How to Check a Builder's Licence and Insurance in NSW

This takes five minutes and it is the single most useful piece of due diligence you can do.

Check the licence

Go to the NSW Fair Trading website and use the licence check service. You can search by licence number, name or business name.

What to look at:

Is it current? Licences expire. Check the expiry date, not just that a record exists.

What class is it? A general builder licence covers most residential building work. Specialist licences cover only their trade. A licensed carpenter is not licensed to run your extension as head contractor.

Does the name match? The licence must match the entity on your contract. If the quote comes from a company but the licence is in an individual’s name, ask why. The contracting entity must hold the licence.

Any conditions? Some licences carry restrictions on the type or value of work.

Disciplinary history. The register shows show cause notices, penalties and cancellations. Worth a look.

Check the insurance

Public liability. Ask for a certificate of currency. Check the insured entity name, the expiry date and the amount. Twenty million is standard. This covers damage to property and injury to people.

Home Building Compensation Fund cover. For residential work over $20,000 in NSW this is mandatory. It protects you if the builder dies, disappears, becomes insolvent or has their licence suspended.

The certificate must be given to you before you pay any deposit and before work starts. If a builder says they will sort it out later, that is not how it works.

You can verify HBCF certificates through the icare website.

Workers compensation. If they have employees, they must have it. Ask.

What the licence classes mean

• Building licence, general. Can contract for and supervise all residential building work.
• Building licence, restricted. Limited to specified categories only.
• Specialist trade licences. Plumbing, electrical, air conditioning. Each is separate and each must be held by the person doing that work.
• Owner-builder permit. Issued to a property owner for their own property. Not a builder licence.

For an extension or renovation you want a general building licence.

Contract requirements in NSW

For residential work over $20,000, the contract must be in writing and must include:

• The contractor’s name and licence number
• A description of the work
• The contract price
• Details of the HBCF cover
• The statutory warranties
• A checklist as required by the Home Building Act

For work between $5,000 and $20,000, a written contract is still required but with fewer prescribed inclusions.

Deposits

The maximum deposit is 5% of the contract price for work over $20,000, and 10% for work of $20,000 or less.

A builder asking for 20% up front is either unaware of the law or intending to ignore it. Neither is reassuring.

Statutory warranties

In NSW, residential building work carries statutory warranties that cannot be contracted out of:

• Six years for major defects
• Two years for all other defects

These run from completion. They apply whether or not they are written into your contract.

What to keep

Keep copies of the licence check, the insurance certificates, the HBCF certificate, the signed contract, all variations in writing, and the final compliance certificates for plumbing, electrical and waterproofing.

You will want these when you sell, and you will need them if anything goes wrong.

The summary

Verify the licence yourself rather than taking a number on a letterhead at face value. Get the insurance certificates before you pay anything. Keep the paperwork.

We provide our licence details, insurance certificates and HBCF cover as a matter of course, and we encourage clients to check them.