled to claim a benefit provided under an insurance contract.
contractor means a person required by section 92 of the Act not to do residential building work under a contract unless an insurance contract is in force in relation to the work.
insurance contract means a contract of insurance required to be entered into under Part 6 of the Act.
insurer means the issuer or provider of an insurance contract.
(2) A reference in this Part to the disappearance of a contractor is a reference to disappearance from Australia and includes a reference to the fact that, after due search and inquiry, the contractor cannot be found in Australia.
cl 34: Am 2018 No 25, Sch 5.22 [1]; 2021 No 6, Sch 5.8.
35
Threshold for warning where no insurance for owner-builder work
35 Threshold for warning where no insurance for owner-builder work
35 Threshold for warning where no insurance for owner-builder work
For the purposes of section 95 (3) (b) of the Act, the amount of $20,000 (inclusive of GST) is prescribed.
36
Persons who may arrange insurance contracts
36 Persons who may arrange insurance contracts
36 Persons who may arrange insurance contracts
An insurance contract may be entered into for the purposes of Part 6 of the Act by a contractor, or by a beneficiary in respect of the work done, and may be arranged by any such person.
37
Beneficiaries
37 Beneficiaries
37 Beneficiaries
(1) An insurance contract must provide that the beneficiaries under the contract are—
(a) a person on whose behalf residential building work covered by the contract is done or is to be done, or
(b) a person who is a purchaser of land on which work required by Part 6 of the Act to be insured, and covered by the contract, is done, or
(c) a successor in title to any person referred to in paragraph (a) or (b).
(2) The following persons are not required to be beneficiaries under an insurance contract—
(a) a developer who does residential building work,
(b) a person who does residential building work other than under a contract,
(c) a holder of a contractor licence who carried out residential building work,
(d) related companies, within the meaning of section 50 of the Corporations Act 2001 of the Commonwealth, to any corporate person referred to in paragraph (a), (b) or (c),
(e) a body corporate that is related, within the meaning of section 50 of the Corporations Act 2001 of the Commonwealth, to any corporate person referred to in paragraph (a), (b) or (c),
(f) a body corporate that is a related party, within the meaning of section 228 of the Corporations Act 2001 of the Commonwealth, of any corporate person referred to in paragraph (a), (b) or (c).
(3) Nothing in this clause prevents a person referred to in subclause (2) from being a beneficiary under an insurance contract.
(4) For the purposes of this clause, the owner or owners of common property the subject of work referred to in Part 6 of the Act are taken to be purchasers of the land on which the common property is situated.
38
Misrepresentation or non-disclosure
38 Misrepresentation or non-disclosure
38 Misrepresentation or non-disclosure
An insurance contract must contain (and is taken to contain) a provision to the effect that the insurer is not entitled either to refuse to pay a claim under the contract or to cancel the contract on the ground that the contract was obtained by misrepresentation or non-disclosure by the contractor or that the policy premium was not paid providing, in the latter case, that a certificate evidencing insurance has been given or the insurer has otherwise accepted cover.
39
Time within which insurer taken to have accepted claim
39 Time within which insurer taken to have accepted claim
39 Time within which insurer taken to have accepted claim
(1) An insurance contract must contain (and is taken to contain) a provision to the effect that an insurer is taken to have accepted liability for an insurance claim if written notice of the insurer’s decision in relation to the claim is not given to the beneficiary within—
(a) 90 days of the lodging of the claim with the insurer, or
(b) such further time as may be agreed between the beneficiary and the insurer.
(1A) This clause does not apply to an insurance claim that relates to a loss that is not required by Part 6 of the Act to be covered by a contract of insurance.
(2) This clause does not apply to insurance contracts entered into before 1 September 2005.
cl 39: Am 2017 (705), Sch 1 [5].
40
Losses indemnified under insurance contracts (where single contract)
40 Losses indemnified under insurance contracts (where single contract)
40 Losses indemnified under insurance contracts (where single contract)
(1A) This clause does not apply to a warranty period insurance contract or a construction period insurance contract.
(1) An insurance contract must indemnify beneficiaries under the insurance contract for the following losses or damage in respect of residential building work covered by the insurance contract—
(a) loss or damage resulting from non-completion of the work because of—
(i) the insolvency, death or disappearance of the contractor, or
(ii) for policies issued on or after 19 May 2009, the suspension of a contractor licence pursuant to section 42A of the Act, and
(b) loss or damage arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or have the contractor rectify because of—
(i) the insolvency, death or disappearance of the contractor, or
(ii) for policies issued on or after 19 May 2009, the suspension of a contractor licence pursuant to section 42A of the Act.
(2) Without limiting subclause (1), an insurance contract must indemnify a beneficiary for the following loss or damage, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor and for policies issued on or after 19 May 2009, suspension of a contractor licence pursuant to section 42A of the Act—
(a) loss or damage resulting from faulty design, where the design was provided by the contractor, or
(b) loss or damage resulting from non-completion of the work because of early termination of the contract for the work because of the contractor’s wrongful failure or refusal to complete the work, or
(c) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of an event referred to in subclause (1), or
(d) loss of deposit or progress payment due to an event referred to in subclause (1), or
(e) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage.
(3) The insurance contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause.
(4) For the purposes of subclause (1), if residential building work has not commenced, the insurance contract may limit the loss or damage indemnified against to the loss of any deposit paid, but is not required to limit the loss or damage to that amount.
cl 40: Am 2017 (705), Sch 1 [6]–[8].
40A
Losses indemnified under construction period insurance contracts
40A Losses indemnified under construction period insurance contracts
40A Losses indemnified under construction period insurance contracts
(1) A construction period insurance contract must indemnify beneficiaries under the contract for loss or damage in respect of residential building work covered by the construction period insurance contract resulting from non-completion of the work because of—
(a) the insolvency, death or disappearance of the contractor, or
(b) the suspension of a contractor licence pursuant to section 42A of the Act.
(2) A construction period insurance contract must indemnify beneficiaries under the contract for loss or damage in respect of the non-completion of residential building work covered by the construction period insurance contract arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or have the contractor rectify because of—
(a) the insolvency, death or disappearance of the contractor, or
(b) the suspension of a contractor licence pursuant to section 42A of the Act.
(3) Without limiting subclauses (1) and (2), a construction period insurance contract must indemnify a beneficiary for the following loss or damage in respect of the non-completion of residential building work, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor or the suspension of a contractor licence pursuant to section 42A of the Act—
(a) loss or damage resulting from faulty design, where the design was provided by the contractor,
(b) loss or damage resulting from non-completion of the work because of early termination of the contract for the work because of the contractor’s wrongful failure or refusal to complete the work,
(c) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of the non-completion,
(d) loss of deposit or progress payment due to the non-completion,
(e) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage.
(4) The construction period insurance contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause.
(5) For the purposes of this clause, if residential building work has not commenced, the construction period insurance contract may limit the loss or damage indemnified against to the loss of any deposit paid, but is not required to limit the loss or damage to that amount.
cll 40A: Ins 2017 (705), Sch 1 [9].
40B
Losses indemnified under warranty period insurance contracts
40B Losses indemnified under warranty period insurance contracts
40B Losses indemnified under warranty period insurance contracts
(1) A warranty period insurance contract must indemnify beneficiaries under the contract for loss or damage in respect of residential building work covered by the warranty period insurance contract, being loss or damage arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or have the contractor rectify because of—
(a) the insolvency, death or disappearance of the contractor, or
(b) the suspension of a contractor licence pursuant to section 42A of the Act.
(2) Without limiting subclause (1), the warranty period insurance contract must indemnify a beneficiary for the following loss or damage, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor or the suspension of a contractor licence pursuant to section 42A of the Act—
(a) loss or damage resulting from faulty design, where the design was provided by the contractor,
(b) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of the non-completion,
(c) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage.
(3) A warranty period insurance contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause.
cll 40B: Ins 2017 (705), Sch 1 [9].
41
Exclusion of amounts of deposit or progress payment
41 Exclusion of amounts of deposit or progress payment
41 Exclusion of amounts of deposit or progress payment
Despite clauses 40 and 40A, an insurance contract may contain a provision that excludes the insurer from liability for the amount of any part of—
(a) a deposit that exceeds the amount permitted for such a deposit by section 8 of the Act, or
(b) on and from 1 March 2015—a progress payment that exceeds the amount permitted for such a payment by section 8A of the Act, or
(c) if a deposit has not been paid, the amount of the deposit.
cl 41: Am 2017 (705), Sch 1 [10].
42
Limitations on liability and cover
42 Limitations on liability and cover
42 Limitations on liability and cover
(1) An insurance contract may contain the following limitations on liability under the contract—
(a) the contract may limit claims that may otherwise arise under the building contract in the nature of liquidated damages for delay or damages for delay provided that any such limitation must not extend to any increase in rectification costs caused by the effluxion of time,
(b) the contract may exclude a claim for such loss or damage as could be reasonably expected to result from fair wear and tear of the building work covered by the contract or failure by the beneficiary to maintain the building work,
(c) the contract may exclude a claim in relation to a defect in, or the repair of damage to, major elements in the non-residential part of a building that supports or gives access to the residential part, unless it is a defect or damage that adversely affects the structure of the residential part or the access to it,
(d) the contract may exclude a claim in relation to damage caused by the normal drying out of the building work, if the damage has occurred despite the contractor taking all reasonable precautions in allowing for the normal drying out when carrying out the building work,
(e) the contract may exclude a claim in relation to damage due to, or made worse by, the failure of any beneficiary to take reasonable and timely action to minimise the damage,
(f) the contract may exclude a claim in relation to an appliance or apparatus (such as a dishwasher or air-conditioning unit) if the claim is made after the expiry of the manufacturer’s warranty period for the appliance or apparatus or, if there is no warranty period, outside the reasonable lifetime of the appliance or apparatus,
(g) the contract may exclude a claim in relation to damage to work or materials that is made outside the reasonable lifetime of the work or materials or the manufacturer’s warranty period for the materials,
(h) the contract may exclude a claim in relation to a defect due to a faulty design provided by a beneficiary or a previous owner,
(i) the contract may limit liability resulting from non-completion of building work to an amount that is not less than 20% of the contract price (including any agreed variation to the contract price) for the work,
(j) the contract may exclude liability for work that is not residential building work or is not work that is required to be covered by a certificate of insurance under Part 6 of the Act (or both), regardless of whether a valid insurance certificate has been issued.
(2) In addition, an insurance contract may exclude a claim for loss or damage resulting from any of the following if the exclusion is a standard policy provision of the insurer and the exclusion is not inconsistent with this Regulation and does not contravene this Regulation—
(a) war,
(b) an act of terrorism,
(c) civil unrest,
(d) asbestos contamination or removal,
(e) a nuclear event,
(f) risks normally insured under a policy for public liability or contract works,
(g) an act of God or nature,
(h) failure by the beneficiary to maintain appropriate protection against pest infestation or exposure of natural timbers,
(i) consequential loss, including, without limitation, loss of rent or other income, loss of enjoyment, loss of business opportunity, inconvenience or distress,
(j) malfunction in any mechanical or electrical equipment or appliance, if the insurer proves that the malfunction is not attributable to the workmanship of, or installation by, the contractor.
(3) An insurance contract may contain any other limitation on liability, but only if it is not inconsistent with this Regulation and does not contravene any requirement of this Regulation.
(4) For the purposes of this clause, an act of terrorism is an act that, having regard to the nature of the act, and the context in which the act was done, it is reasonable to characterise as an act of terrorism.
(5) Any lawful activity or any industrial action cannot be characterised as an act of terrorism for the purposes of this clause. An act can only be so characterised if it—
(a) causes or threatens to cause death, personal injury or damage to property, and
(b) is designed to influence a government or to intimidate the public or a section of the public, and
(c) is carried out for the purpose of advancing a political, religious, ideological, ethnic or similar cause.
43
Reduction of liability for failure to enforce statutory warranty
43 Reduction of liability for failure to enforce statutory warranty
43 Reduction of liability for failure to enforce statutory warranty
(1) An insurance contract may contain a provision to the effect that the insurer may reduce its liability under the contract or reduce any amount otherwise payable in respect of a claim because of a failure by the beneficiary to take action to enforce a statutory warranty from the breach of which the insured loss arises, but only to the extent of an amount that fairly represents the extent to which the insurer’s interests were prejudiced as a result of the failure.
(2) A provision included in an insurance contract under this clause does not limit the operation of any provision included in the insurance contract to the effect of a provision required to be included by clause 47.
Division 4
Amount of cover
Division 4 Amount of cover
Division 4 Amount of cover
44
Amount of cover where one or more dwellings
44 Amount of cover where one or more dwellings
44 Amount of cover where one or more dwellings
An insurance contract may provide that the minimum amount of cover otherwise payable under section 102 of the Act or this Regulation, in respect of a dwelling in a building or complex containing more than one dwelling, may be reduced by not more than an amount calculated by dividing the amount of any claim paid by the insurer in relation to common property of the building or complex by the number of dwellings contained in the building or complex.
45
Minimum insurance cover
45 Minimum insurance cover
45 Minimum insurance cover
(1) For the purposes of section 102 (3) of the Act, the amount prescribed is—
(a) in the case of a construction period insurance contract—$340,000 in relation to each dwelling to which the insurance relates, or
(b) in the case of a warranty period insurance contract—$340,000 in relation to each dwelling to which the insurance relates, or
(c) in the case of any other contract of insurance in relation to residential building work that is required by section 92 of the Act—$340,000 in relation to each dwelling to which the insurance relates, or
(d) in the case of any other contract of insurance in relation to residential building work that is required by section 96 of the Act—$340,000 in relation to each dwelling to which the insurance relates.
