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Explainer · Owner-builder homes
News
An owner-builder warranty can pay you nothing, for four separate reasons
It runs from the day the house was finished, not the day you bought it. It does not restart when the property changes hands. Anything already written into the defect report is excluded. And on the policies still governing most sales, it only responds if the builder has died, disappeared or become insolvent. The reform that fixed all four does not reach backwards.
Published: 21 August 2026
Where: Victoria
Read time: ~12 min
Editor's note Site Inspections is engaged on one of the two matters described in general terms in this article, and referred the other to the Building and Plumbing Commission, where the investigation is open and no findings have been made. We disclose both. Neither property, owner, vendor, builder nor practitioner is identified anywhere in this article, and nothing here should be read as a finding against any person. What is set out is the law, the regulator's own published requirements, and our own inspection findings.
Key facts
The document
Section 137B report
Owner Builder Defects Report
Who obtains it
The vendor
Before entering the contract of sale
Who may write it
A prescribed building practitioner
Registered surveyor or inspector, architect, or endorsed building engineer
Insurance, non-structural
2 years
From completion
Insurance, structural
6 years
From completion
Building action
10 years
From the occupancy permit
Key takeaways
The warranty clock runs from completion, not from your purchase, and it does not restart when the house is sold.
The occupancy permit is not evidence the house complies with the Building Act. That is section 46, in terms.
Anything listed in the vendor's defect report is excluded from the insurance. Anything not listed is what you can act on.
Six years is the insurance. Ten years is the liability, and it runs against the builder, not the insurer.

01 Two buyers, two outcomes

Two people bought, or nearly bought, homes built by owner-builders. Their outcomes could not have been more different, and the difference was not luck.

The first engaged Site Inspections before settlement. We inspected, we reported, and she did not proceed. The second bought a home some years after it was built, and is now living above two leaking bathrooms with water reaching the floor below.

Same law. Same paperwork. One of them got her own eyes on the building first.

This article is about what you are handed when you buy an owner-builder home, and what each of those documents is actually worth.

02 The report that found nothing

When an owner-builder sells within the statutory period, the contract of sale must carry a report on the building prepared by a prescribed building practitioner. It is commonly called a section 137B report, after the section of the Building Act that requires it.

On one property we inspected before purchase, that report had been obtained and provided with the contract. It recorded no defects. Not one.

Our own inspection of the same property found, among other things, non-structural timber used in the roof, no water stops to any of the waterproofing, defective cladding and defective roof plumbing.

Where that matter stands

The purchaser did not proceed with the sale. Site Inspections referred the report to the Building and Plumbing Commission. That investigation is open, and no findings have been made against any person.

We put our findings to the practitioner and the firm in writing before publishing anything, and offered them an opportunity to comment. Their position was that a section 137B report is prepared for a specific statutory purpose, and that its scope, methodology and reporting obligations differ from those of a pre-purchase or building and pest inspection. They also said they could not comment substantively without a complete copy of our report, which we did not provide.

They are right that the scopes differ, and that is worth understanding rather than brushing past. A section 137B report is a statutory report on defects in the owner-builder's building work. It is not a general condition assessment of a house.

Which is exactly why the regulator publishes a template.

03 What the report is required to cover

The Act does not set out the contents itself. It requires a report from a prescribed building practitioner "that contains the matters that are required by the Minister by notice published in the Government Gazette".

The Building and Plumbing Commission publishes the report template. It requires a list of defects in the building, and states that the list is to include, but is not restricted to, the condition of the following elements.

Site drainage
Frame
Floor and wall tiling
Built-in fittings and joinery
Plumbing and drainage
Footings
External walls
External roof
Doors and windows
Fixed appliances
Subfloor
Internal walls and ceiling
Internal roof conditions
Fireplaces and solid fuel heaters
Flyscreens

It also requires the practitioner to record any areas that were inaccessible at the time of inspection, the condition and status of incomplete works, and to attach the building permit and the occupancy permit or certificate of final inspection.

Set the four findings against that list.

