Checking a builder before paying a deposit: licence, history, insurance

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Kooky

Builder of Shaka, the payment router that pays every agent their commission on closing date.

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The deposit on a building or renovation contract is usually the first money to leave the owner's account, and it leaves before a single wall is framed. For a short while the owner has paid for something that does not exist yet, on the strength of a quote, a handshake and a signature. Queensland law is built around that moment. It limits how much can be asked for, it requires the contract to be in writing first, and it gives the owner a few days to change their mind.

The law also makes a good deal of information public. The Queensland Building and Construction Commission, the QBCC, keeps a register of every licensed contractor with a history attached. The corporate regulator, ASIC, publishes company records and insolvency notices. Most builders are licensed and solvent, and these checks will usually confirm exactly that. This guide sets out what each check shows, what it cannot show, how much deposit the Act allows, and what the paperwork looks like when a job has been properly set up.

QBCC licensing pages, the QBCC Consumer Building Guide (version 3, July 2023) and the QBCC cooling-off page reviewed 27 June 2025.

Who needs a licence, and from what value

The starting point is a dollar figure. According to the QBCC, an individual or a company must hold a QBCC licence to carry out, or to contract for, building work valued over $3,300. The value counts labour, materials and GST together, which is how the regulator describes the same threshold for written contracts.

Some work needs a licence whatever it costs. The QBCC lists plumbing and drainage, gas fitting, chemical termite management, fire protection, building design, site classification, completed residential building inspection and mechanical services in that group. Electrical work is licensed separately, by the Electrical Safety Office.

There are exceptions on the other side. A handyperson may do general work valued at no more than $3,300, provided it is not electrical or plumbing work and needs no occupational licence. An owner may also work on their own property up to a value of $11,000, or beyond it under an owner-builder permit.

The licence must match the job. A licence is issued in a class, and the QBCC's guidance is that the class has to be the relevant one for the work, so a contractor may need more than one. A house builder holds a builder licence in one of three categories, low rise, medium rise or open. A trade contractor holds a licence for a trade. The QBCC's home owner pages add that a licence may be shown as a physical card or as a digital licence on a phone, and that a licensed contractor's advertising must carry the name on the licence and the licence number.

Subcontractors are the builder's responsibility: the QBCC states that the principal contractor answers for the licensing and the standard of the trades on site. The owner's check is on the one name that will appear on the contract.

What the QBCC licence search shows

The licensee register is searched online by licence number or by name. The QBCC's fact sheet on checking a licensee's record, effective October 2025, describes what comes back in two layers.

The first is a summary: the licence number, the person or company name and the licence class. The fact sheet's advice is to confirm that the class covers the work being quoted.

The second is a full history report. Its first page repeats the licensee's details and sets out the disciplinary record as a list of items, each marked yes or no. A yes means the later pages carry the details and an explanation of that item. The second page lists the licence classes currently held and any conditions or endorsements on them.

Directions to rectify appear on the public record too. A direction is the formal notice the QBCC may issue after a site inspection finds defective work, and in most cases the contractor has 35 days to comply. The QBCC's page on directions says each one is recorded as complied or not complied on the licensee's public record, for principal contractors and subcontractors alike. A direction that was complied with shows a defect that was found and fixed. One that was not complied with can bring up to 10 demerit points. Under the QBCC's demerit scheme, 30 points within three years means the person cannot hold a licence for three years.

The report also shows a maximum revenue figure: the annual turnover the licensee is allowed under its financial category. The fact sheet notes that this figure cannot rise by more than 10 per cent in a financial year without the QBCC's prior approval. For an owner it gives a sense of scale: a contract that is large beside the contractor's permitted annual turnover is a question to raise before signing.

Two more points come from the search page itself. First, related parties need their own search. If an individual is a director or the nominee supervisor of a licensed company, the QBCC says to search the company as well, and the other way round, because each may hold a licence with its own history. Second, the absence of a result has a meaning. If a name or number cannot be found on a second attempt, the fact sheet says the person may be unlicensed and that the owner should contact the QBCC, on 139 333, rather than proceed.