(1A) Subclause (1) is subject to clause 46.
(2) An insurance contract must provide (and is taken to provide) that the minimum amount of cover payable is to be the amount provided for from time to time by the Act and this Regulation.
(3) Subclause (2) does not prevent an insurance contract from providing for a minimum amount of cover that exceeds the amount referred to in that subclause.
(4) An insurance contract that is entered into using any existing stock is taken to refer to the amount of cover that is, for the time being, the amount provided by or under this clause.
(5) For the purposes of this clause, existing stock means a form that—
(a) has been printed before the date of any increase in the amount of cover provided by or under this clause, and
(b) refers to the amount of cover provided by or under this clause immediately before that date.
cl 45: Am 2017 (705), Sch 1 [11].
46
Requirements for insurance for residential flat buildings
46 Requirements for insurance for residential flat buildings
46 Requirements for insurance for residential flat buildings
(1) For the purposes of section 102 (3) of the Act, the minimum amount of cover for which the contract of insurance must provide in relation to relevant residential flat building work is—
(a) if the amount obtained by dividing the contract price (inclusive of GST) by the number of dwellings in the building does not exceed $20,000—
(i) in the case of a construction period insurance contract—$340,000, or
(ii) in the case of a warranty period insurance contract—$340,000, or
(iii) in the case of any other contract of insurance —$340,000, or
(b) if the amount obtained by dividing the contract price (inclusive of GST) by the number of dwellings in the building exceeds $20,000—provide for cover of no less than $340,000 in relation to each dwelling in the building—
(i) in the case of a construction period insurance contract—$340,000 in relation to each dwelling to which the insurance relates, or
(ii) in the case of a warranty period insurance contract—$340,000 in relation to each dwelling to which the insurance relates, or
(iii) in the case of any other contract of insurance—$340,000.
(2) In this clause—
dwelling, in relation to a strata, community scheme or company title home unit, includes any garage or storage area that is included in the same title as the unit.
relevant residential flat building work means the following work in relation to an existing single building containing 2 or more dwellings where the contract price (inclusive of GST) exceeds $20,000—
(a) work on the common property of the existing single residential flat building (where the building comprises strata, community scheme or company title home units),
(b) work on an existing single residential flat building if the whole building is owned by the same person.
cl 46: Am 2017 (705), Sch 1 [12].
Division 5
Miscellaneous
Division 5 Miscellaneous
Division 5 Miscellaneous
46A
Notification of insurer
46A Notification of insurer
46A Notification of insurer
For the purposes of section 92A (c) of the Act, the contact details of the other party to the contract to do residential building work are prescribed as matters of which the holder of a contractor licence must inform the insurer.
cll 46A: Ins 2017 (705), Sch 1 [13].
46B
Enforcement of statutory warranties outside time limits (policies issued from 1 July 2002)
46B Enforcement of statutory warranties outside time limits (policies issued from 1 July 2002)
46B Enforcement of statutory warranties outside time limits (policies issued from 1 July 2002)
For the purposes of section 103BB (6) of the Act, the following factors are to be taken into account in determining whether the conduct of the beneficiary under a contract of insurance constitutes diligent pursuit of the enforcement of a statutory warranty—
(a) whether or not the beneficiary has fulfilled the duties imposed on the beneficiary by section 18BA of the Act,
(b) except in the case where the breach arises because of the insolvency, death or disappearance of the contractor—whether or not the beneficiary has taken all the steps that were necessary and reasonable in the circumstances to notify the relevant dispute in accordance with Part 3A of the Act,
(c) whether or not the beneficiary has fulfilled any duties imposed on the beneficiary by section 48D (4) or (6) of the Act in relation to the investigation of the dispute,
(d) whether or not the beneficiary has complied with the requirements of any rectification order made in relation to the dispute, as required by section 48E (3) of the Act,
(e) whether or not the beneficiary has taken all the steps that were necessary and reasonable in the circumstances to commence and advance proceedings in a court or tribunal in relation to the relevant breach of statutory warranty,
(f) whether or not the beneficiary has taken all the steps that were reasonable or necessary to enforce any judgment or order obtained in relation to the dispute.
cll 46B: Ins 2017 (705), Sch 1 [13].
47
Time limits for notice of loss or damage
47 Time limits for notice of loss or damage
47 Time limits for notice of loss or damage
(1) An insurance contract must contain (and is taken to contain) a provision to the effect that the insurer may not reduce its liability under the contract or reduce any amount otherwise payable in respect of a claim merely because of a delay in a claim being notified to the insurer if the claim is notified within the period set out below—
(a) except as referred to in paragraph (b), not later than 6 months after the beneficiary first becomes aware, or ought reasonably to be aware, of the fact or circumstance under which the claim arises, or
(b) in the case of a fact or circumstance that may give rise to a claim for loss or damage resulting from incomplete work, not later than 12 months after—
(i) the contract date, or
(ii) the date provided in the contract for commencement of work, or
(iii) the date work ceased,
whichever is the later.
(2) However, an insurance contract may contain a provision extending the time within which notice of a fact or circumstance may be given or enabling the insurer to waive or extend the time within which notice may be given.
(3) If a beneficiary gives notice of a loss (the notified loss) to the insurer, the beneficiary is taken for the purposes of a provision included in an insurance contract pursuant to this clause to have given notice of every loss (a related loss) that was caused by the same defect as caused the notified loss, whether or not the claim in respect of the notified loss has been settled.
(4) The giving of notice of or the making of a claim for the notified loss does not constitute the giving of notice of or the making of a claim for any related loss for the purposes of sections 103BA–103BC of the Act, and those sections are not affected by this clause or any provision included in an insurance contract pursuant to this clause.
48
Refusal of insurance claims
48 Refusal of insurance claims
48 Refusal of insurance claims
(1) For the purposes of making an appeal against a decision of an insurer, an insurance claim is taken to have been refused if written notice of the insurer’s decision is not given to the beneficiary within 45 days of the lodging of the claim with the insurer or within such further time as may be agreed between the beneficiary and the insurer.
(2) This clause does not apply to an insurance claim made in relation to an insurance contract entered into on or after 1 September 2005.
49
Insurance appeals
49 Insurance appeals
49 Insurance appeals
(1) An appeal against a decision of an insurer that is a building claim made under Part 3A of the Act or a claim under the Consumer Claims Act 1998 must be made not later than 45 days after written notice of the decision is given to the beneficiary.
(2) Nothing in subclause (1) limits the time within which an appeal may be made if a claim is taken to have been refused because of the operation of clause 48 and written notice of a decision has not been given to the beneficiary.
(3) However, an appeal may, with the leave of the Tribunal or court, be lodged with the principal registrar of the Tribunal or court after the end of the period referred to in subclause (1), if—
(a) an application is made to the Tribunal or court for leave to lodge the appeal out of time, and
(b) in the opinion of the Tribunal or court, there are special circumstances to grant leave, and
(c) the Tribunal or court grants leave.
(4) Without limiting the type of circumstances that may be considered special circumstances, the time taken for a decision to be reviewed by the insurer is a factor in determining special circumstances.
50
50
50, 51 (Repealed)
52
Access for work
52 Access for work
52 Access for work
(1) An insurance contract may require a beneficiary to give access to the relevant property to a contractor for the purpose of inspection, rectification or completion of work.
(2) Any such requirement is to be subject to the beneficiary’s right to refuse access on reasonable grounds.
53
Insurance thresholds
53 Insurance thresholds
53 Insurance thresholds
For the purposes of sections 92 (3) and 96 (3) (e) of the Act, the amount of $20,000 (inclusive of GST) is prescribed.
54
Maximum insurance excess
54 Maximum insurance excess
54 Maximum insurance excess
For the purposes of section 102 (6) of the Act, the maximum excess is $250.
Division 6
Exemptions relating to insurance
Division 6 Exemptions relating to insurance
Division 6 Exemptions relating to insurance
54A
Amendment or cancellation of certain exemptions granted by Authority
54A Amendment or cancellation of certain exemptions granted by Authority
54A Amendment or cancellation of certain exemptions granted by Authority
(1) A person to whom an exemption has been granted by the Authority under section 97 of the Act may apply to the Authority for the exemption to be amended or cancelled.
(2) The Authority may, by notice in writing, at any time amend or cancel an exemption, on the making of an application or at the Authority’s discretion.
(3) The notice must state the Authority’s reasons for the amendment or cancellation.
(4) The amendment or cancellation takes effect on the giving of the notice to the person to whom the exemption was granted or on a later date specified in the notice.
cl 54A: Ins 2017 (705), Sch 1 [15].
55
Persons entitled to apply for exemptions from insurance requirements
55 Persons entitled to apply for exemptions from insurance requirements
55 Persons entitled to apply for exemptions from insurance requirements
For the purposes of section 97 (1A) of the Act—
(a) a developer who is required to comply with section 96A of the Act is prescribed as a person entitled to apply for an exemption under that subsection, and
(b) a contractor doing residential building work is prescribed as entitled to apply in relation to that work for the exemption referred to in that subsection.
55A
Register of exemptions—the Act s 140(2)(l)
55A Register of exemptions—the Act s 140(2)(l)
55A Register of exemptions—the Act s 140(2)(l)
(1) The Authority must keep a register of exemptions granted under the Act, section 97.
(2) The register of exemptions may include the following information—
(a) the name of the exempted person, including the person’s ACN if the exempted person is a corporation,
(b) the exempted person’s contractor licence number, if applicable,
(c) a description of the exempt work,
(d) the address, lot and deposited plan number of the land on which the exempt work is to be done,
(e) the date on which the exemption was granted.
(3) The register must be made available, free of charge, on a NSW Government website.
(4) In this clause—
ACN, short for Australian Company Number, has the same meaning as it has in the Corporations Act 2001 of the Commonwealth, section 9.
cl 55A: Ins 2023 (100), Sch 1[1].
56
Exemptions from insurance for multi-storey buildings
56 Exemptions from insurance for multi-storey buildings
56 Exemptions from insurance for multi-storey buildings
(1) A person who does, or enters into a contract to do, residential building work relating to the construction of a multi-storey building is exempt from the requirements of Part 6 of the Act in respect of that residential building work.
(2) A developer who enters into a contract for the sale of land on which residential building work relating to the construction of a multi-storey building has been done, or is to be done, is exempt from the requirements of section 96A of the Act in relation to that residential building work.
(3) The exemption in subclause (2) does not apply if the residential building work was contracted to be done before the commencement of this clause and, at the time the contract was entered into, the work was required to be insured.
(4) The exemption in subclause (2) extends to a developer who enters into a contract for the sale of land to the extent that work relating to the building’s construction was contracted to be done before the commencement of this clause, if, at the time that work was contracted to be done, it did not relate to the construction of a multi-storey building for the purposes of the Home Building Regulation 2004.
(5) This clause does not apply in respect of residential building work commenced before 31 December 2003 (being the date of commencement of clause 57BC of the Home Building Regulation 1997, the corresponding earlier version of this clause).
(6) If a developer entered into a contract for the sale of land on which residential building work in relation to a multi-storey building was proposed to be carried out but was not commenced before 31 December 2003 and the developer complied with clause 61 in relation to that contract—
(a) the provisions of the contract complying with clause 61 (b) (ii) and (iii) cease to have effect, and
(b) the developer must notify the purchaser of the land in writing that they no longer have effect and of the exemption from the requirements of Part 6 of the Act in relation to the residential building work conferred by this clause.
(7) In this clause—
multi-storey building means a building—
(a) that has a rise in storeys of more than 3, and
(b) that contains 2 or more separate dwellings.
rise in storeys has the same meaning as it has in the Building Code of Australia of the National Construction Code Series.
storey has the same meaning as it has in the Building Code of Australia of the National Construction Code Series.
57
Exemption from insurance in relation to retirement villages
57 Exemption from insurance in relation to retirement villages
57 Exemption from insurance in relation to retirement villages
(1) A holder of a contractor licence who does, or enters into a contract to do, residential building work on behalf of a developer, being residential building work relating to the construction of a self contained dwelling in a retirement village, is exempt from the requirements of Part 6 of the Act in respect of that residential building work.
(2) A holder of a contractor licence who does, or enters into a contract to do, residential building work on behalf of an operator of a retirement village, being residential building work relating to that retirement village, is exempt from the requirements of Part 6 of the Act in respect of that residential building work.
(3) For the purposes of this clause, retirement village has the same meaning as in the Retirement Villages Act 1999, except that it does not include a retirement village that is subject to a community land scheme, company title scheme or strata scheme.
cl 57: Am 2018 No 25, Sch 5.22 [2]; 2021 No 7, Sch 4.8.
58
Exemption from insurance for built-in furniture and other work
58 Exemption from insurance for built-in furniture and other work
58 Exemption from insurance for built-in furniture and other work
(1) A holder of a contractor licence who does, or enters into a contract to do, residential building work that consists only of built-in furniture work, and any incidental electrical wiring work involved in the installation of lighting as part of built-in furniture, is exempt from the requirements of Part 6 of the Act in respect of that work if the work is done under a separate contract and not as part of a contract for other residential building work that requires such insurance.
(2) In this clause—
built-in furniture work means the making and installation of furniture that is made to measure and fixed to a dwelling (such as built-in cupboards, bench tops, wardrobes, entertainment units and the like), and which may be made off-site and installed as a complete unit.
