Combustible cladding law changes: key requirements for buyers and sellers of buildings in Queensland

In response to the Grenfell Tower tragedy in London in 2017, most Australian states introduced reforms to their cladding regulations. This article provides an overview of Queensland’s regulations, and outlines important steps and considerations for buyers and sellers of buildings in Queensland.

The combustible cladding regulations

Put simply, “combustible cladding” is cladding which can significantly contribute to the propagation of flame and facilitate rapid fire spread throughout a building.

Amendments to Queensland’s Building Regulation 2006 regarding combustible cladding took effect on 1 October 2018. The new regulations require all owners of ‘private buildings’ to complete inspections and online checklists to identify whether buildings are affected by combustible cladding. A ‘private building’ is a building that:

• is a two or more storey residential building (excluding houses), health care or aged care building, or a three or more storey office, retail carpark, warehouse or factory building;
• received building development approval (to build the building or alter the building’s cladding) between 1 January 1994 and 1 October 2018; and
• is at least 50% privately owned.

The checklist is in three parts:

• Part 1 (due 29 March 2019), requiring all private building owners to register their buildings and provide general information including, if known, the building’s external building materials. If these materials are unknown, or may be combustible, Part 2 of the checklist must be completed. Owners who know or suspect that their building has combustible cladding can proceed to Part 3.
• Part 2 (due 31 July 2019), requiring owners to engage a building industry professional to assess whether the external building material is potentially combustible. If the materials are combustible, Part 3 must be completed.
• Part 3 (notification of fire engineer’s details due 31 October 2019; assessment due 3 May 2021), requiring owners to engage a fire engineer to assess whether the risk posed by the combustible cladding is mitigated by way of an existing fire engineering assessment or the building’s fire safety measures, or whether building work is required to rectify the issue.

Where combustible cladding is identified, building owners must display notices on the building and send the fire engineer’s assessment to all owners and tenants.

Currently, the reforms do not specifically require owners of buildings affected by combustible cladding to undertake rectification works. However, the amendments include disclosure requirements when selling Queensland buildings, which are important for both buyers and sellers to keep in mind.

Requirements for buyers and sellers

The combustible cladding reporting obligations shift with a change of ownership of a building. To ensure that buyers are fully informed of the status of the building in relation to the provisions, and to ensure that compliance with the regulations continues after the change of ownership, the regulations impose certain disclosure requirements on both parties.

Before ownership of the building changes, the seller must complete QBCC Form 37 and provide the buyer with a copy (the Queensland Building and Construction Commission must also be provided with a copy of the form, signed by both parties, after settlement). The form informs buyers of the extent to which the seller has (or has not) completed the combustible cladding checklist. The seller must also provide the buyer with copies of all documents given and received under the combustible cladding provisions, and all documents that the owner of the building is required by the provisions to keep.

Following the change of ownership, buyers assume responsibility for compliance with the combustible cladding regulations. This includes:

• completing parts of the checklist that the seller has not completed;
• keeping all documents that the seller was required to keep, until the time period for keeping those documents expires; and
• displaying notices that the seller was required to display, until the time period for displaying the notices expires.

Important considerations

Failure to comply with the combustible cladding requirements in the Building Regulations may amount to an offence, attracting a penalty of up to $21,540.75 (for failing to complete the Part 3 checklist). Buyers should be aware that there is no recourse available under the regulations if a seller does not comply with its obligations within statutory time frames, including regarding disclosure and the giving of documents to the buyer.

For this reason, and considering the cost involved in the rectification of combustible cladding, it is important that, when buying Queensland buildings, buyers take steps during their due diligence process to determine:

• whether the seller has complied with its legal obligations by the required time frames;
• whether the seller has information regarding whether the building is affected by combustible cladding and, if so, the potential cost of rectification;
• whether the seller has provided (or will provide at settlement) all necessary documents that the buyer will be required to keep under the regulations; and
• whether an affected private building notice is required to be displayed and, if so, is displayed.

It is also important for both parties to make provision for any issues in their sale contract, and to include appropriate warranties or representations reflecting the legislative requirements. Owners and purchasers of Queensland buildings who are concerned about compliance with the regulations, their potential liability or ensuring they are protected while buying or selling a building should contact the authors of this article.