Version No. 002

Domestic Building Contracts Regulations 2017

S.R. No. 18/2017

Version as at26 April 2017

TABLE OF PROVISIONSRegulation Page

1 Objectives 12 Authorising provision 13 Revocation 24 Commencement 25 Definitions 26 Major domestic building contract—contract price for the

carrying out of domestic building work 37 Building work to which Act does not apply—work to be carried

out under a contract for one type of work only 38 Building work to which the Act does not apply—certain

buildings and premises 49 Building work to which the Act does not apply—subdivisions 510 Type of cost plus contract allowed 611 Certain contracts exempt from provisions of the Act 712 Certain persons exempt from provisions in the Act 713 Progress payments 714 Fee for request to chief dispute resolution officer for assessor 8

Schedule 1 9

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Endnotes 12

1 General information 12

2 Table of Amendments 14

3 Amendments Not in Operation 15

4 Explanatory details 16

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Version No. 002

Domestic Building Contracts Regulations 2017

S.R. No. 18/2017

Version as at26 April 2017

1 Objectives

The objectives of these Regulations are—

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

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

(c) to exempt certain persons and contracts from various provisions of the Act; and

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

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

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

2 Authorising provision

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

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3 Revocation

The Domestic Building Contracts Regulations 20071 are revoked.

4 Commencement

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

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

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

5 Definitions

In these Regulations—

public construction has the same meaning as in section 3(1) of the Project Development and Construction Management Act 1994;

public entity has the same meaning as in section 4(1) of the Public Administration Act 2004;

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

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

the Act means the Domestic Building Contracts Act 1995;

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

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

For the purposes of the definition of major domestic building contract in section 3(1) of the Act, an amount of $10 000 is fixed.

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

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

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

(b) electrical work;

(c) glazing;

(d) installing floor coverings;

(e) insulating;

(f) painting;

(g) plastering;

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

(i) tiling (wall and floor);

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

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

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

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

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

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

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

(i) a community service established under section 44 of the Children, Youth and Families Act 2005; or

(ii) a community service registered under section 46 of that Act, which is situated on Crown land or land in relation to which the Secretary to the Department of Health and Human Services or the Director of Housing is registered as proprietor; or

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

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

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

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

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

(i) a prison established under section 10 of the Corrections Act 1986; or

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

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

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

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

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

(g) a movable unit within the meaning of the Housing Act 1983 that is constructed for Kids Under Cover Inc. that is used or intended to be used to provide accommodation on a non-profit basis.

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

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

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

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

(c) engineering works, fencing works, landscaping works or retaining structures required for the subdivision under—

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

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

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

10 Type of cost plus contract allowed

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

(a) contracts for work entered into before 1 August 2017 that it is reasonably estimated will cost $500 000 or more;

(b) contracts for work entered into on or after 1 August 2017 that it is reasonably estimated will cost $1 000 000 or more;

(c) domestic building contracts for public construction where the Crown or a public entity is a party to the contract.

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11 Certain contracts exempt from provisions of the Act

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

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

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

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

12 Certain persons exempt from provisions in the Act

Sections 15(2), 31(1), 32 and 33(2) of the Act do not apply to a builder who enters into a major domestic building contract for public construction.

13 Progress payments

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

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

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

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

14 Fee for request to chief dispute resolution officer for assessor

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

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Schedule 1FORM 1

Regulation 13(1)(a)

WARNING TO OWNER—CHANGE OF LEGAL RIGHTSUnder section 40 of the Domestic Building Contracts Act 1995 (the Act) a builder cannot, under a major domestic building contract, charge more than a fixed percentage of the total contract price at the completion of each stage of building a home.

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

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

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

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

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

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

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

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

If you have any doubts, you could contact—

Consumer Affairs Victoria; or

Law Institute of Victoria; or

Royal Australian Institute of Architects.

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

Signature of building owner ____________

Date ____________

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FORM 2Regulation 13(1)(b)

PROGRESS PAYMENTS

The parties agree that—(i) the progress payments set out in section 40 of the Domestic Building

Contracts Act 1995 do not apply; and

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

Name of stage

Work involved in Stage (If this stage is not the same as a stage defined in section 40(1) of the Domestic Building Contracts Act 1995, describe the work that is involved in this stage.)

Percentage of total contract price

Amount of progress payment

Signature of building owner ____________

Date ____________

AND

Signature of builder ____________

Date ____________

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Endnotes1 General information

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

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

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

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

INTERPRETATION OF LEGISLATION ACT 1984 (ILA)

Style changes

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

References to ILA s. 39B

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

Interpretation

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

• Headings

All headings included in a Statutory Rule which is made on or after 1 January 2001 form part of that Statutory Rule. Any heading inserted in a Statutory Rule which was made before 1 January 2001, by a Statutory Rule made on or after 1 January 2001, forms part of that Statutory Rule. This includes headings to Parts, Divisions or Subdivisions in a Schedule; Orders; Parts into which an Order is divided; clauses; regulations; rules;

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items; tables; columns; examples; diagrams; notes or forms. See section 36(1A)(2A)(2B).

• Examples, diagrams or notes

All examples, diagrams or notes included in a Statutory Rule which is made on or after 1 January 2001 form part of that Statutory Rule. Any examples, diagrams or notes inserted in a Statutory Rule which was made before 1 January 2001, by a Statutory Rule made on or after 1 January 2001, form part of that Statutory Rule. See section 36(3A).

• Punctuation

All punctuation included in a Statutory Rule which is made on or after 1 January 2001 forms part of that Statutory Rule. Any punctuation inserted in a Statutory Rule which was made before 1 January 2001, by a Statutory Rule made on or after 1 January 2001, forms part of that Statutory Rule. See section 36(3B).

• Provision numbers

All provision numbers included in a Statutory Rule form part of that Statutory Rule, whether inserted in the Statutory Rule before, on or after 1 January 2001. Provision numbers include regulation numbers, rule numbers, subregulation numbers, subrule numbers, paragraphs and subparagraphs. See section 36(3C).

• Location of "legislative items"

A "legislative item" is a penalty, an example or a note. As from 13 October 2004, a legislative item relating to a provision of a Statutory Rule is taken to be at the foot of that provision even if it is preceded or followed by another legislative item that relates to that provision. For example, if a penalty at the foot of a provision is followed by a note, both of these legislative items will be regarded as being at the foot of that provision. See section 36B.

• Other material

Any explanatory memorandum, table of provisions, endnotes, index and other material printed after the Endnotes does not form part of a Statutory Rule. See section 36(3)(3D)(3E).

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2 Table of AmendmentsThere are no amendments made to the Domestic Building Contracts Regulations 2017 by statutory rules, subordinate instruments and Acts.

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3 Amendments Not in OperationThere are no amendments which were Not in Operation at the date of this publication.

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4 Explanatory details

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1 Reg. 3: S.R. No. 25/2007.

——Fee Units

These Regulations provide for fees by reference to fee units within the meaning of the Monetary Units Act 2004.

The amount of the fee is to be calculated, in accordance with section 7 of that Act, by multiplying the number of fee units applicable by the value of a fee unit.

The value of a fee unit for the financial year commencing 1 July 2016 is $13.94. The amount of the calculated fee may be rounded to the nearest 10 cents.

The value of a fee unit for future financial years is to be fixed by the Treasurer under section 5 of the Monetary Units Act 2004. The value of a fee unit for a financial year must be published in the Government Gazette and a Victorian newspaper before 1 June in the preceding financial year.