59
Exemptions from insurance for certain community care work funded by State or Commonwealth government
59 Exemptions from insurance for certain community care work funded by State or Commonwealth government
59 Exemptions from insurance for certain community care work funded by State or Commonwealth government
(1) A holder of a contractor licence who does (under a contract entered into before 1 July 2018) residential building work that is funded by the Home and Community Care Program through the Home Modification and Maintenance sub-program administered by the Department of Communities and Justice is exempt from the requirements of Part 6 of the Act in respect of that work.
(2) A holder of a contractor licence who does, or enters into a contract to do, any of the following residential building work is exempt from the requirements of Part 6 of the Act in respect of the work—
(a) work funded by the NSW Community Care Supports Program,
(b) work funded by the Commonwealth Home and Community Care Program, in relation to home modification work commenced before 1 January 2016.
(3) Subclause (2) does not affect the operation of any insurance contract issued under Part 6 of the Act before the commencement of the subclause.
cl 59: Am 2015 (584), cl 3; 2017 (705), Sch 1 [16]; 2022 No 59, Sch 3.37.
59A
Exemption from insurance for certain registered charities
59A Exemption from insurance for certain registered charities
59A Exemption from insurance for certain registered charities
(1) The holder of a contractor licence who does residential building work is exempt from the requirements of the Act, Part 6 if—
(a) the work is being done—
(i) on behalf of a developer who is a recognised housing provider, or
(b) the contract for the work states that the holder is relying on the exemption under this clause, and
(c) for a contract entered into with a Local Aboriginal Land Council that is approved under the Aboriginal Land Rights Act 1983, section 52A to provide rental accommodation under a community benefits scheme—the contract includes a copy of the approval.
(2) Subclause (1)(c) does not apply to a contract entered into with a Local Aboriginal Land Council that is—
(a) a Local Aboriginal Land Council approved under the Aboriginal Land Rights Act 1983, section 52A to provide rental accommodation under a community benefits scheme, or
(ii) to an existing dwelling built in accordance with development consent granted under State Environmental Planning Policy (Housing) 2021, Chapter 3, Part 4 and the contract is entered into within 8 years of the issue of the occupation certificate for the dwelling, or
(iii) to a building that is being used as a build to rent property and the contract is entered into within 8 years of the making of an application for reduction in the assessable value of the land for the purpose of the Land Tax Management Act 1956, section 9E, and
(b) the contract for the work states that the holder is relying on the exemption under this clause.
The holder of a contractor licence who does residential building work is exempt from the requirements of the Act, Part 6 if—
(a) the work is being done on behalf of a developer who is a council under the Local Government Act 1993, and
(b) the contract for the work states that the holder is relying on the exemption under this clause.
cl 59C: Ins 2023 (100), Sch 1[2].
60
Exemption from insurance for certain work funded through Teacher Housing Authority of NSW
60 Exemption from insurance for certain work funded through Teacher Housing Authority of NSW
60 Exemption from insurance for certain work funded through Teacher Housing Authority of NSW
A holder of a contractor licence who does (under a contract entered into before 1 September 2018) residential building work that is funded by the Teacher Housing Authority of New South Wales is exempt from the requirements of Part 6 of the Act in respect of that work.
cl 60: Am 2017 (705), Sch 1 [17].
61
Exemption from certificate requirement where work not commenced
61 Exemption from certificate requirement where work not commenced
61 Exemption from certificate requirement where work not commenced
A developer is exempt from the requirements of section 96A of the Act if—
(a) work under a contract for the carrying out of residential building work entered into by the developer has not commenced when a contract of sale is entered into for the sale of the land on which the residential building work is to be done, and
(b) the contract of sale contains provisions—
(i) informing the purchaser of the land under the contract that the exemption applies, and
(ii) informing the purchaser that the Act requires residential building work (whether or not done under a contract) to be insured, and
(iii) requiring the developer or any assignee of the developer’s rights under the contract to provide a certificate of insurance in respect of any residential building work (as required by section 96A (1) of the Act) to the purchaser within 14 days after the contract of insurance in respect of that work is made, and
(iv) enabling the purchaser to rescind if the developer or any assignee of the developer fails to provide the certificate of insurance within that period of 14 days.
62
Exemption from requirement to show insurance has been obtained
62 Exemption from requirement to show insurance has been obtained
62 Exemption from requirement to show insurance has been obtained
The holder of, or an applicant for, a contractor licence is exempt from the provisions of sections 20 (3) (c) and 22A of the Act if the contractor licence only authorises the holder to contract to do work of a kind that is not required to be insured under Part 6 of the Act.
Part 6A
Alternative indemnity products—fidelity fund schemes
Part 6A Alternative indemnity products—fidelity fund schemes
Part 6A Alternative indemnity products—fidelity fund schemes
pt 6A: Ins 2017 (705), Sch 1 [18].
62A
Application
62A Application
62A Application
(1) This Part applies to an alternative indemnity product that is a fidelity fund scheme.
(2) In this Part—
alternative indemnity contract includes any arrangement under which cover is provided by means of a fidelity fund scheme.
construction period fidelity fund contract—see clause 62F (1) (a).
fidelity fund cover means cover by means of a fidelity fund scheme for the purposes of Part 6B of the Act.
rules of a fidelity fund scheme means the rules set out in the trust deed for the fidelity fund scheme.
warranty period fidelity fund contract—see clause 62F (1) (b).
(3) Words and expressions used in this Part have the same meaning as in Part 6B of the Act.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62B
Persons who may arrange fidelity fund cover
62B Persons who may arrange fidelity fund cover
62B Persons who may arrange fidelity fund cover
Fidelity fund cover may be entered into for the purposes of Part 6 of the Act by a contractor, or by a beneficiary in respect of the work done, and may be arranged by any such person.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62C
Information to be provided to an alternative indemnity provider
62C Information to be provided to an alternative indemnity provider
62C Information to be provided to an alternative indemnity provider
For the purposes of section 104C (1) (a) of the Act, a person to whom fidelity fund cover is provided must give the licensed provider of the product the contact details of the other party to the contract to do residential building work.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62D
Provisions of the Act that apply to alternative indemnity products in same way as to contracts of insurance
62D Provisions of the Act that apply to alternative indemnity products in same way as to contracts of insurance
62D Provisions of the Act that apply to alternative indemnity products in same way as to contracts of insurance
(1) For the purposes of section 104B (4) of the Act, sections 92A, 101 (2) (c) and (d), 101A (5), 102 (2) and (6), 102A (1A) (a), 103C (2) (i) and 103EA (1) of the Act apply to a fidelity fund scheme, subject to the following modifications—
(a) a reference to an insurer or a licensed insurer is to be read as a reference to a provider,
(b) a reference to a certificate issued to evidence arrangements is to be read as a reference to the prescribed form of evidence of fidelity fund cover referred to in section 104B (2) of the Act.
(2) For the purposes of section 104C (2) (a) of the Act, Part 3A, and sections 92C and 97 (2), of the Act apply to a fidelity fund scheme, subject to any necessary modifications.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62E
Loss to be covered by fidelity fund cover
62E Loss to be covered by fidelity fund cover
62E Loss to be covered by fidelity fund cover
(1) Fidelity fund cover that is proposed to provide cover instead of a contract of insurance required by section 92 of the Act, as permitted by section 104B of the Act, must provide cover for each risk that is required by section 99 (1)–(3) of the Act to be covered by a contract of insurance.
(2) Fidelity fund cover that is proposed to provide cover instead of a contract of insurance required by section 96 of the Act, as permitted by section 104B of the Act, must provide cover for each risk that is required by section 100 of the Act to be covered by a contract of insurance.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62F
Requirements for fidelity fund cover for residential building work done under contract
62F Requirements for fidelity fund cover for residential building work done under contract
62F Requirements for fidelity fund cover for residential building work done under contract
(1) Despite any other provision of this Part, the fidelity fund cover in relation to residential building work that is required by section 92 of the Act, as permitted by section 104B of the Act, may be provided by means of—
(a) one contract (a construction period fidelity fund contract) that provides cover (by means of a fidelity fund scheme) against—
(i) the risk specified in section 99 (1) (a) of the Act, and
(ii) the risk specified in section 99 (1) (b) of the Act in a case of non-completion of the residential building work, and
(b) another contract (a warranty period fidelity fund contract) that provides cover (by means of a fidelity fund scheme) against the risk specified in section 99 (1) (b) of the Act.
(2) Alternatively, the cover required by section 92 of the Act may be provided by means of any combination of the following contracts (that is, by one contract from paragraph (a) and one contract from paragraph (b))—
(a) a construction period insurance contract referred to in section 99 (4) (a) of the Act, a construction period fidelity fund contract referred to in subclause (1) (a) or a construction period alternative indemnity contract referred to in clause 62ZH (1) (a), and
(b) a warranty period insurance contract referred to in section 99 (4) (b) of the Act, a warranty period fidelity fund contract referred to in subclause (1) (b) or a warranty period alternative indemnity contract referred to in clause 62ZH (1) (b).
(3) A warranty period fidelity fund contract is not required to, but may, cover loss that arises from a breach of a statutory warranty in a case of non-completion of residential building work.
(4) A provider is not required to, but may, provide both a construction period fidelity fund contract and a warranty period fidelity fund contract in relation to the same residential building work.
(5) Nothing in this clause requires a person obtaining cover for the purposes of section 92 of the Act, as permitted by section 104B of the Act, and who obtains fidelity fund cover for that purpose by entering into 2 contracts of fidelity fund cover as specified by this clause, to enter into both contracts with the same provider.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62G
Period of cover to be provided by an alternative indemnity product
62G Period of cover to be provided by an alternative indemnity product
62G Period of cover to be provided by an alternative indemnity product
(1) An alternative indemnity contract must provide cover for loss arising from non-completion of the work for a period of not less than 12 months after the failure to commence, or cessation of, the work the subject of the cover.
(2) An alternative indemnity contract (other than a construction period fidelity fund contract) must provide cover for other loss covered in accordance with the Act for a period of not less than—
(a) in the case of loss arising from a major defect in residential building work (within the meaning of section 18E of the Act)—6 years after completion of the work, or
(b) in the case of any other loss—2 years after completion of the work.
(3) A construction period fidelity fund contract must provide cover for loss insured in accordance with the Act for a period of not less than 12 months after the failure to commence or cessation of the work the subject of the cover.
(4) However, the Authority may, by notice published in the Gazette, give written approval for an alternative indemnity contract, or for a class of contracts of alternative indemnity products, to provide cover for a shorter period to the extent to which the cover applies to loss in relation to specified work or materials.
(5) The rules of a fidelity fund scheme must provide that the provider is not entitled either to refuse to pay a claim under the fidelity fund cover in relation to work done after the fidelity fund has commenced, or to cancel the fidelity fund cover, on the ground that the contract for the work or supply to which it relates was entered into before the period of the cover commenced if a certificate evidencing the cover has been given or the provider has otherwise accepted cover.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62H
Beneficiaries of fidelity fund
62H Beneficiaries of fidelity fund
62H Beneficiaries of fidelity fund
(1) The rules of a fidelity fund scheme must provide that the persons who benefit from the fidelity fund (the beneficiaries of the fidelity fund) are—
(a) a person on whose behalf residential building work covered by the alternative indemnity contract is done or is to be done, or
(b) a person who is a purchaser of land on which work required by Part 6 of the Act to be covered for a loss under an insurance contract, and covered by the alternative indemnity contract, is done, or
(c) a successor in title to any person referred to in paragraph (a) or (b).
(2) The following persons are not required to be beneficiaries of the fidelity fund—
(a) a developer who does residential building work,
(b) a person who does residential building work other than under a contract,
(c) a holder of a contractor licence who carried out residential building work,
(d) related companies, within the meaning of section 50 of the Corporations Act 2001 of the Commonwealth, to any corporate person referred to in paragraph (a), (b) or (c),
(e) a body corporate that is related, within the meaning of section 50 of the Corporations Act 2001 of the Commonwealth, to any corporate person referred to in paragraph (a), (b) or (c),
(f) a body corporate that is a related party, within the meaning of section 228 of the Corporations Act 2001 of the Commonwealth, of any corporate person referred to in paragraph (a), (b) or (c).
(3) Nothing in this clause prevents a person referred to in subclause (2) from being a beneficiary of the fidelity fund.
(4) For the purposes of this clause, the owner or owners of common property the subject of work referred to in Part 6 of the Act are taken to be purchasers of the land on which the common property is situated.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62I
Misrepresentation or non-disclosure
62I Misrepresentation or non-disclosure
62I Misrepresentation or non-disclosure
The rules of a fidelity fund must provide (and are taken to provide) that the trustee is not entitled either to refuse to pay a claim or to cancel the fidelity fund cover on the ground that the cover was obtained by misrepresentation or non-disclosure by the contractor or that contributions or membership payments or other fees payable in respect of the fidelity fund cover or the fund were not paid so long as, in the latter case, a certificate evidencing the cover has been given or the provider has otherwise accepted cover.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62J
Other requirements may be specified in Insurance Guidelines
62J Other requirements may be specified in Insurance Guidelines
62J Other requirements may be specified in Insurance Guidelines
The Insurance Guidelines may specify additional requirements for the trust deed for any fidelity fund scheme that may be approved by the Authority.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62K
Losses indemnified under alternative indemnity contracts (where single contract)
62K Losses indemnified under alternative indemnity contracts (where single contract)
62K Losses indemnified under alternative indemnity contracts (where single contract)
(1) This clause does not apply to a warranty period fidelity fund contract or a construction period fidelity fund contract.
