VENDOR BEWARE: WHEN YOU SELL, YOUR LIABILITY MAY NOT END

Most people assume that once you sell a property, your liability ends, and it all becomes the buyer’s problem. Not so. In reality, you might still be on the hook if you’ve done work without the proper licences or permits—especially if you should have had an Owner Builder’s Licence but didn’t bother. In this post, I’ll walk you through why the old “Buyer Beware” mantra is shifting to “Vendor Beware”, particularly in light of recent case law. 

The Case That’s Changing the Game 

A Supreme Court decision, Macintosh v. Lennon (2024) NSWSC 169, drives home the point that you can’t rely on your own breach (for example, failing to obtain the necessary Owner Builder Permit) to dodge liability for defective work. Essentially, if you did residential building work yourself, skipped the permit, and that work turns out to be defective, you remain liable even after selling the property. 

Law firm Moray & Agnew has a great summary on this case (I’ll link it at the end). But the bottom line is: if you never got the right licence or took out the proper insurance, you can’t just say, “Oops, I never got it, so I’m off the hook.” It doesn’t work that way. 

Why the $20,000 Threshold Matters 

Under NSW legislation, anything over $20,000 that’s considered “residential building work” generally requires either: 

1. A licensed contractor responsible for it, or 

2. An Owner Builder Permit if you’re doing or overseeing the work yourself. 

What counts as “residential building work”? Construction, alterations, repairs, or improvements that affect the structure or fixed components of a dwelling (for example, bathroom renovations with waterproofing, kitchen remodels, etc.). Painting, wallpapering, and laying carpet usually don’t fall under that umbrella. 

Hiring Licensed Trades vs. Doing It Yourself 

If you hire a licensed plumber or licensed builder, and they contract the entire job over $20,000, they need to provide Home Building Compensation Fund (HBCF) insurance (previously “home warranty insurance”). That means they carry the liability for defects. 

But if you hire trades piecemeal—say a plumber for $19,000 and then a separate tiler/water proofer for $2,000—you’ve exceeded the $20,000 threshold overall, and you become the de facto principal contractor. If you haven’t got an Owner Builder Permit, you could be in breach of the Home Building Act. 

Selling a Property with Unapproved Work 

Now, let’s talk about selling after doing unlicensed or unpermitted work. 

1. Disclosure: In your contract of sale, you’re required to disclose if you’ve done residential building work over $20,000. If you say “No” when you have, that’s potentially misleading conduct. 

2. Insurance: You can’t just buy HBCF insurance after the fact, especially if the work was never done by a licensed contractor under a proper contract. Retrospective insurance is nearly impossible to get if you didn’t follow the right process from the start. 

3. Ongoing Liability: Even years after you sell, a buyer might discover defects and come after you. That’s why it’s vital to do it right—hire licensed pros or get an Owner Builder Permit, keep documentation, and comply with statutory requirements. 

Options if You’re Already in Hot Water 

1. Private Insurance: A few niche insurers might offer defect or “retrospective” cover, but it’s rare, expensive, and full of exclusions. 

2. Building Certificate or Compliance Sign-Off: You could try to get the work formally inspected and signed off, but that won’t erase your liability. It might just calm buyers’ nerves a bit. 

3. Full Disclosure & Contract Clauses: If you’re selling, you might end up disclosing the whole story and negotiating a lower price or indemnities. But statutory obligations often override private agreements, so you can’t “sign away” everything. 

4. Legal Advice: If you’re worried about how these rules apply to your specific situation, talk to a lawyer who specialises in property or construction. They can advise on disclosures, contract drafting, or any remedial work needed. 

The Bigger Picture 

With building costs skyrocketing, more homeowners are tempted to DIY or hire unlicensed workers to save money, then flip the property. Buyers, on the other hand, see a “newly renovated” home and assume everything’s top-notch. This mismatch creates huge risks for sellers who skip proper licensing or permits. 

The takeaway? You’re not off the hook just because the ink is dry on the contract of sale. If you’re doing a reno over $20,000: 

1. Get a licensed builder or licensed trades who will handle insurance and compliance, or 

2. Apply for an Owner Builder Permit and follow the rules carefully. 

Protect yourself—and your future buyers—by staying on the right side of the law. 