What we found
Element named in the template
Non-structural timber in the roof
Frame · Internal roof conditions
No water stops to the waterproofing
Floor and wall tiling
Defective cladding
External walls
Defective roof plumbing
Plumbing and drainage · External roof
Our opinion, and the basis for it

The scope argument is a complete answer to a comparison with a general building and pest report. It is not an answer to these four, because every one of them falls within an element the regulator's own template names. In our opinion that report was deficient, and that is why we referred it. The Commission will form its own view, and it has not yet done so.

04 Whose report is it?

Here is the part that is structural rather than personal, and it applies to every owner-builder sale in the state.

The vendor obtains the report. The vendor chooses the practitioner. The vendor pays for it.

None of that is improper. It is what the section requires: the seller must obtain a report and give it to the purchaser. But a buyer who reads it as independent assurance has misunderstood whose report it is, and who commissioned it.

The report must be no more than six months old when the contract is signed, and a copy must be given to the intending purchaser. If those requirements are not met, the contract is voidable at the purchaser's option at any time before completion.

05 The occupancy permit does not mean the house complies

Most buyers treat the occupancy permit as proof the house was built properly. The Act says otherwise, in two sentences that almost nobody has read.

Building Act 1993 (Vic), No. 126 of 1993, Authorised Version No. 149 s 46
"46 Effect of occupancy permit. (1) An occupancy permit under this Division is evidence that the building or part of a building to which it applies is suitable for occupation. (2) An occupancy permit under this Division is not evidence that the building or part of a building to which it applies complies with this Act or the building regulations."

An occupancy permit under this Division is not evidence that the building or part of a building to which it applies complies with this Act or the building regulations.

Building Act 1993 (Vic)
Section 46(2) · Authorised Version No. 149, as at 30 July 2026

The permit says the house can be lived in. It does not say it was built to the Act. Those are different questions, and only one of them is answered by the document in your contract.

06 The four reasons the warranty can pay you nothing

Owner-builder warranty insurance is the other document in the pack. It is worth understanding what it does before you need it.

The reason
What the policy says
1. The two year clock had already run
Non-structural defects are covered for two years from completion
2. You bought too late for it to ever apply
If the first sale contract was more than two years after completion, the policy "does not cover loss or damage arising from a non-structural defect" at all
3. The defect was disclosed
Excluded are "visible defects ... including any defect or incomplete work that is referred to in a report prepared in accordance with section 137B"
4. The builder is alive and solvent
The policy responds "only if the owner builder has died, disappeared, become insolvent or failed to comply with a Tribunal or Court Order"

Reason four surprises people most. If the builder is contactable and paying his bills, the insurance does not respond. The route is the tribunal first, then an order, then non-compliance with it.

Reason three is the one to read twice, and it cuts both ways.

07 The clock starts at completion, and selling does not reset it

  1. Completion
    Day zero
    The date on the occupancy permit
    Every clock starts here. Not when you buy, and not when you move in.
  2. 2 years
    Cover ends
    Non-structural cover ends
    And if the first sale happened after this point, there was never any non-structural cover at all.
  3. 6 years
    Cover ends
    Structural cover ends
    The outer limit of the insurance on the older policies.
  4. 6.5 years
    Selling window
    The window in which an owner-builder selling must obtain the report and cover
    The Commission states the requirement applies where the project was completed less than six and a half years ago and the value was over $20,000.
  5. 10 years
    Liability ends
    A building action can no longer be brought
    Four years after the insurance has gone, the builder can still be pursued. This is the part most people are never told.

A later purchaser inherits the policy as a successor in title, and inherits what is left of it. Buy a house in its fifth year and you may have months of cover, not years, and nothing about the sale restarts it.

Where do you sit? Work out your dates
Enter the date on the occupancy permit and the date of your contract. This works out when each period ends, using the periods published in the Act, the Regulations and the policy wording. It cannot tell you whether you have a claim.
Or the certificate of final inspection, if no occupancy permit was issued. Every clock starts here.
The day you signed, or the day you expect to.
I know when the owner-builder first sold the house
Only needed if you were not the first buyer. On the older policies this date decides whether non-structural cover ever existed for anyone in the chain.
Indicative only, and not legal advice. The ten year period is a long stop rather than a guarantee that any particular claim is in time, and whether a claim runs depends on more than a date. Policy wordings differ between insurers and between years. If something is wrong with your home, get advice from a lawyer.