(2) An alternative indemnity contract must indemnify beneficiaries under the fidelity fund for the following losses or damage in respect of residential building work covered by the alternative indemnity contract—
(a) loss or damage resulting from non-completion of the work because of—
(i) the insolvency, death or disappearance of the contractor, or
(ii) the suspension of a contractor licence pursuant to section 42A of the Act, and
(b) loss or damage arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or have the contractor rectify because of—
(i) the insolvency, death or disappearance of the contractor, or
(ii) the suspension of a contractor licence pursuant to section 42A of the Act.
(3) Without limiting subclause (2), an alternative indemnity contract must indemnify a beneficiary for the following loss or damage, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor or suspension of a contractor licence pursuant to section 42A of the Act—
(a) loss or damage resulting from faulty design, where the design was provided by the contractor,
(b) loss or damage resulting from non-completion of the work because of early termination of the contract for the work because of the contractor’s wrongful failure or refusal to complete the work,
(c) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of an event referred to in subclause (2),
(d) loss of deposit or progress payment due to an event referred to in subclause (2),
(e) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage.
(4) The alternative indemnity contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause.
(5) For the purposes of subclause (2), if residential building work has not commenced, the alternative indemnity contract may limit the loss or damage indemnified against to the loss of any deposit paid, but is not required to limit the loss or damage to that amount.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62L
Losses indemnified under construction period fidelity fund contracts
62L Losses indemnified under construction period fidelity fund contracts
62L Losses indemnified under construction period fidelity fund contracts
(1) A construction period fidelity fund contract must indemnify beneficiaries under the contract for loss or damage in respect of residential building work covered by the construction period fidelity fund contract resulting from non-completion of the work because of—
(a) the insolvency, death or disappearance of the contractor, or
(b) the suspension of a contractor licence pursuant to section 42A of the Act.
(2) A construction period fidelity fund contract must indemnify beneficiaries under the contract for loss or damage in respect of the non-completion of residential building work covered by the construction period fidelity fund contract arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or have the contractor rectify because of—
(a) the insolvency, death or disappearance of the contractor, or
(b) the suspension of a contractor licence pursuant to section 42A of the Act.
(3) Without limiting subclauses (1) and (2), a construction period fidelity fund contract must indemnify a beneficiary for the following loss or damage in respect of the non-completion of residential building work, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor or the suspension of a contractor licence pursuant to section 42A of the Act—
(a) loss or damage resulting from faulty design, where the design was provided by the contractor,
(b) loss or damage resulting from non-completion of the work because of early termination of the contract for the work because of the contractor’s wrongful failure or refusal to complete the work,
(c) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of the non-completion,
(d) loss of deposit or progress payment due to the non-completion,
(e) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage.
(4) The construction period fidelity fund contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause.
(5) For the purposes of this clause, if residential building work has not commenced, the construction period fidelity fund contract may limit the loss or damage indemnified against to the loss of any deposit paid, but is not required to limit the loss or damage to that amount.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62M
Losses indemnified under warranty period fidelity fund contracts
62M Losses indemnified under warranty period fidelity fund contracts
62M Losses indemnified under warranty period fidelity fund contracts
(1) A warranty period fidelity fund contract must indemnify beneficiaries under the contract for loss or damage in respect of residential building work covered by the warranty period fidelity fund contract, being loss or damage arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or have the contractor rectify because of—
(a) the insolvency, death or disappearance of the contractor, or
(b) the suspension of a contractor licence pursuant to section 42A of the Act.
(2) Without limiting subclause (1), the warranty period fidelity fund contract must indemnify a beneficiary for the following loss or damage, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor or the suspension of a contractor licence pursuant to section 42A of the Act—
(a) loss or damage resulting from faulty design, where the design was provided by the contractor,
(b) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of the non-completion,
(c) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage.
(3) A warranty period fidelity fund contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62N
Exclusion of amounts of deposit or progress payment
62N Exclusion of amounts of deposit or progress payment
62N Exclusion of amounts of deposit or progress payment
Despite clauses 62K and 62L, an alternative indemnity contract may contain a provision that excludes the provider from liability for the amount of any part of—
(a) a deposit that exceeds the amount permitted for such a deposit by section 8 of the Act, or
(b) a progress payment that exceeds the amount permitted for such a payment by section 8A of the Act, or
(c) if a deposit has not been paid, the amount of the deposit.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62O
Limitations on liability and cover
62O Limitations on liability and cover
62O Limitations on liability and cover
(1) For the purposes of section 102 (5) of the Act, the rules of a fidelity fund must contain the following limitations on liability under the alternative indemnity contract—
(a) the contract may limit claims that may otherwise arise under the building contract in the nature of liquidated damages for delay or damages for delay provided that any such limitation must not extend to any increase in rectification costs caused by the effluxion of time,
(b) the contract may exclude a claim for such loss or damage as could be reasonably expected to result from fair wear and tear of the building work covered by the contract or failure by the beneficiary to maintain the building work,
(c) the contract may exclude a claim in relation to a defect in, or the repair of damage to, major elements in the non-residential part of a building that supports or gives access to the residential part, unless it is a defect or damage that adversely affects the structure of the residential part or the access to it,
(d) the contract may exclude a claim in relation to damage caused by the normal drying out of the building work, if the damage has occurred despite the contractor taking all reasonable precautions in allowing for the normal drying out when carrying out the building work,
(e) the contract may exclude a claim in relation to damage due to, or made worse by, the failure of any beneficiary to take reasonable and timely action to minimise the damage,
(f) the contract may exclude a claim in relation to an appliance or apparatus (such as a dishwasher or air-conditioning unit) if the claim is made after the expiry of the manufacturer’s warranty period for the appliance or apparatus or, if there is no warranty period, outside the reasonable lifetime of the appliance or apparatus,
(g) the contract may exclude a claim in relation to damage to work or materials that is made outside the reasonable lifetime of the work or materials or the manufacturer’s warranty period for the materials,
(h) the contract may exclude a claim in relation to a defect due to a faulty design provided by a beneficiary to the fidelity fund or a previous owner,
(i) the contract may limit liability resulting from non-completion of building work to an amount that is not less than 20% of the contract price (including any agreed variation to the contract price) for the work,
(j) the contract may exclude liability for work that is not residential building work or is not work that is required to be covered by a certificate of insurance under Part 6 of the Act (or both), regardless of whether a valid certificate of alternative indemnity product cover has been issued.
(2) In addition, the rules of the fidelity fund about the provision of fidelity fund cover may exclude a claim for loss or damage resulting from any of the following if the exclusion is a standard rule and the exclusion is not inconsistent with this Regulation and does not contravene this Regulation—
(a) war,
(b) an act of terrorism,
(c) civil unrest,
(d) asbestos contamination or removal,
(e) a nuclear event,
(f) risks normally insured under a policy for public liability or contract works,
(g) an act of God or nature,
(h) failure by the beneficiary to maintain appropriate protection against pest infestation or exposure of natural timbers,
(i) consequential loss, including, without limitation, loss of rent or other income, loss of enjoyment, loss of business opportunity, inconvenience or distress,
(j) malfunction in any mechanical or electrical equipment or appliance, if the provider proves that the malfunction is not attributable to the workmanship of, or installation by, the contractor.
(3) An alternative indemnity contract may contain any other limitation on liability, but only if it is not inconsistent with this Regulation and does not contravene any requirement of this Regulation.
(4) For the purposes of this clause, an act of terrorism is an act that, having regard to the nature of the act, and the context in which the act was done, it is reasonable to characterise as an act of terrorism.
(5) Any lawful activity or any industrial action cannot be characterised as an act of terrorism for the purposes of this clause. An act can only be so characterised if it—
(a) causes or threatens to cause death, personal injury or damage to property, and
(b) is designed to influence a government or to intimidate the public or a section of the public, and
(c) is carried out for the purpose of advancing a political, religious, ideological, ethnic or similar cause.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62P
Reduction of liability for failure to enforce statutory warranty
62P Reduction of liability for failure to enforce statutory warranty
62P Reduction of liability for failure to enforce statutory warranty
(1) For the purposes of section 102 (5) of the Act, the rules of a fidelity fund may contain a provision to the effect that the provider may reduce its liability, or reduce any amount otherwise payable in respect of a claim, because of a failure by the beneficiary of the fidelity fund to take action to enforce a statutory warranty from the breach of which the loss covered arises, but only to the extent of an amount that fairly represents the extent to which the provider’s interests were prejudiced as a result of the failure.
(2) A rule of a fidelity fund under this clause does not limit the operation of any provision included in the alternative indemnity contract to the effect of a rule required to be included by clause 62Q.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62Q
Time limits for notice of loss or damage
62Q Time limits for notice of loss or damage
62Q Time limits for notice of loss or damage
(1) The rules of a fidelity fund must provide (and are taken to provide) that the provider may not reduce its liability under the alternative indemnity contract or reduce any amount otherwise payable in respect of a claim merely because of a delay in a claim being notified to the provider if the claim is notified within the period set out below—
(a) except as referred to in paragraph (b), not later than 6 months after the member of or contributor to the fidelity fund first becomes aware, or ought reasonably to be aware, of the fact or circumstance under which the claim arises, or
(b) in the case of a fact or circumstance that may give rise to a claim for loss or damage resulting from incomplete work, not later than 12 months after—
(i) the contract date, or
(ii) the date provided in the contract for commencement of work, or
(iii) the date work ceased,
whichever is the later.
(2) However, the rules of a fidelity fund may contain a provision extending the time within which notice of a fact or circumstance may be given or enabling the provider to waive or extend the time within which notice may be given.
(3) If a beneficiary of the fidelity fund gives notice of a loss (the notified loss) to the provider, the beneficiary is taken for the purposes of a provision included in an alternative indemnity contract pursuant to this clause to have given notice of every loss (a related loss) that was caused by the same defect as caused the notified loss, whether or not the claim in respect of the notified loss has been settled.
(4) The giving of notice of or the making of a claim for the notified loss does not constitute the giving of notice of or the making of a claim for any related loss for the purposes of clauses 62U and 62V, and those clauses are not affected by this clause or any provision included in an alternative indemnity contract pursuant to this clause.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62R
Amount of cover where one or more dwellings
62R Amount of cover where one or more dwellings
62R Amount of cover where one or more dwellings
The rules of a fidelity fund may provide that the minimum amount of cover otherwise payable under section 102 of the Act or this Regulation, in respect of a dwelling in a building or complex containing more than one dwelling, may be reduced by not more than an amount calculated by dividing the amount of any claim paid by the provider in relation to common property of the building or complex by the number of dwellings contained in the building or complex.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62S
Minimum cover
62S Minimum cover
62S Minimum cover
(1) An alternative indemnity contract must provide cover of no less than—
(a) in the case of a construction period fidelity fund contract—$340,000 in relation to each dwelling to which the fidelity fund cover relates, or
(b) in the case of a warranty period fidelity fund contract—$340,000 in relation to each dwelling to which the fidelity fund cover relates, or
(c) in the case of any other alternative indemnity contract in relation to residential building work that is required by section 92 of the Act—$340,000 in relation to each dwelling to which the fidelity fund cover relates, or
(d) in the case of any other alternative indemnity contract in relation to residential building work that is required by section 96 of the Act—$340,000 in relation to each dwelling to which the fidelity fund cover relates.
(2) Subclause (1) is subject to clause 62T.
(3) An alternative indemnity contract must provide (and is taken to provide) that the minimum amount of cover payable is to be the amount provided for from time to time by the Act and this Regulation.
(4) Subclause (3) does not prevent an alternative indemnity contract from providing for a minimum amount of cover that exceeds the amount referred to in that subclause.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62T
Requirements for cover for residential flat buildings
62T Requirements for cover for residential flat buildings
62T Requirements for cover for residential flat buildings
(1) The minimum amount of cover for which an alternative indemnity contract must provide in relation to relevant residential flat building work is—
(a) if the amount obtained by dividing the contract price (inclusive of GST) by the number of dwellings in the building does not exceed $20,000—
(i) in the case of a construction period fidelity fund contract—$340,000, or
(ii) in the case of a warranty period fidelity fund contract—$340,000, or
(iii) in the case of any other alternative indemnity contract—$340,000, or
(b) if the amount obtained by dividing the contract price (inclusive of GST) by the number of dwellings in the building exceeds $20,000—provide for cover of no less than $340,000 in relation to each dwelling in the building—
(i) in the case of a construction period fidelity fund contract—$340,000 in relation to each dwelling to which the fidelity fund cover relates, or
(ii) in the case of a warranty period fidelity fund contract—$340,000 in relation to each dwelling to which the fidelity fund cover relates, or
(iii) in the case of any other alternative indemnity contract—$340,000.
(2) In this clause—
dwelling, in relation to a strata, community scheme or company title home unit, includes any garage or storage area that is included in the same title as the unit.
relevant residential flat building work means the following work in relation to an existing single building containing 2 or more dwellings where the contract price (inclusive of GST) exceeds $20,000—
(a) work on the common property of the existing single residential flat building (where the building comprises strata, community scheme or company title home units),
(b) work on an existing single residential flat building if the whole building is owned by the same person.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62U
Time limits for alternative indemnity contracts
62U Time limits for alternative indemnity contracts
62U Time limits for alternative indemnity contracts
(1) Fidelity fund cover provides cover in respect of loss only if a claim in respect of the loss is made to the provider during the period of the cover.
Note.
Subclause (1) is the general rule but there are exceptions to this general rule, as provided by this clause.
(2) A loss that becomes apparent in the last 6 months of the period of the fidelity fund cover has an extended claim period, which permits a claim in respect of the loss to be made within 6 months after the loss becomes apparent.
(3) Despite subclause (2), there is no extended claim period for loss that—
(a) arises from non-completion of work, or
(b) arises from a breach of a statutory warranty that is covered by a construction period fidelity fund contract.