If you’re a property owner looking to renovate and sell, know your obligations. A little caution now can save you a massive headache later. 

For more details on the Macintosh v. Lennon case or the relevant legislation, check out Moray & Agnew’s article, or the NSW Supreme court decision, or consult with a construction law specialist to ensure you’re fully covered. 

Please note: This blog is for general informational purposes only and does not constitute legal advice. If you need legal advice specific to your situation, please consult a qualified legal professional.  

• What is an Owner Builder Permit and when do I need one?

  An Owner Builder Permit lets you act as the principal contractor for residential work over $20,000 on your property. You’ll be responsible for overseeing trades, ensuring compliance, and arranging insurance if needed. If your project exceeds $20,000 and you’re not hiring a licensed builder to manage it, you likely need this permit. 

• Does all renovation work over $20,000 require an Owner Builder Permit?

  Not necessarily. If a licensed builder or tradesperson handles the entire project over $20,000, they provide insurance (Home Building Compensation Fund) and take responsibility, so no permit is needed. But if you coordinate multiple trades separately, you may be considered the principal contractor and require a permit.

• Which works are considered “residential building work” requiring a permit or licence?

  Under NSW’s Home Building Act, “residential building work” typically covers construction, alterations, renovations, or repairs that affect the structure or fixed components of a dwelling. Common examples:  

  • Kitchen renovations (cabinets, benchtops, structural changes) 

  • Bathroom renovations (tiling, waterproofing) 

  • Additions/extensions 

  • Structural repairs or improvements 

  Purely decorative tasks (e.g. painting, wallpapering, carpet laying) are generally excluded from this definition. 

• What happens if I hire more than one trade to complete a single project, and the cost for each trade’s work is under $20,000 but the total completion cost of all trades together exceeds the $20,000 threshold.

  For example, if you hire a plumber for $19,000 and later need tiling for $2,000, the total exceeds $20,000. With separate contracts and no single licensed builder overseeing the project, you may be the principal contractor and need an Owner Builder Permit—even if the extra work was unplanned. 

• Do I need a permit if a licensed tradesperson does all the work for one project over $20,000?

  No, you wouldn’t need an Owner Builder Permit if a licensed tradesperson takes full contractual responsibility for the entire scope of work. The tradesperson must then provide the necessary Home Building Compensation Fund insurance and meet any regulatory requirements. Your main duty is ensuring they are truly licensed and that everything is done above-board. 

• What if I’ve already done unlicensed or unpermitted work and want to sell?

  Retrospectively getting Home Building Compensation insurance is extremely difficult. Your options include: 

  • Private insurance from niche providers (often expensive and limited). 

  • Retrospective building certificate or compliance sign-off (improves buyer confidence but doesn’t necessarily remove all liability). 

  • Full disclosure and contractual clauses (you must disclose unapproved work; statutory obligations can’t always be signed away). 

  • Legal advice to manage potential defects liability and contract disclosures. 

• Am I still liable for defective work after selling my property?

  Yes, possibly. In NSW, you can remain liable for major defects in residential building work for up to six years (and two years for minor defects). The Macintosh v. Lennon (2024) case confirms that if you did the work without the necessary licence or permit, you can’t avoid liability by citing your own breach. “I didn’t get a permit” isn’t a defence if the buyer finds defects later. 

• What are the consequences of not disclosing major work in the sales contract?

  Failing to disclose that you performed (or oversaw) residential building work over $20,000 can be considered misleading conduct. If the buyer later uncovers this omission—especially if the work turns out to be defective—they could have legal grounds to pursue you for damages. 

• How can I protect myself if I plan a big renovation?

  • Engage a licensed builder or contractors who provide Home Building Compensation insurance for works over $20,000. 

  • Obtain an Owner Builder Permit if you intend to manage or do the work yourself. 

  • Keep thorough records of all contracts, approvals, warranties, and inspections. 

  • Disclose everything at sale time—transparency can prevent bigger legal headaches down the road.