08 What you can still do, and it is more than most people are told

This is the part that is usually missing, and it matters more than any of the above.

Six years is the insurance period. It is not the liability period.

2
Years, non-structural cover
From completion
6
Years, structural cover
From completion
10
Years, building action
From the occupancy permit
Building Act 1993 (Vic) s 134(1)
"a building action cannot be brought more than 10 years after the date of issue of the occupancy permit in respect of the building work"

And you have standing even if you were not the original buyer.

Any person who is a successor in title to the purchaser may take proceedings for a breach of the warranties listed in subsection (1) as if that person were a party to the contract.

Building Act 1993 (Vic)
Section 137C(2)

The warranties are that the work was carried out in a proper and workmanlike manner, that the materials were good, suitable and new, and that the work complied with all laws including the Act and the regulations. They are given by the vendor for work carried out "by or on behalf of" them, which means an owner-builder warrants the work of every trade they engaged. A certificate from a tiler or a plumber does not move that warranty.

What the regulator says about the ten years

The Commission states that an owner-builder "may be directed to return and fix the work or pay for the work to be rectified if significant defects or non-compliances are identified after the property is sold by the owner builder for a period of 10 years after completion of the work", and that it can issue a rectification order requiring them to do so at their own cost.

And on the defect report, the regulator is equally direct

"A purchaser who finds defective or non-compliant domestic building work not identified in the required Defects Inspection Report is entitled to take legal action against the owner-builder for breach of statutory warranties."

So the report cuts both ways. What is in it is excluded from the insurance. What is not in it is precisely what you can act on. Which is the strongest practical argument there is for getting your own inspection: everything your inspector finds that the vendor's report missed is the part that remains available to you.

A necessary caution

None of this is legal advice, and the ten year period is a long stop rather than a guarantee that any particular claim is in time. Whether a claim runs depends on more than the date. If you are in this position, get advice from a lawyer.

09 What we see, again and again

Across thousands of inspections, the same failures turn up in the same places, and the same things get done to hide them before an open for inspection.

Start with the heaters. We have walked into houses on mild days with the heating running in every room and the windows shut. Sometimes that is someone who feels the cold. Often it is someone drying the place out before people come through. If you walk into an open and the heating is on when it does not need to be, that is a question worth asking, not a comfort.

Showers that were never waterproofed correctly are the most common serious defect we find. Not showers that have worn out. Showers that were wrong the day they were built, and have been leaking quietly ever since.

A leak that has been painted over is still a leak. Fresh paint on one section of a ceiling, a patched cornice, a single repainted wall in an otherwise untouched room. Something put the mark there, and paint does not fix what caused it.

A wet area on a first floor does not show itself in the bathroom. It shows on the ceiling below, sometimes a room away, often months later. Look down, not around.

Look at what water does to timber, not for water itself. Door jambs and architraves embedded into a tiled wet area floor will wick, then swell, then push their joints apart. By the time the paint splits, the frame behind it has been wet for a long time.

The base of a painted door architrave where carpet meets a tiled floor, the paint split and the timber behind it broken down into loose fibre
Timber tells you before the surface does. An architrave finishing into a tiled wet area floor. The paint has split and the timber behind it has broken down to fibre. That is moisture held against it over a long period, not a recent spill. Site Inspections photograph.

Lift a corner of the carpet on the level below a bathroom. Mould along the skirting line and under the underlay tells you more than any wall surface will.

Carpet and underlay folded back at a tiled bathroom threshold, revealing tidemarks of staining tracking out across the floor beneath
Nothing on the surface said this was here. Carpet and underlay turned back at a bathroom doorway. The tidemarks record water tracking out of the wet area and across the floor underneath the finish. Site Inspections photograph.