(4) When a loss becomes apparent during the period of fidelity fund cover but a claim cannot be made during that period because an indemnified event has not occurred, a claim can be made after the period of cover (as a delayed claim) but only if—
(a) the loss was properly notified to the provider during the period of the cover (or within 6 months after the loss became apparent in the case of a loss that became apparent in the last 6 months of the period of cover), and
(b) the beneficiary making the claim diligently pursued the enforcement of the statutory warranty concerned after the loss became apparent.
(5) A delayed claim can also be made when the indemnified event occurs in the last 6 months of the period of fidelity fund cover (as if the covered event did not occur until after the period of the cover) subject to compliance with the other requirements of this clause for a delayed claim.
(6) For the purposes of subclause (4) (b), the following factors are to be taken into account in determining whether the conduct of the beneficiary under a alternative indemnity contract constitutes diligent pursuit of the enforcement of a statutory warranty—
(a) whether or not the beneficiary has fulfilled the duties imposed on the beneficiary by section 18BA of the Act,
(b) except in the case where the breach arises because of the insolvency, death or disappearance of the contractor—whether or not the beneficiary has taken all the steps that were necessary and reasonable in the circumstances to notify the relevant dispute in accordance with Part 3A of the Act,
(c) whether or not the beneficiary has fulfilled any duties imposed on the beneficiary by section 48D (4) or (6) of the Act in relation to the investigation of the dispute,
(d) whether or not the beneficiary has complied with the requirements of any rectification order made in relation to the dispute, as required by section 48E (3) of the Act,
(e) whether or not the beneficiary has taken all the steps that were necessary and reasonable in the circumstances to commence and advance proceedings in a court or tribunal in relation to the relevant breach of statutory warranty,
(f) whether or not the beneficiary has taken all the steps that were reasonable or necessary to enforce any judgment or order obtained in relation to the dispute.
(7) A loss is properly notified to a provider only if the provider has been given notice in writing of the loss and the notice provides such information as may be reasonably necessary to put the provider on notice as to the nature and circumstances of the loss.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62V
Time limit for making claims
62V Time limit for making claims
62V Time limit for making claims
(1) An alternative indemnity contract does not in any circumstances provide cover in respect of loss unless a claim in respect of the loss is made to the provider within 10 years after the work indemnified was completed.
Note.
Section 3B of the Act provides for the date of completion of residential building work.
(2) This clause does not operate to extend any period of cover.
(3) Except as provided by subclause (5), an alternative indemnity contract does not in any circumstances provide cover in respect of a loss arising from a breach of statutory warranty if a claim has already been made to and paid by the provider or another provider (whether under the same or a different alternative indemnity contract to provide cover by means of an alternative indemnity product) or by a contract of insurance under Part 6 of the Act.
(4) Except as provided by subclause (5), a mortgagee in possession of a lot on which there is building work that is subject to cover by means of an alternative indemnity product is not entitled to the benefit of that contract.
(5) An alternative indemnity contract may provide cover in the circumstances specified in subclause (3) or (4) if the contract expressly provides for cover in the circumstances specified in the subclause.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62W
Time within which provider is taken to have accepted claim
62W Time within which provider is taken to have accepted claim
62W Time within which provider is taken to have accepted claim
(1) An alternative indemnity contract must contain (and is taken to contain) a provision to the effect that the provider is taken to have accepted liability for a claim under the contract if written notice of the decision of the provider in relation to the claim is not given to the beneficiary within—
(a) 90 days of the lodging of the claim with the provider, or
(b) such further time as may be agreed between the beneficiary and the provider.
(2) This clause does not apply to a claim that relates to a loss that is not required by Part 6 of the Act to be covered under an insurance contract or alternative indemnity contract.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
Division 7
Contributions or membership payments
Division 7 Contributions or membership payments
Division 7 Contributions or membership payments
62X
Insurance Guidelines for the determination of contributions or membership payments
62X Insurance Guidelines for the determination of contributions or membership payments
62X Insurance Guidelines for the determination of contributions or membership payments
(1) The Insurance Guidelines may provide for the determination of contributions or membership payments payable by members of, or contributors to, fidelity funds for fidelity fund cover for a loss that is required to be covered by or under this Part.
(2) Insurance Guidelines may (without limiting the generality of subclause (1))—
(a) specify the manner in which contributions or membership payments are to be determined and the factors to be taken into account in determining those contributions or membership payments, and
(b) require providers to specify how they have determined contributions or membership payments, and
(c) specify the nature of the additional information and reports that the Authority may require the provider to furnish with the contributions or membership payments they file or to justify contributions or membership payments they have filed (including with respect to estimated investment earnings, the verification of assumptions, estimated profit, capital allocation to alternative indemnity product cover business under the Act and other relevant matters), and
(d) specify the maximum fee payable to the agents of the providers and the maximum administration expenses relating to acquisition or to fidelity fund cover that providers may include in the determination of contributions or membership payments (including a specified maximum amount or a specified maximum percentage of contribution or membership payment).
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62Y
Contributions or membership payments
62Y Contributions or membership payments
62Y Contributions or membership payments
(1) A provider must not demand or collect an amount for fidelity fund cover, except in accordance with this Part.
(2) The provider must file with the Authority the amount of contributions or membership payments proposed to be collected from members of the fidelity fund.
(3) The provider may, on and from the proposed commencement date for the contribution or membership payment, request payment of a contribution or membership payment that has not been rejected by the Authority within the period allowed under this clause for rejecting a contribution or membership payment. Except as provided by clause 62ZA, the provider must not demand the payment of any other contribution or membership payment on and from that proposed commencement date.
(4) The proposed commencement date for a contribution or membership payment is the date specified in a filed contribution or membership payment as the date on and from which the proposed contribution or membership payment will be collected. The proposed commencement date cannot be earlier than the end of the period allowed for rejecting a contribution or membership payment but can be changed (with notice to the Authority) to accommodate a change in the period allowed for rejecting a contribution or membership payment.
(5) The period allowed for rejecting a contribution or membership payment is the period specified in the Insurance Guidelines.
(6) A contribution or membership payment may only be rejected as provided by this clause or clause 62ZA.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62Z
Filing of contributions or membership payments
62Z Filing of contributions or membership payments
62Z Filing of contributions or membership payments
(1) A provider must file its contributions or membership payments payable by contributors to, or members of, the fidelity fund with the Authority on the occasions or with the frequency that is required by the Insurance Guidelines and may (subject to any limitations specified in those Guidelines as to the frequency with which contributions or membership payments may be filed) file them with the Authority at any other times that the provider considers appropriate.
(2) A provider must also file its contributions or membership payments payable by contributors to or members of the fidelity fund with the Authority whenever required to do so by the Authority by notice in writing to the provider. The notice must allow a period of at least 8 weeks after the notice is served for contributions or membership payments to be filed.
(3) A provider files its contributions or membership payments by filing with the Authority a full set of the contributions or membership payments proposed to be collected for all arrangements for alternative indemnity product cover together with any additional information, including actuarial reports, that the Authority may reasonably require.
(4) A provider must pay to the Authority any fees that are required by the Insurance Guidelines to be paid by providers in connection with the filing of contributions or membership payments payable by members of fidelity funds by providers.
(5) It is a condition of a licence granted to a provider under the Act that the provider must comply with this clause.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZA
Rejection of contributions or membership payments by Authority
62ZA Rejection of contributions or membership payments by Authority
62ZA Rejection of contributions or membership payments by Authority
(1) The Authority may reject a contribution or membership payment filed with it under this Division if it is of the opinion that—
(a) the amount of the contribution or membership payment is, having regard to actuarial advice and to other relevant financial information available to the Authority, excessive or inadequate, or
(b) the amount of the contribution or membership payment does not conform to the relevant provisions of the Insurance Guidelines.
(2) Written notice of the Authority’s rejection of a contribution or membership payment, and the reasons for the rejection, must be given to the provider.
(3) If the Authority rejects a contribution or membership payment proposed by a provider, the provider may request the Authority to reconsider the rejection.
(4) Pending its reconsideration, the Authority may request an actuary to determine a provisional contribution or membership payment.
(5) A provisional contribution or membership payment so determined has effect, pending the Authority’s reconsideration, as if it were a contribution or membership payment that may lawfully be collected by the provider concerned.
(6) If the Authority has not withdrawn its rejection of a contribution or membership payment within 4 weeks after a request to reconsider the rejection, the matter is to be arbitrated under this clause. The following provisions have effect—
(a) The Commercial Arbitration Act 2010 applies to an arbitration under this clause, subject to this Regulation. The Authority and the provider concerned may by agreement appoint a person to act as arbitrator in connection with the matter. Failing agreement within 7 days, paragraphs (b) and (c) apply.
(c) Alternatively, that Tribunal may appoint a person to act as arbitrator in connection with the matter. The person is to be appointed from a panel constituted by the Minister and consisting of persons who have appropriate knowledge and understanding of actuarial science, general alternative indemnity product cover and the interests of home owners and beneficiaries under the Act and this Regulation.
(7) The arbitrator may determine the contribution or membership payment that may be collected by the provider.
(8) The Insurance Guidelines may—
(a) specify the factors to be taken into account in determining for the purposes of this clause the reasonable cost of claims and reasonable claim settlement expenses, and
(b) specify the factors to be taken into account in determining for the purposes of this clause whether a contribution or membership payment is excessive, and
(c) provide that contributions or membership payments that may be collected by the provider may be increased only on an annual basis or only at specified intervals or on the occurrence of specified events, and
(d) exclude specified costs and expenses from being taken into account as costs and expenses of the provider for the purposes of this clause, and
(e) limit the extent to which specified costs and expenses can be taken into account as costs and expenses of the provider for the purposes of this clause.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
Division 8
Assignment of obligations
Division 8 Assignment of obligations
Division 8 Assignment of obligations
62ZB
Assignment of obligations following cancellation of licence and in other cases
62ZB Assignment of obligations following cancellation of licence and in other cases
62ZB Assignment of obligations following cancellation of licence and in other cases
(1) In this clause—
licensed provider includes a provider whose licence has been cancelled or has otherwise ceased to be in force.
(2) The trust deed of a fidelity fund must require the trustee to assign the obligations of the licensed provider under the fidelity fund scheme to another licensed provider with the agreement of that other provider if—
(a) the licence of the first-mentioned licensed provider is cancelled or otherwise ceases to be in force, or
(b) the Authority directs the trustee of the fidelity fund scheme that the Authority is satisfied that it is necessary to do so to ensure compliance with any conditions to which a licence is subject.
(3) The trust deed of a fidelity fund must provide that obligations under the fidelity fund scheme may be assigned under a term referred to in subclause (2) by notice served by the Authority on the providers concerned.
(4) On the service of the notice—
(a) the fidelity fund cover to which it relates is cancelled as from the date and time specified in the notice, and
(b) the licensed provider to whom the obligations under the relevant fidelity fund scheme are assigned is taken (as from the time and date of cancellation) to have entered into fidelity fund cover with those covered under the relevant fidelity fund scheme on the same terms as, and for the balance of the periods of, the trust deed relating to that fidelity fund cover, and
(c) the licensed provider whose obligations are assigned must provide the provider’s records relating to the assigned obligations to the provider to whom the obligations are assigned.
(5) On the cancellation of a fidelity fund cover under subclause (4) (a), the provider whose fidelity fund cover is cancelled must pay to the provider to whom the fidelity fund cover is assigned—
(a) the same proportion of the contributions or membership payments paid or to be paid in respect of the fidelity fund cover as the balance of the indemnity period of the fidelity fund cover bears to the whole indemnity period of the fidelity fund cover, and
(b) any additional amount that the Authority directs relating to the income from investment and the management fee with respect to the charge.
(6) Any amount payable under subclause (5) to a licensed provider may be recovered by the provider as a debt in a court of competent jurisdiction.
(7) The effect of the cancellation of a fidelity fund cover under this clause is to terminate the indemnity period of the fidelity fund cover but, subject to this clause, without affecting any right, obligation or liability acquired, accrued or incurred under the fidelity fund cover in respect of that period before its termination.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
Part 6B
Alternative indemnity products—specialised insurance arrangements
Part 6B Alternative indemnity products—specialised insurance arrangements
Part 6B Alternative indemnity products—specialised insurance arrangements
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZC
Application
62ZC Application
62ZC Application
(1) This Part applies to an alternative indemnity product that involves the provider entering into a contractual arrangement to provide cover by means of a specialised insurance arrangement for the purposes of Part 6B of the Act.
(2) In this Part—
alternative indemnity contract means a contract to provide cover by means of an alternative indemnity product to which this Part applies.
construction period alternative indemnity contract—see clause 62ZH (1) (a).
specialised insurance cover means cover by means of a specialised insurance arrangement for the purposes of Part 6B of the Act.
warranty period alternative indemnity contract—see clause 62ZH (1) (b).
