If you operate in the building and construction industry, or if you are undertaking a building project and need to engage a private certifier, you need to be aware of legislation changes which commenced on 1 July 2020.

The Building and Development Certifiers Act 2018 (Act) and the Building and Development Certifiers Regulation 2020 (Regulation) (together, the Legislation) regulate the services provided by certifiers. Certifiers are people who undertake certification work, for example, a private certifier who is engaged to certify and issue a development consent. This article will explain the changes to the Legislation and how this may impact your business if you need to engage a certifier.

Registration Requirements

If you are a certifier, then the Act requires you to be registered with the Secretary of the Department of Customer Service (Secretary). It is unlawful for you to carry out any certification work unless you are registered. It is also unlawful to falsely represent that you can carry out certification work, or that you are registered.

Certifiers face various penalties under the Act.

For example, breaching obligations carries a maximum penalty of $110,000 for a body corporate, or $33,000 otherwise (including for an individual).

The Regulations specify different classes of registration (for example, fire safety certifier, building inspector and structural engineer), along with the parameters of certification work that certifiers in each class can perform. They also set out the conditions on obtaining and maintaining registration, including:

  • providing proof to the Secretary that the certifier is adequately insured;
  • that recognised training has been completed;
  • the qualifications and experience required for registration ;
  • required knowledge and skills for certifiers; and
  • the completion requirements for Continuing Professional Development (CPD).

The Legislation creates a range of additional requirements on certifiers. This includes carrying their certificate of registration when completing certification work. This is because an authorised officer may ask them to produce the certificate at any time.

The Secretary has the power to find that a person is not suitable to carry out certification work. This may be where the person has had a relevant authorisation (which is broadly defined and includes a contractor licence under the Home Building Act 1989 (NSW)) cancelled or suspended in the past.

Insurance

The Legislation outlines the insurance requirements for registered certifiers. The Act uses the term 'adequately insured'. This means that the registered certifier is indemnified by insurance against any liability that could arise during their certification work.

The insurance requirements also apply to accredited certifiers under the Environmental Planning and Assessment Act 1979 (NSW) or the Building Professionals Act 2005 (NSW). The Building Professionals Act 2005 (NSW) is being replaced by the new Legislation.

The insurance obligations include:

  • for a certifier to have a professional indemnity insurance policy that complies with the regulations; and
  • requirements on the limits of cover per claim under the professional indemnity insurance policy.

There are certain exclusions relating to cladding claims under professional indemnity policies commencing before 1 July 2020 that operate for 12 months or less.

If you are a certifier, or are engaging a certifier, it is important to have your insurance broker review the Legislation against the professional indemnity insurance policy to ensure it is compliant.

The Secretary may direct the issuers of insurance policies to release certain information, including any:

  • policy schedule;
  • endorsements;
  • applications made;
  • disclosures;
  • completed claims;
  • legal proceedings; and
  • amounts they have paid out in relation to a claim.

Contract Requirements

One of the key changes resulting from the Legislation is that certifiers have to ensure their contracts contain certain information and provisions. All certification work must be carried out under a written contract either between:

  • a person (i.e. the person for whom the certification work is being carried out) and a council; or
  • a person and a registered certifier.

The key requirements to be included in contracts for certification works include:

Requirement

Details

Contact Details

The name, registration number, address of their place of business, telephone number and email address of the registered certifier needs to be outlined.

If the contract is between a person and an employer of a registered certifier, it must also include the employer's details. The contract also needs to outline the name and registration number of the employee who will carry out the certification work.

Director Details

The registered certifier will need to outline the details of a suitably qualified director of the company carrying out the certification work.

Your Details

The name, address and contact details of the person engaging the certifier need to be included.

Insurance

The registered certifier needs to outline details of the insurance required under the Legislation, including the:

  • name of each insurer the certifier is currently covered by the insurance;
  • identifying the number of the insurance contract; and
  • dates between which the insurance contract is effective.

Particulars

The registered certifier needs to outline the particulars of the certification work. This includes, for example, the scope of the work.

Development Details

If certification work is carried out under the Environmental Planning and Assessment Act 1979 (NSW), the registered certifier will need to outline details of the relevant development.

For example, this will be relevant where the certification work involves issuing a development consent or occupation certificate.

Fees

The contract must outline the fees and charges payable for the certification work and how those fees and charges have been calculated.

Unforeseen Contingencies

The registered certifier needs to outline any charges that may be payable for work arising as a result of unforeseen contingencies. Here, the contract must also outline the basis on which those fees and charges are calculated.

The registered certifier also needs to outline requirements in relation to unforeseen services, including for the certifier to provide a quote for such work and to have the quote accepted before commencing the work.

Contract Date

This is typically the date the last party properly signs or executes the contract>.

Declaration

There must be a declaration that the person engaging the certifier has:

  • freely chosen to engage the certifier;
  • have read the contract; and
  • understood each party's roles and responsibilities under the contract.

Attachment

The registered certifier must also attach an information sheet made available on the Secretary's website. As at the date of this article, an information sheet has not been published.

Payment Terms

The terms of payment for certain types of work, including:

for work involved in the determination of an application for a development certificate, the fees are to be paid before or on lodgement of the application;

for principal certifier obligations, the fees and charges are to be paid before the functions are carried out; and

for unforeseen contingencies, invoices must be issued within 21 days following completion of the work.


The certifier is also required to comply with the code of conduct in Schedule 5 of the Regulations. It is, therefore, best practice to include an obligation to this effect in the contract.

Do You Carry Out Residential Building Work?

If you carry out residential building work, you will also need to take note of the Act, as it amends the Home Building Act 1989 (NSW).

The Act will apply to you if:

  • you are the holder of a contractor licence undertaking or varying residential building work or specialist work (for example, plumbing work or electrical wiring work);
  • the work is valued at or above $5,000 (incl GST) for a contract entered into after 1 March 2015;
  • such work requires the services of a registered certifier; and
  • it is not a contract with a developer.

If these criteria apply to you, then you:

  • must provide the owner with consumer information about the role of a registered certifier (at the date of this article, this information has not yet been published); and
  • must not unduly influence a person (or attempt to do so).
  • Further, from 1 July 2020, your contracts must include:
  • an obligation on you to notify the property owner if a registered certifier is required for any work;
  • that the selection of a registered certifier is the owner's responsibility;
  • an obligation on you not to object to the selection of any particular registered certifier; and
  • an updated consumer checklist (required to be included in residential building contracts over $20,000) that was amended on 1 July 2020.

If you fail to comply with these obligations, you could face penalties.

Key Takeaways

The changes in the new Legislation require contracts for certification work to include various mandatory requirements. Certifiers need to be registered and have professional indemnity insurance obligation. There are also further requirements for residential building contracts that you must comply with.

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.