For homeowners, envisioning their ideal residence is a thrilling adventure. For builders, making this adventure seamless and within legal bounds is essential. The Building Commission's recent advisories have highlighted an alarming and potentially harmful trend in the construction sector: license lending. Inspector West, a top building inspector in Perth, delves into the consequences of this practice and offers guidance on its inherent dangers.
Decoding License Lending
License lending involves registered builders allowing their contractor credentials to be accessed by other entities, sometimes even unregistered ones. Although subcontracting to another certified service provider might appear benign, it carries significant risks. Operating under a registered builder's license when unlisted is illegal and fraught with perils.
The Dangers Unveiled
The Building Commission's Industry Bulletin 155 details two essential case studies:
Lending to Another Registered Builder:
Scenario: Builder A, under certain limitations, collaborates with Builder B, who has a solid and certified standing. Builder B receives payment for projects executed in its name but managed by Builder A. Regrettably, Builder A confronts fiscal crises, leaving numerous tasks incomplete.
Consequence: although not directly implicated, Builder B must complete the lingering tasks and address any shortcomings. The overwhelming financial responsibility endangers Builder B's entire venture and reputation. Additionally, due to possible bankruptcy, Builder B's future registration hangs in the balance.
Lending to an Individual:
Scenario: Person A, aiming to avoid the expenses tied to a registered builder, teams up with Builder B. The builder consents to lend its certification for a particular remuneration. However, once the home is erected and sold, major infrastructural problems surface.
Consequence: Builder B bears the brunt of these deficiencies and incurs a $75,000 Building Remedy Order from the Building Commissioner. On top of this, a $10,000 fine is levied on Builder B for enabling Person A's unlawful construction endeavours.
A Word of Wisdom
The outlined scenarios accentuate the necessity for rigorous scrutiny. Builders must remain wary of the fleeting appeal of earnings from license lending, given the potentially devastating repercussions both in financial and reputational terms.
Inspector West, a respected authority in Perth's construction inspection sphere, consistently champions clarity, trustworthiness, and adherence to rules. Remembering that every construction endeavour should stand firmly on honesty and expertise is crucial. Avoid being swayed by momentary advantages that might compromise enduring success.
Source: Building Commission's Industry Bulletin 155 on "The risks associated with lending out your building contractor registration."
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