(3) Words and expressions used in this Part have the same meaning as in Part 6B of the Act.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZD
Persons who may arrange specialised insurance cover
62ZD Persons who may arrange specialised insurance cover
62ZD Persons who may arrange specialised insurance cover
An alternative indemnity contract may be entered into for the purposes of Part 6 of the Act by a contractor, or by a beneficiary in respect of the work done, and may be arranged by any such person.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZE
Information to be provided to an alternative indemnity provider
62ZE Information to be provided to an alternative indemnity provider
62ZE Information to be provided to an alternative indemnity provider
For the purposes of section 104C (1) (a) of the Act, a person to whom specialised insurance cover is provided must give the licensed provider the contact details of the other party to the contract to do residential building work.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZF
Provisions of the Act that apply to alternative indemnity contracts in same way as to contracts of insurance
62ZF Provisions of the Act that apply to alternative indemnity contracts in same way as to contracts of insurance
62ZF Provisions of the Act that apply to alternative indemnity contracts in same way as to contracts of insurance
(1) For the purposes of section 104B (4) of the Act, sections 92A, 101 (2) (c) and (d), 101A (5), 102 (2) and (6), 102A (1A) (a), 103C (2) (i) and 103EA (1) of the Act apply to an alternative indemnity product subject to the following modifications—
(a) a reference to an insurer or a licensed insurer is to be read as a reference to a licensed provider of an alternative indemnity product (within the meaning of Part 6B of the Act),
(b) a reference to a certificate issued to evidence arrangements is to be read as a reference to the prescribed form of evidence of cover by means of an alternative indemnity product referred to in section 104B (2) of the Act.
(2) For the purposes of section 104C (2) (a) of the Act, Part 3A, and sections 92C and 97 (2), of the Act apply to an alternative indemnity product, subject to any necessary modifications.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZG
Loss to be covered by an alternative indemnity contract
62ZG Loss to be covered by an alternative indemnity contract
62ZG Loss to be covered by an alternative indemnity contract
(1) An alternative indemnity contract that is proposed to provide cover instead of a contract of insurance required by section 92 of the Act, as permitted by section 104B of the Act, must provide cover for each risk that is required by section 99 (1)–(3) of the Act to be covered by a contract of insurance.
(2) An alternative indemnity contract that is proposed to provide cover instead of a contract of insurance required by section 96 of the Act, as permitted by section 104B of the Act, must provide cover for each risk that is required by section 100 of the Act to be covered by a contract of insurance.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZH
Requirements for alternative indemnity product cover for residential building work done under contract
62ZH Requirements for alternative indemnity product cover for residential building work done under contract
62ZH Requirements for alternative indemnity product cover for residential building work done under contract
(1) Despite any other provision of this Part, the alternative indemnity product cover in relation to residential building work that is required by section 92 of the Act, as permitted by section 104B of the Act, may be arranged by means of—
(a) one contract (a construction period alternative indemnity contract) that provides cover (by means of a specialised insurance arrangement) against—
(i) the risk specified in section 99 (1) (a) of the Act, and
(ii) the risk specified in section 99 (1) (b) of the Act in a case of non-completion of the residential building work, and
(b) another contract (a warranty period alternative indemnity contract) that provides cover (by means of a specialised insurance arrangement) against the risk specified in section 99 (1) (b) of the Act.
Note.
Combinations of contracts in which cover may be provided are set out in clause 62F.
(2) A warranty period alternative indemnity contract is not required to, but may, cover loss that arises from a breach of a statutory warranty in a case of non-completion of residential building work.
(3) A licensed provider is not required to, but may, provide both a construction period alternative indemnity contract and a warranty period alternative indemnity contract in relation to the same residential building work.
(4) Nothing in this clause requires a person obtaining cover for the purposes of section 92 of the Act, as permitted by section 104B of the Act, and who obtains cover for that purpose by entering into 2 contracts of alternative indemnity product cover as specified by this clause, to enter into both with the same licensed provider.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZI
Period of cover to be provided by an alternative indemnity contract
62ZI Period of cover to be provided by an alternative indemnity contract
62ZI Period of cover to be provided by an alternative indemnity contract
(1) An alternative indemnity contract must provide cover for loss arising from non-completion of the work for a period of not less than 12 months after the failure to commence, or cessation of, the work the subject of the cover.
(2) An alternative indemnity contract (other than a construction period alternative indemnity contract) must provide cover for other loss covered in accordance with the Act for a period of not less than—
(a) in the case of loss arising from a major defect in residential building work (within the meaning of section 18E of the Act)—6 years after completion of the work, or
(b) in the case of any other loss—2 years after completion of the work.
(3) A construction period alternative indemnity contract must provide cover for loss insured in accordance with the Act for a period of not less than 12 months after the failure to commence or cessation of the work the subject of the cover.
(4) However, the Authority may, by notice published in the Gazette, give written approval for an alternative indemnity contract, or for a class of contracts of alternative indemnity product, to provide cover for a shorter period to the extent to which the cover applies to loss in relation to specified work or materials.
(5) The terms of an alternative indemnity contract must provide that the provider is not entitled either to refuse to pay a claim under the alternative indemnity contract in relation to work done after an alternative contract has commenced, or to cancel the alternative indemnity contract, on the ground that the contract for the work or supply to which it relates was entered into before the period of alternative indemnity product cover commenced if a certificate evidencing alternative indemnity product cover has been given or the provider has otherwise accepted cover.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZJ
Beneficiaries
62ZJ Beneficiaries
62ZJ Beneficiaries
(1) The terms of an alternative indemnity contract must provide that the beneficiaries under the contract are—
(a) a person on whose behalf residential building work covered by the alternative indemnity contract is done or is to be done, or
(b) a person who is a purchaser of land on which work required by Part 6 of the Act to be covered for a loss under an insurance contract, and covered by the alternative indemnity contract, is done, or
(c) a successor in title to any person referred to in paragraph (a) or (b).
(2) The following persons are not required to be beneficiaries under an alternative indemnity contract—
(a) a developer who does residential building work,
(b) a person who does residential building work other than under a contract,
(c) a holder of a contractor licence who carried out residential building work,
(d) related companies, within the meaning of section 50 of the Corporations Act 2001 of the Commonwealth, to any corporate person referred to in paragraph (a), (b) or (c),
(e) a body corporate that is related, within the meaning of section 50 of the Corporations Act 2001 of the Commonwealth, to any corporate person referred to in paragraph (a), (b) or (c),
(f) a body corporate that is a related party, within the meaning of section 228 of the Corporations Act 2001 of the Commonwealth, of any corporate person referred to in paragraph (a), (b) or (c).
(3) Nothing in this clause prevents a person referred to in subclause (2) from being a beneficiary under an alternative indemnity contract.
(4) For the purposes of this clause, the owner or owners of common property the subject of work referred to in Part 6 of the Act are taken to be purchasers of the land on which the common property is situated.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZK
Misrepresentation or non-disclosure
62ZK Misrepresentation or non-disclosure
62ZK Misrepresentation or non-disclosure
The terms of an alternative indemnity contract must provide (and are taken to contain) that the provider is not entitled either to refuse to pay a claim under the alternative indemnity contract or to cancel that contract on the ground that the contract was obtained by misrepresentation or non-disclosure by the contractor or that the charges under the contract were not paid so long as, in the latter case, a certificate evidencing the alternative indemnity product cover has been given or the provider has otherwise accepted cover.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZL
Losses indemnified under alternative indemnity contracts (where single contract)
62ZL Losses indemnified under alternative indemnity contracts (where single contract)
62ZL Losses indemnified under alternative indemnity contracts (where single contract)
(1) This clause does not apply to a warranty period alternative indemnity contract or a construction period alternative indemnity contract.
(2) An alternative indemnity contract must indemnify beneficiaries under the alternative indemnity contract for the following losses or damage in respect of residential building work covered by the alternative indemnity contract—
(a) loss or damage resulting from non-completion of the work because of—
(i) the insolvency, death or disappearance of the contractor, or
(ii) the suspension of a contractor licence pursuant to section 42A of the Act, and
(b) loss or damage arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or have the contractor rectify because of—
(i) the insolvency, death or disappearance of the contractor, or
(ii) the suspension of a contractor licence pursuant to section 42A of the Act.
(3) Without limiting subclause (2), an alternative indemnity contract must indemnify a beneficiary for the following loss or damage, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor or suspension of a contractor licence pursuant to section 42A of the Act—
(a) loss or damage resulting from faulty design, where the design was provided by the contractor,
(b) loss or damage resulting from non-completion of the work because of early termination of the contract for the work because of the contractor’s wrongful failure or refusal to complete the work,
(c) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of an event referred to in subclause (2),
(d) loss of deposit or progress payment due to an event referred to in subclause (2),
(e) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage.
(4) The alternative indemnity contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause.
(5) For the purposes of subclause (2), if residential building work has not commenced, the alternative indemnity contract may limit the loss or damage indemnified against to the loss of any deposit paid, but is not required to limit the loss or damage to that amount.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZM
Losses indemnified under construction period alternative indemnity contracts
62ZM Losses indemnified under construction period alternative indemnity contracts
62ZM Losses indemnified under construction period alternative indemnity contracts
(1) A construction period alternative indemnity contract must indemnify beneficiaries under the contract for loss or damage in respect of residential building work covered by the construction period alternative indemnity contract resulting from non-completion of the work because of—
(a) the insolvency, death or disappearance of the contractor, or
(b) the suspension of a contractor licence pursuant to section 42A of the Act.
(2) A construction period alternative indemnity contract must indemnify beneficiaries under the contract for loss or damage in respect of the non-completion of residential building work covered by the construction period alternative indemnity contract arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or have the contractor rectify because of—
(a) the insolvency, death or disappearance of the contractor, or
(b) the suspension of a contractor licence pursuant to section 42A of the Act.
(3) Without limiting subclauses (1) and (2), a construction period alternative indemnity contract must indemnify a beneficiary for the following loss or damage in respect of the non-completion of residential building work, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor or the suspension of a contractor licence pursuant to section 42A of the Act—
(a) loss or damage resulting from faulty design, where the design was provided by the contractor,
(b) loss or damage resulting from non-completion of the work because of early termination of the contract for the work because of the contractor’s wrongful failure or refusal to complete the work,
(c) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of the non-completion,
(d) loss of deposit or progress payment due to the non-completion,
(e) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage.
(4) The construction period alternative indemnity contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause.
(5) For the purposes of this clause, if residential building work has not commenced, the construction period alternative indemnity contract may limit the loss or damage indemnified against to the loss of any deposit paid, but is not required to limit the loss or damage to that amount.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZN
Losses indemnified under warranty period alternative indemnity contracts
62ZN Losses indemnified under warranty period alternative indemnity contracts
62ZN Losses indemnified under warranty period alternative indemnity contracts
(1) A warranty period alternative indemnity contract must indemnify beneficiaries under the contract for loss or damage in respect of residential building work covered by the warranty period alternative indemnity contract, being loss or damage arising from a breach of a statutory warranty, being loss or damage in respect of which the beneficiaries cannot recover compensation from the contractor or have the contractor rectify because of—
(a) the insolvency, death or disappearance of the contractor, or
(b) the suspension of a contractor licence pursuant to section 42A of the Act.
(2) Without limiting subclause (1), the warranty period alternative indemnity contract must indemnify a beneficiary for the following loss or damage, being loss or damage in respect of which a beneficiary cannot recover compensation from the contractor concerned, or have the contractor rectify, because of the insolvency, death or disappearance of the contractor or the suspension of a contractor licence pursuant to section 42A of the Act—
(a) loss or damage resulting from faulty design, where the design was provided by the contractor,
(b) the cost of alternative accommodation, removal and storage costs reasonably and necessarily incurred as a result of the non-completion,
(c) any legal or other reasonable costs incurred by a beneficiary in seeking to recover compensation from the contractor for the loss or damage or in taking action to rectify the loss or damage.
(3) A warranty period alternative indemnity contract must state that the risks indemnified include the acts and omissions of all persons contracted by the contractor or other person to perform the work resulting in loss or damage of a kind referred to in this clause.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
62ZO
Exclusion of amounts of deposit or progress payment
62ZO Exclusion of amounts of deposit or progress payment
62ZO Exclusion of amounts of deposit or progress payment
Despite clauses 62ZL and 62ZM, an alternative indemnity contract may contain a provision that excludes the provider from liability for the amount of any part of—
(a) a deposit that exceeds the amount permitted for such a deposit by section 8 of the Act, or
(b) a progress payment that exceeds the amount permitted for such a payment by section 8A of the Act, or
(c) if a deposit has not been paid, the amount of the deposit.
Parts 6B (cll 62A–62ZZC): Ins 2017 (705), Sch 1 [18].
More sections below
Source text: opening excerpt
Sourced from legislation.nsw.gov.au, CC BY 4.0.
Part 1 Preliminary
Part 1 Preliminary
Part 1 Preliminary
1 Name of Regulation
1 Name of Regulation
1 Name of Regulation
This Regulation is the Home Building Regulation 2014.
2 Commencement
2 Commencement
2 Commencement
This Regulation commences on 15 January 2015 and is required to be published on the NSW legislation website.
3 Definitions
3 Definitions
3 Definitions
(1) In this Regulation—
electricity supply authority has the same meaning as it has in the Gas and Electricity (Consumer Safety) Act 2017.
fee unit—see Part 2 of Schedule 6.
qualified supervisor, for electrical wiring work, has the same meaning as in the Act, section 14.
Supervision Practice Standard means the Supervision Practice Standard for Apprentices in the Electrical Industry published in Gazette No 266 of 12 July 2024.
the Act means the Home Building Act 1989.
warranty period insurance contract—see section 99 (4) of the Act.
Note.
The Act and the Interpretation Act 1987 contain definitions and other provisions that affect the interpretation and application of this Regulation.
(2) Notes included in this Regulation do not form part of this Regulation.
