Q&A with Technical Manager David Kyburz

Posted 10 January 2020

Q&A with Technical Manager David Kyburz

Q: I have just completed a multi-unit development and provided MBA with copies of the completion notices however MBA have advised that only one fidelity certificate was issued over the development. Does this mean only one unit is covered?

A: In brief yes, only one unit would be covered where only one Fidelity certificate has been issued and more than one dwelling is constructed in that development there for only one dwelling would be covered under that Fidelity Fund Certificate should a claim be made against the Fidelity Fund by the consumer or homeowners.

Any claim made by additional homeowners would be rejected because a valid Fidelity Fund Certificate had not been issued for other dwellings on that block.

Insurance or Fidelity Fund Certificates are required under the ACT Building Act 2004 and is provided by a licensed builder for the benefit of the building owner. 

Before work can commence, the Building Certifier is required to verify the authenticity and validity of the Certificate, then give the licensed builder the Building Commencement Notice

This problem of dwellings having been constructed without a Fidelity Fund Certificate has been raised before and is concerning.

The builder is to ensure that he/she is vigilant when making applications for Fidelity Fund Certificates and the building certifier is to ensure that he/she is also vigilant when issuing a Building Commencement Notice.

Commencing of building work before obtaining a Building Commencement Notice from a Building Certifier is an offence under the Building Act 2004 and under the Construction Occupations Licensing Act 2004.

The Constructions Occupations Registrar (the Registrar) could take disciplinary action against you as the licensee and the building certifier.

I covered this topic in a previous Q and A however to view a short description for a demerit ground for occupational discipline that is a contravention of the Act or an operational Act and the number of demerit points incurred for those grounds you could view Schedule 2 of the Construction Occupations (Licensing) Regulation 2004  https://www.legislation.act.gov.au/sl/2004-36

 

The ACT Government introduced mandatory Residential Building Insurance in 1988 and then in 2002 legislated to enable Fidelity Funds to be established in the ACT. 

The principal purpose of the insurance or Fidelity Fund Certificate is to provide the home owner with protection against financial loss resulting from the builder’s death, insolvency or disappearance.

Under Part 6 of the ACT Building Act 2004, both the statutory warranties and insurance provide the home owner with a similar level of protection and sometimes referred to as Home Owners Warranty Insurance.

If a multi dwelling or unit development has progressed without a Fidelity Fund Certificate issued for each dwelling then the home owner of each dwelling will not be covered should a home owner make a claim against the Fidelity Fund.

Fidelity Fund Certificates are required for each dwelling that forms part of the building work on that block.  For example, if building approval has been granted to build two residences on a block then a certificate is required for each dwelling.

When applying for a Master Builders Fidelity Certificate a separate application must be completed for each house or unit.

This insurance or Fidelity Fund Certificate is required under the Building Act 2004 and is provided by a licensed builder for the benefit of the building owner. 

Before work can commence, the Building Certifier is required to verify the authenticity and validity of the Certificate, then give the licensed builder the Building Commencement Notice for each dwelling on that block. 

It should be noted that commencing building work before obtaining a Building Commencement Notice from a Building Certifier is an offence under the Building Act 2004 and under the Construction Occupations Licensing Act 2004.

New residential buildings

Fidelity Fund Certificates are required for the construction of all sole occupancy residences being class 1 building (detached house) or class 2 building (town house, units, apartments). Both separate dwellings and those attached to other dwellings by party walls.  This includes:

 

  • multi-residential units up to 3 storeys in height constructed over separate ground floor – car parking, commercial offices and/or shops;
  • garages that are an integral part of the new building: i.e. under the same roof as the residence

 

Additions and alterations to residences

Fidelity Fund Certificates are required for building work valued at $12,000 or more, that requires building approval.

This includes alterations that form part of the structural integrity of the building, i.e.

  • excavations that will affect the structure; and
  • the removal of internal walls, being either load bearing or acting as bracing units such as required in Australian Standards AS 1684 Residential Timber-framed Construction.

 

Not all internal renovations in excess of $12,000 require building approval. For example kitchen and bathroom upgrades, do not require Fidelity Fund Certificates.

 

If you have any technical questions you may contact me on 6175 5954, mobile 0419 866 796 or via email dkyburz@mba.com.au

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