What owner builders need to know about Adjoining Property Protection, and get it without fuss or outrageous premium hikes.
Owner builders will require Protection of Adjoining Property when there is high risk that damage could occur to the neighbouring and adjoining property from the proposed owner builder works.
Adjoining Property Protection and neighbouring property impacts are determined by the Building Surveyor.
Adjoining Property Protection may be required where:
- Building works footing system undermines or has the potential to undermine the neighbouring and adjoining footings;
- Retaining walls or excavation proposed are very near to the boundary line;
- Proposed building works could impact and cause significant damage to an adjoining property.
Qtrust provide scope for inclusion of Adjoining Property Protection clauses in their standard construction and building works insurance Policy.
To include Adjoining Property Protection cover, owners builders are required to obtain ‘Form 3 & 4’ or Forms ‘7 & 8’, from their Building Surveyor and along with their Building Permit make application.
An owner builder is required to submit, the following risk assessment supporting documentation prior to issuing Protective Works Insurance. Copies of:
- Form 3 & 4 or Forms 7 & 8 (unsigned by neighbours is OK)
- Site Plan
- Engineering Report including soil report
- Condition or Dilapidation Report of Impacted structures
- Building Permit is available.
Sam Greco, CEO Qtrust Insurances, emphasises the importance of respecting and protecting all parties including neighbouring property owners concerns and often there apprehensions with such works so close to home. Sam adds, ‘it’s our firms responsibility to understand detail of risk and then manage it appropriately for our clients and for all those who may be impacted. Adjoining Property Protection does not protect an owner builder in any manner, but simply put; it protects a Building Surveyor against their errors or omissions or miscalculations, it offers neighbour(s) some comfort but little outside of standard and legislated third party liability and no protection for the paying client – an owner builder. Why it is required? An outstanding question remaining unanswered. Nonetheless as owner builders want to get on with their build, we do include Protective Works once we are able to underwrite the risk’
Background notes. Adjoining Property Protection may be required where: 1. Building works footing system undermines or has the potential to undermine the neighbouring and adjoining footings; 2. Retaining walls or excavation proposed are very near to the boundary line; 3. Proposed building works could impact and cause significant damage to an adjoining property.
Adjoining Property and Protection Work Insurance – the detail
What are Protection Works?
Protection Works are enshrined in Part 7 of the Building Act 1993 (Victoria).
In summary Protective Works and the terms implied Part 7 are directed where building works may affect the Adjoining Property.
This area focuses on the requirement of an Owner of the property undertaking building works to ensure that the property of their neighbour is not damaged by any of the proposed building works.
What are the Responsibilities of an Owner regarding Protection of Adjoining Property?
The Building Regulations 2006 set out in Regulation 602 that an Owner undertaking building works is required to carry out Protection Works if determined by the Building Survey.
Responsibilities where Protection Works are required:
Should an Owner be required to carry out Protection Works, under section 84 of the Act, an Owner must serve notice of the proposed building works to the adjoining Owner giving details of the proposed Protection Works.
Under section 85 of the Act, the adjoining Owner has 14 days to act on this notice, and may disagree with the proposed Protection Works, or require further information from the Owner, so that the Building Surveyor can consider the proposal. Failure to dispute the proposed Protection Works within 14 days will mean that the adjoining Owner is deemed to have agreed, and loses the right to dispute them.
An adjoining Owner who wishes to dispute the proposed Protection Works must notify the Owner and the Building Surveyor. The Building Surveyor must then under section 87 of the Act consider the appropriateness of the proposed Works, and make a determination.
The Owner will breach section 88 of the Act if they begin to carry out Protection Works before the Adjoining Owner has agreed or before the Building Surveyor has resolved a dispute over the proposed Works. The Protection Works carried out must always be in accordance with the approved proposal.
An Owner is required to obtain a ‘Dilapidation Report’ before commencement of any Protection Works, and record any existing cracks and defects in the adjoining property. This needs to be signed by both parties, and should not be taken lightly, as the survey will be admissible as evidence of the adjoining property’s condition if there is a later dispute with the adjoining Owner.
What are the Responsibilities of Adjoining Owners?
Under section 95 of the Act, the Owner is allowed a right to enter the adjoining property between 8am to 6pm to conduct a Dilapidation Report, and subsequently for the purposes of carrying out the approved Protection Works. The Owner has a further right to remove furniture which would obstruct carrying out of the works. These rights are only limited by the requirement not to cause damage when entering adjoining property, and the requirement to give at least 24 hours’ notice. The adjoining Owner will commit an offence under s96 of the Act if they prohibit or hinder the work of the Owner exercising these rights.
Expenses Incurred by Adjoining Owner:
The Owner is liable to pay the adjoining Owner for all costs and expenses incurred in assessing the proposed Protection Works, and in supervising their carrying out.
Under section 98 of the Act, an Owner must also compensate an adjoining Owner for inconvenience, loss or damage suffered by the adjoining Owner in connection with the carrying out of the Protection Works.
Information Providing Obligations of Building Surveyor:
The Building Surveyor is required under section 92 of the Act to provide any plans, drawings or specifications for the proposed building works to the adjoining Owner upon request.
What is Protection Works Insurance?
An Owner must ensure they understand, Protection Works Insurance.
Not only must Owners be aware of Protection Works Insurance and ensure compliance with the Act, Adjoining Owners and Adjoining Occupiers must also understand the rights afforded to them under this legislation, not only when a Protection Works Notice is served on them, but when it becomes apparent that building work or development is taking place on land that adjoins their property.
Section 93. Owner are to arrange Insurance
- Before any protection work is commenced in respect of an adjoining property, an Owner must ensure that a contract of insurance is in force, in accordance with this section, against-
- Damage by the proposed Protection Work to the Adjoining Property; and
- Any liabilities likely to be incurred to Adjoining occupiers and members of the public during the carrying out of the building work and for a period of 12 months after that building work is completed.
- The contract of insurance must be entered into with an insurer and for an amount-The Owner must lodge a copy of the contract of insurance with the Adjoining Owner before the commencement of the protection work. The Owner must lodge a copy of a document evidencing the renewal or extension of the contract of insurance with the Adjoining Owner as soon as it is practicable to do so after the renewal or extension.
- Agreed to by the Owner and the Adjoining Owner; or
- In the event of a dispute, determined by the Building Appeals Board under Part 10 The Owner must ensure that the contract of insurance is renewed or extended as often as may be necessary during the carrying out of the building work and for 12 months after that work is completed.
Protection Works Notice Insurance is a highly specialised form of insurance, pertaining to potential loss and damage likely to be suffered by an Adjoining Owner, which is distinct from Builders Insurance.
Some key issues regarding Protection Works Insurance that are appropriate to note are that:
- It is not the responsibility of the Adjoining Owner to ensure that appropriate Protection Works Insurance is in place, and that it is the responsibility of the Owner;
- The Protection Works Insurance must provide cover for any liabilities likely to be incurred by the Adjoining Owner during the building work and for a period of 12 months after the building work is completed;
- The Insurance is to be taken out by the Owner and not their Builder, as Protection Works Insurance is an entirely different creature from Building Insurance;
- The Insurance policy should denote values of Adjoining Properties. These values must be agreed to by the Adjoining Owner;
Section 93 requires that any damage to the Adjoining Owners property, whether arising indirectly or directly from the Protection Works is required to be covered by the Protection Works Insurance.
Should a builder or owner builder require clarification or addition information, call 1300 798 991
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