28/07/2025
How to avoid unlicensed builders and protect your legal rights
Following widespread flooding across parts of New South Wales, many homeowners are now beginning the clean-up and rebuilding process. But amid the rush to repair, the NSW Building Commission is urging caution after it has received more than 150 reports of unlicensed or unregistered trade work since January 2025.
Whether you're rebuilding after flood damage or planning general residential construction, it’s essential to do your due diligence. Choosing the wrong builder or tradesperson can leave you exposed to poor workmanship, financial loss or further delays.
Don’t risk unlicensed work
In NSW, any residential building work worth more than $5,000 must be carried out by a licensed tradesperson. For projects over $20,000, the builder must also take out home building compensation (HBC) cover to protect you if the work is incomplete or defective.
Before signing anything, use the Service NSW licence check tool to make sure your builder is properly licensed and qualified to do the job.
Be cautious of unsolicited offers
It’s common for unlicensed or dishonest operators to knock on doors offering cheap, fast repairs. These offers can be tempting, especially when you're under pressure, but they can lead to serious legal and financial problems.
You are entitled to ask for a licence number, proof of insurance and references. If someone is pushy, evasive or unwilling to provide documents, it's a red flag.
Know what should be in your contract
Even when working with a licensed builder, you still need a clear written contract that outlines key aspects of the job. In NSW, a written contract is required for any residential building work valued over $5,000. The contract details vary depending on the job’s value.
For smaller jobs ($5,000 to $20,000), be sure your contract includes:
● Parties’ full names, including the builder’s exact licence name and licence number
● A clear description of the work, including any plans or specifications
● The contract price, if known
● A ‘quality of construction’ clause confirming compliance with the Building Code of Australia and relevant laws or development approvals
● Clauses limiting the builder’s liability if defects arise solely from homeowner-provided designs or specifications
● A copy of the Consumer Building Guide (required for contracts entered from 2018 onwards)
● The contract must be signed and dated by both parties
For larger jobs (over $20,000), you must have:
● Date and signatures of both parties
● Builder’s licence details and homeowner’s full name
● Detailed description of the work with attached plans and specifications
● Relevant warranties as required by the Home Building Act
● Contract price prominently displayed or a clear explanation if unknown or subject to change
● HBC insurance costs and certificate requirements
● Clear terms for contract variations, requiring written and signed agreement
● A progress payment schedule specifying payment amounts, timing and documentation required
● Termination clause outlining legal grounds for ending the contract
● Statement of a five-business-day cooling-off period for the homeowner
● Acknowledgement that the homeowner has read the Consumer Building Guide and completed the checklist
● A ‘quality of construction’ clause ensuring compliance with all relevant codes, laws and development consents
● Clauses limiting liability for builder if defects result solely from homeowner’s designs, with written notice
You should also check whether your site is affected by flood zoning, bushfire risk or heritage restrictions using tools like myHome Planner.
If something goes wrong, get help quickly
The NSW Building Commission encourages homeowners to report concerns about unlicensed work or poor workmanship. If you're worried about a contract, a repair job or a tradesperson, you can lodge a complaint directly with the Commission.
You can also speak to a lawyer who acts for homeowners and builders in residential building disputes, like KLH & Associates. We can help you resolve issues under the Home Building Act, review your contract and pursue compensation if needed.
If you need help with a building contract or have concerns about your rights, contact KLH & Associates for expert legal support. Call us on 02 9894 9133 or email [email protected].
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