Residential builder licence lending is creating a malaise in the building industry, and given the seemingly growing number of cases popping up, it does not appear the problem is going away any time soon.
Licence lending is a practice in which a company, partnership or sole trader purports to be - or masquerades as - a residential builder in circumstances where the trading entity does not have a builder registered in the category of residential builder either in its employ or as a director or principal of the business. It appears that commercial expedience allows for an arrangement or an accommodation to occur where someone in possession of registration allows by way of the accommodation or arrangement the expedient party to utilise his or her registration along with the home warranty cover.
What is overlooked in this bizarre practice is that Section 176 states that it is a statutory offence to purport or carry out the business of a builder unless the company or the partnership has a director or a partner who is a registered building practitioner in the relevant category. The fine for the offence can be up to $50,000.
In circumstances where a party involves itself in this masquerade, it can turn into a shocker pretty damn quickly. Apart from breaking the law, if the licence lender is not involved in the supervision and coordination of the project, which by all accounts is often the case, the quality of the workmanship is often deplorable.
Furthermore, if the contract goes off the rails, the registered building practitioner (the license lender or the remote controller as it were) will face the music, for it will be the registered building practitioner who is brought to account and required to make good the liabilities and the damages that flow from the compromised building project.
The real casualty, the innocent victim, will of course be the hapless owner who suffers the misfortune of entering into a contract with an unregistered building practitioner. The owner will be left with a partially completed house, delays, the threat or resort to litigation and the attendant stresses that will invariably present themselves.
The mere existence of this practice is an extraordinary state of affairs. Can you imagine someone going to a doctor only to discover the doctor is not registered but provides consultation on the basis that unbeknownst to the client, he or she has borrowed another doctor's licence? Can you imagine someone going to a law firm where a bloke with no legal qualification or practicing certificate holds himself out as being a lawyer on the basis that he has come to a covert arrangement with a lawyer working for another employer where he “borrows” the licenced lawyer's practicing certificate and insurance?
Mark my words, if these types of practices came to the attention of the legal and medical licencing bodies, they would come down on the impostors like a ton of bricks. The mind boggles as it seems too ridiculous to be true, yet anecdotally one hears of this practice gaining traction in the building industry.
It is a serious issue, because the vagaries of the practice visit themselves upon the innocent and the unsuspecting.