The Perils of Building Licence Lending 9

Friday, February 27th, 2015
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Anecdotally, one hears of scenarios where residential builders have “lent” their builders registration to other individuals who don’t have builder registration.

Why do they do it? I wouldn’t have the foggiest idea. Maybe its to help out a mate, maybe there is a stipend, but whatever the case, it’s a daft, very bad idea.

The “tom-tom drums” of the building industry beat a tale of woe where the ode of licence lending comes back to bite registered builders who engage in this naïve and misconceived practice. It appears that there are those who, armed with licence, nominate a mate as the registered builder apparently with the consent of the registered builder, and then with lofty dreams and limited experience, go about the business of building.

Not surprisingly the impostors – the “pop up builders” if you will – pretty quickly find out that they are out of their depth and the project goes of the rails. The project’s demise can occur due to a whole variety of reasons: underquoting, poor workmanship, failure to complete the job, no understanding of the Building Code of Australia or a veritable potpourri of all of the above.

The pretender, or the “builder you have when you don’t really have a builder,” then disappears, the project goes down the gurgler and the victim (the consumer) finds a construction lawyer who then advises the aspiring home owner to go after the registered builder (the holder of the DBU number) who has the home owners warranty policy.

That’s when things get really bilious. The builder may say well my involvement was limited, was remote or abstract, but that won’t cut the mustard because it’s the registered builder who will be called to account.

If the pretender has done a runner or is devoid of funds, then all roads will lead to the bloke who had the brain explosion and let his mate make use of his or her domestic registration number. That will leave the licenced builder to fix up the mess or risk being sued.

If the insurer has to step in, then the insurer (the furnisher of the home warranty cover) when called upon to pay out will doggedly and relentlessly claw the monies back from the real builder courtesy of the counter indemnities.

Builders should never lend their registration to another. They should always assume full custodianship of every project they lend their name to by way of registration. It is incumbent upon a registered builder to have rigorous systems in place to control and manage every project that comes under his, her or its watch.

If the motivation is to help out a buddy by lending out one’s registration, remember, “the road to hell is paved with good intentions.” Of course, I would not say that lending out one’s registration for the construction of a dwelling is well-intentioned, so the metaphor is not entirely on point.

The bottom line is this: if you are a registered builder, don’t lend out your registration or DBU number, don’t desert your post, keep control of your project, build well and on time  and above all be the master of your own destiny.

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  1. This silly practice is dangerous, foolish and undermines the integrity of the whole building system and should not be allowed to happen.

    What's the point of having a builder registration system if the person actually doing the building under the license is not the actual licensed individual? And given that normal, honest and diligent builders put the time and effort in to become a registered builder and learn how to do the job properly and safely, why should some 'mate' get the benefit of the licence when he or she gets all the benefits of a license without the effort required to learn to do things right.

    Oh, and by the way, registered builders may be doing their mate a favour, but that's going to be hard to justify when that mate gets himself hurt because he was performing work that he had no business to perform.

  2. James Elias

    I hear this story over and over again. I work at Qualify Me! and we get some 'lentee' builders who actually do have some great experience and can demonstrate their skills quite confidently whilst others… let's just say they're a danger to themselves and the industry!

  3. John Smolders

    Well said Kim, it has happened and sure to happen again.

  4. David Chandler

    Is this practice not illegal? What are the regulators doing? When was the last person prosecuted? If a repeat offender what next?
    This seems another example of the regulator being out to lunch. If the penalties are weak then they should be ramped up.
    The public should be protected by a bit more than appealing to dumb builder mates.

    • Branko Mladichek

      You are on the money David. Yes the practice is illegal as it is nothing more than circumventing requirement that builders be registered. You have also hit bulls eye, its all about lack of enforcement with proper penalties. If for example there was 10 year suspension of builders licence for the offence of lending licence you would find situation would quickly change. If we had robust building control enforcement with on the spot hefty penalties for builders and subcontractors, for breaches of Building act and Domestic building Contracts Act, you could turn around this industry very very quickly. And yes another change to our law is required. The common law principle from Bellgrove vs Eldridge should be amended by statute law so that currently rectification is undertaken when it is necessary for conformance and it its a reasonable course of action to read that where building work is non compliant with regulations and or non conformant with contract that it is mandatory that it be undertaken regardless of economic loss to the builder (save for very exceptional cases) to maintain building standards.
      How many times have I seen Building Commission reports that declare that brickwork is defective but remedy is not recommended. Figure that.
      Faced with element of fear, penalties and expensive rectifications, builders that now build with impunity and get away without any quality control (i see it all the time) will quickly clean up their act.

  5. Malcolm Findlay

    A similar situation occurs with other Registered Practitioners.

    I seem to recently encounter clients (mostly O/B) who have a mate who has a drawing program, and has some ability to draw plans, however is not willing to gain registration from the Practitioners Board.
    They produce poor documentation, sell it to the O/B and tell them to claim that they have drawn the plans themselves.

    These people work on the fringe of our industry, and cause nothing but trouble to the O/B the tradesmen quoting the work , and Building Surveyor trying to issue a permit.
    No wonder O/B attract a higher permit fee !

  6. Kim Lovegrove.

    Interesting feedback all, it is revealing and troubling that other categories of practitioners appear to be caught up in the same web. It is also troubling to hear that the problem may be more widespread than I thought, albeit by way of anecdotal feedback. It is hoped that practitioners take heed and pay heed to the comments that you fine Sirs have taken time out of your day to amplify in this sourceable feedback.

  7. Jessica

    I don't know why they do it, I just don't get it!

  8. Jon

    I can tell you why they do it… License lend to a project management company who can build but aren't licensed, then say this company is building 16 estate houses a year at a fee of $30,000 each job that's $480,000 extra in the builders pocket on top of their own works.