Part 2 Contracting for residential building work and specialist work
Part 2 Contracting for residential building work and specialist work
Part 2 Contracting for residential building work and specialist work
4 Exemptions relating to contracting and advertising
4 Exemptions relating to contracting and advertising
4 Exemptions relating to contracting and advertising
(1) A person is exempt from the requirements of section 4 (Unlicensed contracting) of the Act if the contract concerned is made by or on behalf of—
(a) an exempt corporation and the exempt corporation does not contract to do specialist work only under the contract, or
Licensing and Registration (Uniform Procedures) Act 2002
Fourth, it mandates insurance. Part 6 is the most technically dense section. It defines beneficiaries (cl 37), deems certain terms into every insurance contract (misrepresentation not to void cover – cl 38; 90-day deemed acceptance of claims – cl 39), specifies indemnified losses for construction, warranty, and single contracts (cll 40–40B), sets minimum cover at $340,000 per dwelling (cl 45, subject to residential flat building adjustments in cl 46), and lists 20+ permissible exclusions and limitations (cl 42). Thresholds for insurance are $20,000 (cl 53). Excess is capped at $250 (cl 54). Part 6A and 6B then create parallel regimes for fidelity fund schemes and specialised insurance arrangements, allowing approved alternative indemnity products to satisfy the Act's insurance obligations (ss 104B–104D of the Act). These Parts replicate the loss indemnification, beneficiary, and time-limit rules while adding contribution-filing and prudential requirements (cll 62X–62ZZC).
The Regulation also deals with advertising (Part 5 – site signs and licence number disclosure), dispute resolution (Part 4 – transfer of court proceedings to NCAT and warning notices), a public register (Part 9 – extensive particulars including claims history and disciplinary outcomes), fees (Part 8 and Schedule 6, indexed by CPI), and a long list of exemptions (Part 7 and Division 6 of Part 6) for Crown projects, retirement villages, built-in furniture, government-funded community care, charities, build-to-rent, and local councils. Part 8A addresses loose-fill asbestos verification and warning signs. Part 10 contains miscellaneous machinery (major defect definition for cladding, refrigeration/air-conditioning declarations, Home Building Administration Fund application, relevant laws for plumbing, reviewable decisions, information sharing, fee waiver power, certificate evidence, and penalty notice offences in Schedule 7).
In short, the Regulation translates the Act's high-level consumer-protection objectives into granular, enforceable rules that licensing authorities, builders, insurers, and homeowners must follow on a daily basis.
Who it affects
The Regulation casts a wide net. Primary regulated persons are:
Holders of contractor licences, supervisor certificates, and tradesperson certificates (cll 13–16, 20, Schedule 4). Any individual, partnership, or corporation wishing to contract for, or carry out, residential building work above $5,000 or specialist work of any value must hold the appropriate authority. Endorsed licences and certificates are required for supervision (cll 15–16A).
Owner-builders (cll 17, 19). Any person intending to carry out owner-builder work valued over $10,000 (GST inclusive) on land in which they hold a prescribed interest must obtain a permit, complete general construction induction training, and may be required to undertake additional education if the cost exceeds $20,000.
Developers and vendors of land (cll 55, 56, 59A–59C, 61). Developers must ensure insurance or alternative indemnity cover before selling lots with residential building work (s 96A of the Act). Specific exemptions apply to recognised housing providers, build-to-rent schemes, and councils.
Insurers and providers of alternative indemnity products (Parts 6, 6A, 6B, 6C). Licensed insurers must issue contracts containing the deemed terms in cll 38–40B. Providers of fidelity funds or specialised insurance arrangements must comply with identical loss indemnification, beneficiary, and prudential rules, file contributions (cll 62X–62ZZB), and are subject to insolvency declarations (cl 62ZZJ).
Consumers and beneficiaries (cll 37, 62H, 62ZJ). Homeowners, subsequent purchasers, and successors in title are the protected class. They receive statutory warranties (enforceable for 2 or 6 years depending on major defect status), insurance or fidelity fund cover, cooling-off rights, and access to NCAT for claims.
Apprentices, trainees, and employees of exempt bodies (cll 25–28). Limited exemptions from licensing exist for employees of councils or statutory corporations performing non-specialist work in the ordinary course of duties, and for apprentices performing electrical wiring work under qualified supervision in accordance with the Supervision Practice Standard.
Advertisers and signatories (cll 32–33). Any licensee advertising or displaying signs on sites must include licence numbers; failure attracts penalty notices.
NCAT, courts, and the Secretary (cll 30–31, 71). The Regulation prescribes procedural rules for transfer of proceedings, warning notices on orders, and reviewable decisions.
Indirectly affected are manufacturers of kit homes (cl 65), suppliers of built-in furniture (cl 58), and persons performing minor maintenance or work below insurance thresholds. The Crown enjoys a limited exemption for community and public housing projects involving externally-administered contractors (cl 63).
Key duties and rights
Duties of licensees and contractors
Obtain and maintain the correct authority for each category of work (cll 13–14, 20, Schedule 4).
Not contract for specialist work unless also licensed in that category or subcontract to a licensed specialist (cl 15).
Ensure contracts over the prescribed thresholds are written, contain the approved checklist and Security of Payment information, and do not back-date commencement (cll 5, 8, 10).
Display site signs and include licence details in all advertising (cll 32–33).
Arrange insurance or approved alternative indemnity cover before commencing work above $20,000 (cll 53, 92 and 96 of the Act, cll 36, 62B).
Comply with supervision standards for electrical wiring (cll 16A, 27–28).
Notify insurers of counterparty details (cl 46A).
Return varied or cancelled authorities unless exempted (cl 29).
Comply with NCAT orders or face automatic suspension (cl 15(2), 31).
Duties of insurers and providers
Include all mandated indemnities and deemed terms (cll 37–40B, 62E–62M).
Not refuse claims on misrepresentation grounds if a certificate has issued (cll 38, 62I, 62ZK).
Decide claims within 90 days or be deemed to accept (cll 39, 62W, 62ZX).
Observe the $340,000 minimum per dwelling (cll 45–46, 62S–62T) and $250 maximum excess (cl 54).
File and justify contributions or charges in accordance with Insurance Guidelines (cll 62X–62ZZB).
Rights of consumers/beneficiaries
Written contract with cooling-off period (cl 7).
Statutory warranties (enforceable directly or via insurance/fidelity fund).
Insurance or fidelity fund cover for non-completion and defective work (cll 40–40B, 62K–62M).
Extended claim periods for latent defects and diligent pursuit of warranties (cll 46B, 62U, 62V).
Access to NCAT for building claims and insurance appeals (cll 30, 49).
Warning notices on Tribunal orders and automatic licence suspension for non-compliance (cl 31).
Register of exemptions is publicly available (cl 55A).
Exemptions and carve-outs
Extensive. Councils, statutory corporations, electricity supply authorities, and certain developers are exempt from licensing and insurance in defined circumstances (cll 4, 24–26, 56–59C). Work below $5,000 or $20,000 thresholds often escapes full contract or insurance requirements. Owner-builders are exempt from contractor licensing but must still insure if selling (s 95 of the Act, cl 35).
Penalties and enforcement
The Regulation creates or adopts a tiered enforcement regime. Maximum penalties for individuals are generally 10–100 penalty units; corporations face 20–200 units (e.g. cl 18 – 10 units for failure to surrender replaced authority; cl 32(1) and 33(1) – 10/20 units for advertising/sign offences). Schedule 7 lists 30+ penalty notice offences with on-the-spot fines of $250–$1,500 for individuals and $500–$3,000 for corporations. Serious breaches (unlicensed contracting – s 4 of the Act; failure to insure – ss 92, 96) attract higher fines or imprisonment on prosecution.
Disciplinary action is the principal enforcement tool. The Secretary may impose conditions, suspend, cancel, or disqualify authorities (ss 22–33B of the Act). Non-compliance with NCAT orders triggers automatic suspension after 28 days (cl 31) and prevents renewal. Public warnings and formal cautions are recorded on the public register (cl 69). Insurance claims history and disciplinary outcomes must be disclosed (cl 69(2)–(4)).
The Home Building Insurers Guarantee Fund and Home Building Operational Fund are funded by insurer and provider contributions (cll 62ZF–62ZI). Insolvent providers can have their obligations assigned (cll 62ZB, 62ZZC). The Secretary may waive, reduce, postpone, or refund fees in cases of hardship or special circumstances (cl 71B).
How it interacts with other laws
The Regulation is expressly parasitic on the Act. Almost every substantive clause begins “For the purposes of section X of the Act…” or “An insurance contract must contain (and is taken to contain)…”. It cross-references the Interpretation Act 1987, Gas and Electricity (Consumer Safety) Act 2017, Local Government Act 1993, Building and Construction Industry Security of Payment Act 1999, Work Health and Safety Regulation 2011, Real Property Act 1900, Licensing and Registration (Uniform Procedures) Act 2002, Strata Schemes Development Act 2015, Community Land Development Act 2021, Retirement Villages Act 1999, Environmental Planning and Assessment Act 1979, and the Corporations Act 2001 (related companies, related parties).
It modifies the Licensing and Registration (Uniform Procedures) Act 2002 in two places (cll 22, 68) to exclude owner-builder permits from certain procedural requirements and to prevent automatic lapsing on restoration applications. Insurance provisions interact with the Insurance Protection Tax Act 2001 and the Commercial Arbitration Act 2010 (cl 62ZA arbitration of contribution disputes). Electrical supervision must align with the Supervision Practice Standard (cll 16A, 27–28) and the Gas and Electricity (Consumer Safety) Act 2017. Asbestos provisions (Part 8A) dovetail with the Work Health and Safety Act 2011 and NATA accreditation requirements. Recent amendments link the Regulation to the Design and Building Practitioners Act 2020 and Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 for fund application (cl 69C).
Information sharing is permitted with a prescribed list of agencies (cl 71A), including SafeWork NSW, Fire and Rescue NSW, and the Department of Planning and Environment. Corresponding laws from every other Australian jurisdiction are prescribed for disqualification purposes (cl 21).
Recent changes and why
The Regulation has been heavily amended since 2015, reflecting three policy drivers: consumer protection after high-profile insolvencies, modernisation of insurance, and alignment with planning and safety reforms.
2017 amendments (Home Building Amendment (Compensation Reform) Act 2017 and Regulation): introduced the $340,000 minimum cover, split construction and warranty period insurance contracts (cll 40A–40B), created alternative indemnity products (Parts 6A–6C), and adjusted thresholds. The aim was to stabilise the home warranty insurance market after several insurer exits.
2018–2020 amendments: updated categories (cl 14), inserted cl 16A and amended cll 27–28 to mandate the Supervision Practice Standard for electrical apprentices and supervisors following safety incidents. Refrigeration and air-conditioning work were clarified (cl 69B, Schedule 4).
2021–2023 amendments: cl 8 substituted to require Security of Payment information; cl 55A created a public register of exemptions; cll 59A–59C inserted targeted insurance exemptions for registered charities, build-to-rent schemes (under SEPP (Housing) 2021), and councils. These changes implement housing supply initiatives while maintaining consumer safeguards. Clause 69C (2022) expanded permissible uses of the Home Building Administration Fund to the new design and apartment compliance Acts.
2024 amendments (2024 (363)): further reinforced electrical supervision by inserting cl 16A, amending cll 3, 27 and substituting cl 28 to require compliance with the July 2024 Supervision Practice Standard “to the extent the standard does not conflict with the Act”.
Each wave of change has been driven by actuarial concerns, coronial recommendations on electrical safety, housing affordability policies, and the need to reduce red tape for not-for-profit and government providers.
Court challenges and controversies
Because the Regulation is largely machinery, direct challenges are rare; most litigation concerns the parent Act. However several provisions have been tested.
The validity of the $20,000 insurance threshold and the distinction between construction and warranty policies was upheld in NCAT and Supreme Court decisions applying the deemed terms in cll 38–40B. The extended claim periods in cll 46B and 62U have generated controversy; beneficiaries must prove “diligent pursuit” of statutory warranties before accessing insurance outside normal limitation periods. Factors listed in cl 46B (notification under Part 3A, compliance with rectification orders, commencement of proceedings) are routinely litigated; insurers argue that failure to use the statutory dispute resolution pathway prejudices their subrogation rights.
The electrical supervision amendments (cll 16A, 28) have not yet produced reported cases but have been criticised by industry groups as overly prescriptive. The fidelity fund and alternative indemnity regimes (Parts 6A–6B) remain largely untested; the insolvency declaration mechanism in cl 62ZZJ has not been invoked.
Controversy also surrounds the breadth of exemptions (cll 56–59C). Developers of multi-storey buildings and build-to-rent projects are relieved of insurance obligations, shifting risk to purchasers. Consumer advocates argue this undermines the Act’s protective purpose. Conversely, small builders complain that the $340,000 minimum cover inflates premiums for low-value jobs.
The public register (cl 69) has been challenged on privacy grounds, but the breadth of particulars (insurance claims paid, disciplinary outcomes, public warnings) has been upheld as necessary for informed consumer choice.
No regulation-wide validity challenge has succeeded. Courts treat the Regulation as a legitimate exercise of the regulation-making power in s 140 of the Act.
Gotchas
Most practitioners miss three recurring traps.
First, the “integral part” deeming rule in the general building work and structural landscaping categories (Schedule 4). If a builder contracts for a kitchen renovation that includes waterproofing (a specialist category), the entire contract is treated as general building work only if the waterproofing is integral. Otherwise the builder must subcontract to a licensed waterproofer or hold dual licences. Clauses 15 and 16 impose strict conditions; breach can lead to disciplinary action even if the work is defect-free.
Second, the interaction between cl 10 and s 8A of the Act. A contract over $20,000 cannot deem residential building work to have commenced before physical work on site. Many standard forms still contain “date of contract = commencement” clauses; these are void for residential building work but may survive for associated non-residential work. The note to cl 10 is often overlooked.
