Australia: One Year On, Ownership Still an Issue for the Building Act 2011

Last Updated: 5 May 2013
Article by Anne Wood

On 2 April 2012, the main provisions of the Building Act 2011 came into force in Western Australia. As we pass the first anniversary of this controversial Act, the traditional gift of paper seems appropriate, with more amendments likely.

Since then, there have been two sets of amendments to the Act and three sets of amendment to the regulations. Four exemption orders have also been issued – three of which controversially allowed construction to begin before receiving a building licence, for applications lodged but not determined within certain time limits. All these time limits have now elapsed.

Despite the constant shifting sands of legislative amendments and proclamations, local governments and applicants have worked together to survive the first year and many of the problems in the initial drafting have been overcome.

Unfortunately some problems remain and the new drafting has resulted in some new problems arising.

One of the more significant problems is the definition of "owner". Section 16(b) of the Building Act 2011 requires each owner of the land to be named and to sign an application for a building or demolition licence. This must be done for it to be a valid application.

"16. Making an application

An application —

  1. must be made in an approved manner and form; and
  2. must name, and be signed by, each owner of the land on which the building or incidental structure is, or is proposed to be, located; and..."

Owner is defined in section 5 of the Building Act 2001 as being;

"5. Meaning of owner

  1. In this Act, unless the contrary intention appears —
  2. owner, in relation to land held in freehold, means —

    1. a person whose name is registered as a proprietor of the land; and
    2. the State, if registered as a proprietor of the land; and
    3. a person who holds a prescribed interest in the land;

    owner, in relation to Crown land, means —

    1. a prescribed person; or
    2. the State, in prescribed circumstances; or
    3. a person who holds a prescribed interest in the land, and the regulations may specify whether owner means one or more of those persons for the purposes of a particular provision of this Act.
  1. The regulations may impose restrictions on the circumstances in which a person will be treated as an owner for the purposes of a provision of this Act specified in the regulations."

This seems clear enough for the most common situation in which the registered proprietor of freehold land wishes to make an application. However, where the person wishing to lodge the application is a purchaser who has signed an offer and acceptance, but the property has not yet settled, the situation becomes more complex.

Regulation 10(b) of the Building Regulations 2012 stipulates that a purchaser with a signed contract is also to be treated as an owner.

"10. Owners of land (s. 5(1))

  1. For the purposes of paragraph (c) of the definition of owner, in relation to land held in freehold in section 5(1) the following interests are prescribed —
    1. a leasehold interest in land if the terms of the lease allow the lessee to undertake building work without the consent of each person whose name is registered as a proprietor of the land;
    2. an interest as purchaser under a contract to purchase an estate in fee simple in the land;
    3. ..."

This classification of purchasers as owners – even before settlement – is then taken one step further by regulation 11A which states that for the purposes of making an application for a building or demolition permit the purchaser is the only person who can be regarded as an owner.

"11A. Restriction on circumstances where person treated as owner (s. 5(2))

  1. For the purposes of section 16(b), in the circumstances where a person who holds an interest referred to in regulation 10(1)(a) has signed an application in respect of land on which a building or incidental structure is, or is proposed to be, located no other person is to be treated as the owner of the land.
  2. For the purposes of section 16(b), in the circumstances where a person who holds an interest referred to in regulation 10(1)(b) has signed an application in respect of land on which a building or incidental structure is, or is proposed to be, located no other person is to be treated as the owner of the land."

This is a significant departure from the previously existing state of the law where the registered proprietor who appears on the Certificate of Title for the land is deemed to be the owner.

Whilst this may have been intended to speed up the development of land, it is likely to have unintended consequences. For example:

  • Does any licence issued take effect from the date of issue? Arguably yes, because there is nothing in the Building Act 2011 to suggest otherwise – even if the settlement has not yet occurred.
  • Can a local government issue a licence to a purchaser with a condition that work cannot commence until the land is transferred to the purchaser? This condition is debatable, given that no condition can overrule a statutory provision, and in this case there is a statutory provision that no other person can be regarded as an owner.
  • What then happens in the following scenario? A purchaser signs an application for a demolition licence and is granted the licence from the local government. A demolition licence is granted prior to settlement occurring. The purchaser and the seller are involved in bitter court proceedings. The seller objects to the local government but the local government has no option but to issue the licence. The purchaser demolishes the residence on the property prior to settlement. Settlement does not occur.

If you are thinking of selling a parcel of land, consider carefully the implications of the Building Act 2011 before signing any sale contract.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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