Understanding the S137B Building Act and Its Importance

The Building Act 1993 is a fundamental piece of legislation that governs building regulations in Victoria, Australia. It ensures that construction projects adhere to safety, quality, and compliance standards. Within this framework, Section 137B (S137B) is crucial for property stakeholders, particularly owner-builders, homebuyers, builders, developers, real estate agents, and government entities.

Section 137B was introduced to safeguard property buyers from defective or substandard building work by mandating owner-builders to provide necessary reports before selling their property. This compliance measure ensures transparency, reduces legal disputes, and upholds construction standards.

Failure to comply with Section 137B can lead to significant legal and financial penalties, making it essential for anyone involved in property transactions to understand its requirements thoroughly.

What is Section 137B of the Building Act 1993?

Section 137B serves as a protection mechanism for property buyers, ensuring that owner-builders disclose essential details about the construction work undertaken on a property. This regulation applies to any owner-builder who has done renovations, extensions, or major home improvements and intends to sell the property within 6.5 years of completion.

Key Elements of S137B:

• Defects Inspection Report Requirement: Owner-builders must obtain a Defects Inspection Report from a registered building practitioner before selling the property.
• Prescribed Period: The 6.5-year timeframe ensures that property buyers remain protected from potential structural issues arising within this period.
• Types of Building Work Covered: Includes major structural modifications, extensions, and renovations, but excludes minor cosmetic changes.
• Protection Against Defective Work: Ensures buyers are fully informed about the condition of the property they purchase.

Failure to adhere to these obligations could result in contract termination, financial liabilities, or penalties from the Victorian Building Authority (VBA)

Who Does Section 137B Apply To?

1. Owner-Builders

• If an owner-builder carries out and completes construction work and later decides to sell the property within 6.5 years, compliance with S137B is mandatory.
• Obligations Include:
  • Obtaining a Defects Inspection Report from a registered building practitioner.
  • Providing a copy of the report to the prospective buyer before signing a contract.
  • Purchasing Domestic Building Insurance (if applicable).

2. Registered Building Practitioners

• Unlike owner-builders, licensed builders are already governed by strict compliance regulations and are not required to provide an S137B Defects Report when selling a home.
• However, builders must still ensure all work is completed to Australian Standards and Building Codes.

3. Property Buyers & Real Estate Agents

• Buyers should conduct due diligence by requesting S137B reports when purchasing properties with owner-built modifications.
• Real estate agents must ensure compliance, as they could be legally liable if a property is sold without meeting S137B requirements.

4. Exemptions Under the Act

• Minor renovations (e.g., painting, flooring, cabinetry) do not require an S137B report.
• Certain commercial properties may be exempt depending on classification.

Requirements Under Section 137B

1. When is Compliance Required?

• Any owner-built home sold within 6.5 years of construction completion must comply with Section 137B.

2. The Defects Inspection Report

• A licensed building surveyor or inspector must inspect the property and certify its condition.
• The report should include:
  • Structural integrity assessment
  • Identification of defects, faults, or incomplete work
  • Compliance status with current building codes
  • Recommendations for any necessary repairs

3. Domestic Building Insurance

• Required if building work exceeds $16,000.
• Protects buyers from financial losses if defects arise and the owner-builder is unavailable.
• Covers structural issues, faulty workmanship, and incomplete projects.

4. Warranty Obligations

• Owner-builders must provide implied warranties about the quality and durability of their work.
• Failure to disclose major defects could lead to legal action.

The Defects Inspection Report in Detail

A Defects Inspection Report is a critical legal document required under S137B. It provides an independent assessment of the property’s condition and must be conducted no more than six months before a sale.

Key Aspects of the Report:

• Must be prepared by a qualified building practitioner.
• Covers structural soundness, workmanship quality, and potential defects.
• Helps buyers make informed decisions before purchase.

Legal Implications for Non-Compliance

Penalties for Violating S137B

• Failure to provide a Defects Inspection Report or Domestic Building Insurance can result in:
  • Significant fines imposed by the Victorian Building Authority (VBA).
  • Legal claims from buyers for non-disclosure of defects.
  • Possible contract rescission, forcing the seller to repay the purchase price.

Buyers’ Rights Under the Act

• Buyers can terminate contracts before settlement if the seller fails to comply with S137B requirements.
• Legal action can be pursued for misrepresentation or undisclosed defects.

Case Studies & Legal Precedents

• Past court rulings highlight the importance of full compliance.
• Buyers have successfully voided contracts and received compensation due to non-compliance by sellers.

Role of the Victorian Building Authority (VBA)

The Victorian Building Authority (VBA) monitors and enforces compliance with S137B.

VBA’s Role Includes:

• Conducting random audits and inspections.
• Investigating complaints from buyers and property stakeholders.
• Providing guidance and certification for building practitioners.

For compliance assistance, visit the Victorian Building Authority website.

Understanding and complying with Section 137B of the Building Act 1993 is essential for ensuring smooth property transactions in Victoria. Whether you’re an owner-builder, homebuyer, real estate agent, or developer, compliance safeguards your investment, protects buyers, and prevents costly legal issues.

Consult a licensed building practitioner today for professional defects inspection reports and domestic building insurance to ensure full compliance with the S137B Building Act.