An important distinction between commercial building work and residential building work arises when considering the licensing (and other) requirements, as well as statutory obligations and rights of the parties.

The key distinguishing factor is whether the work is being undertaken in a “dwelling”.

The Home Building Act (NSW) 1989, defines dwelling as:

 “dwelling” is “a building or portion of a building that is designed, constructed or adapted for use as a dwelling (such as a detached or semi-detached house, transportable house, terrace or town house, duplex, villa-home, strata or company title home unit or residential flat).  It includes any swimming pool or spa constructed for use in conjunction with a dwelling.” There are a number of inclusions and exclusions to this definition which need to be considered also.

It also defines “residential building work” as:

  1. “Any work, or work involving the co-ordinating or supervising of that work where that work is:
    (a) the construction of a dwelling; or
    (b) the making of alterations or additions to a dwelling; or
    (c) the repairing, renovation, decoration or protective treatment of a dwelling.”

Commercial building work however is not currently regulated in the same way that residential building work is, NSW. While there have been discussions at state government level here in NSW, licensing is not a pre-requisite to carrying out commercial building work, whereas it is for residential building work. There are strict penalties that apply if a person carries out residential building work, without a license, under the Home Building Act.

Key distinguishing factors between “commercial building work” and “residential building work”, include, but are not limited to:

Residential building work:

  1. Licensing – the builder and all contractors must be licensed.
  2. Contract Requirements – a written contract compliance with the Home Building Act must be in place before works are carried out.
  3. For works exceeding the statutory threshold, Home Owners Warranty Insurance must be obtained an in place.
  4. Statutory warranties apply to all residential building contracts. These vary between 2 to 6 years.

Commercial Building Work:

  1. Licensing – persons on-site are not required to licenses issued by the New South Wales Office of Fair Trading.
  2. There is no requirement for Home Owners Warranty Insurance.
  3. There are no formal contracting requirements, but it is always suggested that a contract be entered into between the parties.
  4. The statutory warranties that are implied into residential building contracts, do not apply to commercial building works.

Of course other legislation such as: the Building and Construction Industry Security of Payment Act, Environment Planning and Assessment Act and the Australian Consumer Law, amongst others, may still apply to commercial building works.

At HBA LAWYERS, Ziv Ben-Arie and his team are experts in Building and Construction Law. If you require any advice or assistance with these matters, the preparation of contracts, administration advice, payment disputes or general law matters, please do not hesitate to contact us on admin@hbal.com.au or call us on 0415 933 993.

*this article is not intended to provide legal advice. If you have any specific questions regarding your own matter you should seek legal advice.