Section 137B Report: Owner-Builder Rules in VIC

If you are an owner-builder selling a home in Victoria within six years and six months of finishing your building work, the Building Act 1993 requires you to give buyers a Section 137B report. This is a defects inspection report from a prescribed building practitioner, dated no more than six months before the contract is signed. Depending on the value of the work, you may also need Home Warranty cover, and your contract of sale must include statutory warranties. You can remain responsible for defects for up to 10 years after completion. This guide explains each obligation in plain English, so you can sell with confidence.

Picture this. Priya and Sam spent two years of weekends turning their Reservoir weatherboard into a family home: a rear extension, a new deck and a carport, all managed themselves as owner-builders. The agent is booked, photos are done, and then the conveyancer asks one question: “Where’s your 137B report and Notice of Cover?” Suddenly the campaign is on hold.

It happens more often than you’d think. The good news is that the owner builder report Victoria requires is straightforward to organise, as long as you plan for it before the sale campaign begins.

What Is a Section 137B Owner Builder Report?

A Section 137B owner builder report is an independent defects inspection of the building work you carried out, or managed, as an owner-builder. It is required under section 137B of the Building Act 1993 (Vic) whenever you sell within six and a half years of completion.

According to the Building and Plumbing Commission (BPC), the report must:

• be prepared by a prescribed practitioner, such as a registered building inspector, building surveyor or architect
• follow the BPC’s Owner Builder Defects Inspection Report template
• list all defective or non-compliant work, supported by detailed photos
• be no more than six months old when you sign the contract of sale
• be given to the buyer, usually attached to your Section 32 vendor statement

What work does it cover?

The report applies to owner-builder work regardless of its value. Consumer Affairs Victoria notes this includes extensions, renovations, garages and verandahs. In practice, we also inspect decks, pergolas, carports, retaining walls and internal alterations. Purely cosmetic jobs, such as painting, generally fall outside the scope.

The six-and-a-half-year clock starts from the date on your occupancy permit or certificate of final inspection.

Your Obligations When Selling an Owner-Built Home

Owner builder selling property Victoria obligations come down to three core requirements. Here’s how they fit together:

What changed on 1 July 2026?

Victoria’s building insurance system has been overhauled. The BPC now runs a “first resort” Home Warranty scheme, replacing the old Domestic Building Insurance (DBI) for new policies. Under the old system, a buyer could only claim if the owner-builder died, disappeared or became insolvent. Home Warranty works differently, and the BPC can also chase owner-builders directly for defects (more on that below).

If you bought DBI before 1 July 2026, your policy continues to be honoured. If you’re unsure which scheme applies to you, speak to your conveyancer before listing.

What Are Your Owner Builder Defect Liability Risks?

Here’s the part many vendors overlook. The report is a disclosure tool, not a shield. Your owner builder defect liability continues after settlement in three key ways.

1. Statutory warranties. Under section 137C, you warrant that:

• the work was done in a proper and workmanlike manner
• materials were good, suitable and (unless stated otherwise) new
• the work complied with the Building Act 1993 and all relevant regulations

These warranties cannot be contracted out of, except for defects the buyer knew about, or reasonably should have known about, at the time of sale. They also pass to future owners of the property.

2. Undisclosed defects. If a buyer later finds defective work that wasn’t listed in your report, they can take legal action against you for breach of warranty. Defects that were listed are excluded from Home Warranty cover, because the buyer purchased knowing about them.

3. Rectification orders. For work covered by Home Warranty, the BPC can order you to return and fix significant defects, or pay for the repairs, for up to 10 years after completion. If you refuse, the BPC can fund the work and recover the cost from you.

One more warning: engaging an unregistered builder for part of your project can invalidate Home Warranty cover and leave you personally exposed.

What Happens If You Sell Without a 137B Report?

Selling without the required report, insurance or warranties has real consequences:

• The contract is voidable. The buyer can cancel at any time before settlement.
• Fines apply. The offence carries a penalty of up to 100 penalty units.
• Future permits are at risk. The BPC can refuse you a certificate of consent for later owner-builder projects.
• Your sale campaign stalls. Most agents and conveyancers won’t proceed without the paperwork in the Section 32.

A simple rule: book your inspection before the agent starts marketing. That leaves time to fix any defects first, which means fewer items on your report and a cleaner sale.

Why Buyers Should Read the Owner Builder Defects Report Closely

If you’re buying an owner-built home, the owner builder defects report is one of the most useful documents in the Section 32. It tells you exactly where the vendor’s own work falls short. Across Melbourne, we regularly see owner-builder issues tied to local conditions:

• Reactive clay soils in the west and north, including Werribee, Point Cook and Epping, where extensions on shallow footings can crack and move differently from the original house
• Ageing weatherboards where a new extension joins an older home, creating weak points for water entry and rot
• Heritage homes in inner suburbs, where alterations may not match planning overlays or approved plans
• Townhouses and apartments with DIY bathroom or balcony upgrades, where waterproofing failures often hide behind fresh tiles

Keep in mind that the 137B inspection only covers the owner-builder work. For a full picture of the property, including roof, subfloor and timber pests, consider a separate pre-purchase building and pest inspection from our full range of building and pest inspection services.

Getting a Section 137B Report Melbourne Vendors Can Rely On

At IBC Property Inspections, our 137B inspection service is built around one goal: a report that’s accurate, compliant and easy to understand. Here’s how it works:

1. Consultation first. We confirm what work was done, when it was finished and which permits apply.
2. Document review. We check your building permit, occupancy permit or certificate of final inspection, plans and any trade compliance certificates.
3. Thorough on-site inspection. Every element of your owner-builder work is inspected and photographed.
4. Compliant reporting. Your owner builder inspection report is prepared on the BPC template, with clear photos and plain-English findings.
5. Walkthrough and next steps. We explain each finding and what it means for your sale, so there are no surprises.

Your inspection is led by Hetti Pathirana, BSc (Eng), MSc, a registered building inspector (IN-PS 74781) and member of both the HIA and AIBS. That engineering background means we understand how Melbourne’s soils, older housing stock and modern construction methods interact.

Documents to gather before your inspection:

• building permit and occupancy permit or certificate of final inspection
• approved plans and any engineering drawings
• electrical and plumbing compliance certificates
• a list of the works and dates of completion
• details of any registered builders or trades you engaged

You can learn more about local requirements on our dedicated page for Section 137B owner-builder reports in Melbourne.

Book Your 137B Inspection with IBC Today

You put years of work into your home, so don’t let paperwork hold up the sale. Contact IBC Property Inspections to book your 137B inspection, get a compliant report that your agent and conveyancer can rely on, and go to market with confidence. We’re available Monday to Saturday, 7am to 7pm, across Melbourne and regional Victoria.

This article provides general information only and is not legal advice. Please confirm your specific obligations with a conveyancer or property lawyer.