Third, the 10-year long-stop on claims (cl 62V) applies to alternative indemnity products as well as traditional insurance. Beneficiaries who notify a defect in year 9 but do not commence NCAT proceedings until after the 10-year anniversary lose cover entirely, even if the policy period is longer. The “diligent pursuit” factors in cl 46B are exhaustive; failure to use the statutory Part 3A process is almost always fatal.
Another subtle gotcha is cl 41 and 62N: insurers and providers may exclude deposits or progress payments that exceed the statutory caps. A builder who accepts a 10% deposit on a $500,000 job (exceeding the 10% permitted by s 8) risks the entire deposit being uninsured.
Finally, the CPI indexing of fees (Schedule 6, Part 2) is often ignored. The “fee unit” amount changes annually; quoting last year’s dollar figure can result in under-payment and rejected applications.
How to comply
Compliance is best achieved by a three-layer system: pre-contract, during works, and post-completion.
Pre-contract
Confirm the exact categories of work and ensure the correct licence or combination of licences is held (use the Schedule 4 table).
For jobs over $20,000 prepare a compliant contract containing the Secretary-approved checklist and Security of Payment information (cl 8). Delete any back-dating clauses (cl 10).
Arrange either a traditional insurance certificate or approved alternative indemnity product evidence before work commences (cll 36, 62B). Retain the certificate.
For owner-builders, obtain the permit, complete the White Card course, and secure insurance if selling within 6 years (s 95 of the Act).
During works
Display the required site sign (cl 32).
Ensure all advertising and quotations contain the licence number in the prescribed format (cl 33).
Supervise electrical wiring strictly in accordance with the Supervision Practice Standard (cll 16A, 28). Document supervision.
Subcontract specialist work only to appropriately licensed contractors and retain records (cl 15).
Issue progress claims in accordance with the contract and the Building and Construction Industry Security of Payment Act 1999.
Post-completion
Provide final certificates of insurance or alternative indemnity to the owner and any subsequent purchasers.
Retain all contracts, insurance documents, and supervision records for at least 10 years (cl 62V long-stop).
If a defect claim arises, notify the insurer or provider within 6 months of becoming aware (or 12 months for non-completion) (cl 47). Failure to do so can reduce liability only to the extent of prejudice (cl 43).
Comply with any NCAT order within time; notify Fair Trading in writing of compliance to avoid automatic suspension (cl 31).
Monitor the public register and ensure particulars are accurate; update the Secretary of any changes in directors, partners, or nominated supervisors.
Licensees should maintain a compliance calendar keyed to the financial year for renewal, contribution filing (cll 62Y, 62ZZ), and CPI-adjusted fees. Professional indemnity insurance (separate from home warranty insurance) is prudent. When in doubt, obtain written advice from the Secretary under s 121 of the Act; such advice is admissible in disciplinary proceedings.
By treating the Regulation as a practical checklist rather than abstract law, licensees can convert its complexity into a competitive advantage: clear contracts, proper insurance, and documented supervision dramatically reduce the risk of NCAT claims and disciplinary action.
Section 4Exemptions relating to contracting and advertising
(b) a general contractor and the general contractor contracts to do specialist work (none of which is residential building work) under the contract and that specialist work is part only of the work to be done under the contract by the general contractor, or
(c) an electricity supply authority and the electricity supply authority contracts under the contract to do only installation, alteration or maintenance work on power lines forming part of an electrical installation.
(2) A person is exempt from the requirements of section 5 (Seeking work by or for unlicensed person) of the Act if the representation concerned is made by or about—
(a) an exempt corporation and the representation does not relate to specialist work only, or
(b) a general contractor and the representation relates to specialist work none of which is residential building work and that specialist work is only part of the work to be done, or
(c) an electricity supply authority and the representation relates only to installation, alteration or maintenance work on power lines forming part of an electrical installation.
(3) In this clause—
electrical installation has the same meaning as it has in the Gas and Electricity (Consumer Safety) Act 2017.
exempt corporation means—
(a) a council or county council within the meaning of the Local Government Act 1993, or
(b) a corporation that is constituted by or under an Act, other than—
(i) a company within the meaning of the Corporations Act 2001 of the Commonwealth, or
(ii) a corporation that is subject to control under the Co-operatives (Adoption of National Law) Act 2012 or the Associations Incorporation Act 2009.
general contractor means a contractor who carries on a business the principal object of which is to supply goods or services otherwise than by the doing of specialist work but the supply of which goods or services may incidentally involve the doing of specialist work.
cl 4: Am 2017 No 15, Sch 2.10.
5 Thresholds for contract requirements
5 Thresholds for contract requirements
5 Thresholds for contract requirements
(1) For the purposes of section 7 (1A) of the Act, the prescribed amount is—
(a) for contracts entered into before 1 March 2015—$5,000, and
(b) for contracts entered into on or after 1 March 2015—$20,000.
(2) For the purposes of section 7AAA of the Act, the prescribed amount is—
(a) for contracts entered into before 1 March 2015—$1,000, and
(b) for contracts entered into on or after 1 March 2015—$5,000.
6
6 (Repealed)
6
cl 6: Am 2017 (705), Sch 1 [2] [3]. Rep 2018 No 25, Sch 1.16.
7 Thresholds for cooling-off period
7 Thresholds for cooling-off period
7 Thresholds for cooling-off period
For the purposes of section 7BA (1A) of the Act, the prescribed amount is $20,000.
8 Matters for inclusion in contracts to do residential building work
8 Matters for inclusion in contracts to do residential building work
8 Matters for inclusion in contracts to do residential building work
(1) A contract to do residential building work to which section 7 of the Act applies must include the following—
(a) a checklist in the approved form,
(b) information, in the approved form, that explains the operation of the Building and Construction Industry Security of Payment Act 1999 and the Building and Construction Industry Security of Payment Regulation 2020.
(2) In this clause—
approved form means the form approved by the Secretary.
cl 8: Am 2017 (705), Sch 1 [4]. Subst 2018 No 65, Sch 8.5[1]; 2021 (132), cl 3(1).
9 Conditions to be included in certain contracts (before 1 March 2015)
9 Conditions to be included in certain contracts (before 1 March 2015)
9 Conditions to be included in certain contracts (before 1 March 2015)
(1) For the purposes of section 7E of the Act, a contract to do residential building work must include each of the conditions set out in Part 1 of Schedule 3.
(2) For the purposes of section 16DE of the Act, a contract to supply a kit home must include each of the conditions set out in Part 2 of Schedule 3.
(3) This clause does not apply to a contract entered into on or after 1 March 2015.
10 Terms of contracts to which section 8A of the Act applies
10 Terms of contracts to which section 8A of the Act applies
10 Terms of contracts to which section 8A of the Act applies
(1) For the purposes of section 7E (2) (b) of the Act, a relevant contract entered into on or after 1 March 2015 must not contain a term that provides that residential building work under the contract was taken to have commenced prior to residential building work being performed on the land to which the contract relates.
Note.
The above subclause limits the terms that can be included in certain contracts to do residential building work. It does not limit terms in a contract that relate to associated work that is not residential building work.
(2) In this clause—
relevant contract means a contract to do residential building work where the contract price exceeds $20,000 or (if the contract price is not known) the reasonable market cost of the labour and materials involved exceeds $20,000.
11 Thresholds for maximum progress payments
11 Thresholds for maximum progress payments
11 Thresholds for maximum progress payments
On and from 1 March 2015, the prescribed amount for the purposes of section 8A (1) of the Act is $20,000.
12 Thresholds for residential building work
12 Thresholds for residential building work
12 Thresholds for residential building work
For the purposes of clause 2 (3) (a) of Schedule 1 to the Act, the prescribed amount is $5,000.
Part 3 Contractor licences, certificates and owner-builder permits
Part 3 Contractor licences, certificates and owner-builder permits
Part 3 Contractor licences, certificates and owner-builder permits
Division 1 Categories of work
Division 1 Categories of work
Division 1 Categories of work
13 Categories of residential building work
13 Categories of residential building work
13 Categories of residential building work
For the purposes of sections 21 (1) (a) and 27 (1) (a) of the Act—
(a) the following building work categories of residential building work are prescribed—
(i) erection of pre-fabricated metal-framed home additions and structures,
(ii) general building work,
(iii) kitchen, bathroom and laundry renovation,
(iv) structural landscaping,
(v) swimming pool building, and
(b) the following trade categories of residential building work are prescribed—
(i) bricklaying,
(ii) carpentry,
(iii) decorating,
(iv) dry plastering,
(v) excavating,
(vi) fencing,
(vii) general concreting,
(viii) glazing,
(ix) joinery,
(x) metal fabrication,
(xi) minor maintenance and cleaning,
(xii) minor tradework,
(xiii) painting,
(xiv) roof plumbing,
(xv) roof slating,
(xvi) roof tiling,
(xvii) stonemasonry,
(xviii) swimming pool repairs and servicing,
(xix) underpinning or piering,
(xx) wet plastering,
(xxi) wall and floor tiling,
(xxii) waterproofing.
14 Categories of specialist work
14 Categories of specialist work
14 Categories of specialist work
For the purposes of sections 21 (1) (b) and 27 (1) (b) and (2) of the Act, the following specialist work categories are prescribed—
(a) advanced liquefied petroleum gasfitting work,
(b) air-conditioning work,
(c) disconnection and reconnection of fixed electrical equipment,
(d) draining work,
(e) electrical wiring work,
(f) gasfitting work,
(g) liquefied petroleum gasfitting work,
(h) plumbing work,
(i) refrigeration work,
(j) water plumbing—fire protection systems,
(k) water plumbing—fire sprinkler systems,
(l) water plumbing—urban irrigation,
(m) water plumbing work,
(n) medical gasfitting work,
(o) medical gas technician work,
(p) mechanical services and medical gas work.
cl 14: Am 2018 No 65, Sch 4.2[1]; 2020 (179), Sch 1[1]; 2020 (643), Sch 1[1].
Division 2 Authorities
Division 2 Authorities
Division 2 Authorities
15 Conditions of certain contractor licences
15 Conditions of certain contractor licences
15 Conditions of certain contractor licences
(1) A contractor licence that authorises work in a category of residential building work prescribed by clause 13 (a) is subject to the condition that the holder of the licence must not do any specialist work involved, and must instead enter into a subcontract with the holder of a contractor licence in the relevant category of specialist work, unless the holder of the first-mentioned licence also holds a contractor licence in the relevant category of specialist work.
(2) It is a condition of a contractor licence that the holder of the licence must comply with an order made by a court or the tribunal under section 48O (1) (c) of the Act.
16 Conditions of supervisor certificates
16 Conditions of supervisor certificates
16 Conditions of supervisor certificates
(1) A supervisor certificate that authorises work in a category of residential building work prescribed by clause 13 (a) is subject to the condition that the holder of the supervisor certificate may not do specialist work other than under the immediate supervision and direction of the holder of a contractor licence or supervisor certificate that permits the doing or supervision of the relevant category of specialist work, unless the holder of the supervisor certificate also holds an authority that permits the holder to do the relevant specialist work.
(2) It is a condition of a supervisor certificate that the holder of the certificate must comply with an order made by a court or the tribunal under section 48O (1) (c) of the Act.
16A Condition of electrical wiring work authorities—the Act, s 36(1)(a)
16A Condition of electrical wiring work authorities—the Act, s 36(1)(a)
16A Condition of electrical wiring work authorities—the Act, s 36(1)(a)
It is a condition of a qualified supervisor’s endorsed contractor licence or supervisor certificate that the qualified supervisor supervises electrical wiring work in accordance with the Supervision Practice Standard, to the extent the standard does not conflict with the Act.
cl 16A: Ins 2024 (363), Sch 1[2].
17 Education, training and qualification requirements for issue of owner-builder permits
17 Education, training and qualification requirements for issue of owner-builder permits
17 Education, training and qualification requirements for issue of owner-builder permits
(1) For the purposes of section 31 (2) (d) of the Act, an applicant for an owner-builder permit must hold a current general construction induction training card (within the meaning of the Work Health and Safety Regulation 2011) before a permit may be issued.
(2) In addition, if the reasonable market cost of the labour and materials of proposed owner-builder work exceeds $20,000, the Secretary may approve additional education and training requirements that an applicant for an owner-builder permit must complete before an owner-builder permit may be issued.
18 Replacement authorities
18 Replacement authorities
18 Replacement authorities
Note.
Under Part 2 of the Licensing and Registration (Uniform Procedures) Act 2002 (as applied by sections 19 (2), 24 (2) and 30 (2) of the Home Building Act 1989), an application for the replacement of an authority may be made to the Secretary by the authority holder if the authority is lost, damaged or destroyed.
The holder of an authority that is replaced by the Secretary—
(a) must surrender the original authority if it is recovered, or
(b) in the case of a damaged authority that is replaced, must surrender the damaged authority.
Maximum penalty—10 penalty units.
18A
18A (Repealed)
18A
cl 18A: Ins 2021 (187), cl 3. Rep 2022 No 2, Sch 2.15[1].
19 Owner-builder permits
19 Owner-builder permits
19 Owner-builder permits
(1) For the purposes of the definition of owner-builder work in section 29 (1) of the Act, the prescribed amount is $10,000 (inclusive of GST).
(2) For the purposes of section 29 (3) of the Act, a person has a prescribed interest in land (so that the person is an owner of land for the purposes of Division 3 of Part 3 of the Act) if the person individually, jointly or in common, either at law or in equity—
(a) has a freehold interest in the land (such as where the person is duly registered under the Real Property Act 1900 as the proprietor of an estate in fee
This is an opening excerpt, not the complete document.