Get into the roof if you can. Timber grade, tie-downs and unfinished flashings are not visible from the ground, and they are not visible from the hallway.

Inside a roof space showing timber roof framing, reflective sarking, cabling draped loose over a chord and a bare lamp resting on a timber member
None of this is visible from the hallway. A roof space at inspection. Framing, sarking and the way services have been run are readable from inside the space and from nowhere else in the house. Site Inspections photograph.

None of this announces itself on a Saturday morning walk-through, and none of it is what a buyer is looking at when they are deciding whether the kitchen is big enough.

A thermal imaging camera held up to a tiled shower wall, its screen showing a regular pattern of cooler circular patches behind the tiles
This is what thermal imaging where it is warranted actually looks like. The regular pattern of cooler patches on the screen is tile adhesive applied in dabs rather than as a full bed. It cannot be seen, and it is audible only as a hollow note if somebody thinks to tap the wall. Site Inspections photograph.
What a proper inspection actually does
  1. Moisture readings, and thermal imaging where it is warranted, rather than a visual walk-through
  2. Every wet area, and the ceilings below every wet area
  3. The roof space and the subfloor where access exists, and a written note where it does not
  4. The permits and certificates read against what is actually built, not accepted at face value

Ask what an inspector will do before you engage them, and ask to see a sample report.

10 What changed on 1 July 2026

Every one of the four reasons above was addressed by the scheme that began on 1 July 2026. None of it is retrospective.

Under the older policies, which still govern most sales.

Categories
Structural and non-structural
Waterproofing
Not named. Only weatherproofing forming part of the external walls or roof is caught
Non-structural
Two years, and none at all if the first sale was more than two years after completion
When it responds
Only if the builder has died, disappeared, become insolvent, or failed to comply with an order

Under Home Warranty, for contracts signed on or after 1 July 2026.

Categories
Major defect, and other
Waterproofing
"major defect means (a) a structural defect; or (b) a waterproofing or weatherproofing defect"
Major defects
Six years from the completion date
What it can do
Owner-builder work is inside the scheme, and the scheme can rectify the work rather than only pay
One point that is easy to get wrong

The new scheme excludes "a person who is required to obtain a certificate of consent" from assistance. That is the owner-builder, not the purchaser. If you buy a home built under an owner-builder permit, you are not the excluded person.

Before you buy
  1. Ask for the occupancy permit first. It is one page, and it carries the date every clock counts from.
  2. Read the section 137B report properly, and note what is not in it. Anything listed is excluded from the insurance. Anything missing is what remains available to you.
  3. Get your own inspection. The vendor's report was obtained by the vendor. Yours is the only one commissioned in your interest.
Get your own report before you sign
We don't just do inspections. We investigate.
Request a pre-purchase inspection→
Every job is quoted. Or contact us to talk it through first.

11 Sources

  1. Building Act 1993 (Vic), sections 46, 134, 137B and 137C. No. 126 of 1993, Authorised Version No. 149, incorporating amendments as at 30 July 2026
    Read 20 and 21 August 2026 · legislation.vic.gov.au
  2. Building and Plumbing Commission, Owner Builder Domestic Building Report template
    Downloaded 21 August 2026 · bpc.vic.gov.au/resource-hub/forms/owner-builder-domestic-building-report-template
  3. Building and Plumbing Commission, Selling an owner-built home
    Read 21 August 2026 · bpc.vic.gov.au/owner-builders/selling-an-owner-built-home
  4. Victorian Managed Insurance Authority, Domestic Building Owner Builder Insurance Policy, OBPOL-0717-1, effective 1 July 2017
    Read 20 August 2026 · vmia.vic.gov.au
  5. Building (Statutory Insurance Scheme) Regulations 2026 (Vic), S.R. No. 42/2026, regulations 5 and 8
    Read 21 August 2026 · legislation.vic.gov.au
  6. Building Legislation Amendment (Buyer Protections) Act 2025 (Vic), No. 17 of 2025, sections 137I and 137L
    Read 21 August 2026 · legislation.vic.gov.au

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