What the licence search cannot tell you

The register has limits, and the QBCC states them plainly on its search page. The search shows only the information the QBCC is required to keep on the public record. It does not cover insolvencies, bankruptcies or civil proceedings, including contract disputes. For those the regulator points elsewhere: to ASIC for companies, to the Australian Financial Security Authority, AFSA, for individuals, and to the Queensland Civil and Administrative Tribunal or the courts for civil matters.

There is a timing gap as well. The search page warns that an active licence does not confirm that its holder is not an undischarged bankrupt, because the procedure for cancelling a licence can take time. The QBCC also gives no warranty that the search is accurate and says a certificate from the Commission is the way to obtain a record that can be relied on.

This is why the fifth step above sits outside the QBCC. ASIC's register search page lists, among others, a company and organisation register, a register of banned and disqualified people and organisations, and published notices. The published notices website is run by ASIC as a separate site for notices required under the Corporations Act 2001, and it includes insolvency and external administration notices. No registration is needed to search it, and it holds notices published since 1 July 2012. If the builder trades as a sole trader or a partnership rather than a company, the equivalent search is AFSA's bankruptcy register. The QBCC's fact sheet on builder insolvency, effective September 2024, suggests searching both when the structure is unclear.

Some context on why the regulator sends owners to these registers. ASIC statistics reported by Accountants Daily on 22 July 2026 counted 14,152 companies entering insolvency across Australia in 2025-26, down from 14,722 the year before. Construction was the industry with the most, at 3,472 companies, about a quarter of the total. Those are national figures across every kind of construction business, and they explain why a company search belongs on the list.

The contract comes before the money

No deposit is due without a contract, and the contract has a legal form. The QBCC's page on domestic building contracts says work priced over $3,300 needs a written contract, signed and dated by each party, that complies with Schedule 1B of the Queensland Building and Construction Commission Act 1991. Contracts are grouped by price: level 1 for renovation, extension and repair contracts from $3,301 to $19,999, and level 2 for those of $20,000 and over, with new homes treated alongside level 2.

Three documents follow from that.

The signed copy. The contractor must give the owner a copy of the signed and dated contract, with the plans and specifications, within five business days of entering it.

The Consumer Building Guide. For work priced at $20,000 or more, the contractor must hand over the QBCC Consumer Building Guide before the owner signs. The current version is version 3, effective July 2023. It summarises the owner's rights on price, deposits, variations and delays.

The commencement notice. For level 2 and new home contracts, the contractor must give a signed notice within 10 business days of work starting on site, stating the start date and the date for practical completion.

The Consumer Building Guide also sets out what the contract must say about price. A fixed price appears prominently on the first page of the contract schedule. Where the price is not fixed, the schedule has to explain how it will be calculated, including any allowances, and the contract must warn about provisions that can change the price. The QBCC recommends formal legal advice before signing a cost-plus or construction management contract.

Then comes the cooling-off period. The QBCC's page, reviewed on 27 June 2025, puts it at five business days in general. It starts the day after the owner receives the signed copy of the whole contract, including plans and specifications, and the Consumer Building Guide where one is required. If the contractor is late in handing those over, the period is extended. To withdraw, the owner gives the contractor a written, signed notice stating that the withdrawal is made under section 35 of Schedule 1B. The contractor is then usually entitled to $100 plus reasonable out-of-pocket expenses incurred before the withdrawal.

The right is not universal. The QBCC lists two cases where it does not apply: where the owner and the contractor already had a contract on substantially the same terms for the same site, and where the owner received formal legal advice about the contract from a practising lawyer before signing, or told the contractor so.

How much deposit the law allows

Schedule 1B caps the deposit, meaning anything paid before work starts on site. The QBCC's page on deposits and progress payments, reviewed on 27 June 2025, and its Consumer Building Guide give three limits, set by the contract price and by where the work is done.

The off-site rule exists for work that is largely manufactured before it reaches the block: the guide applies the 20 per cent limit where the value of off-site work is more than 50 per cent of the contract price. Whether a given contract falls into it depends on how its own price divides between the workshop and the site.

The caps are a ceiling, and a contractor may ask for less. A request for more is a matter for the regulator rather than for negotiation: the QBCC lists taking an excess deposit among the breaches that can attract demerit points on a licence. It is also one of the easier things to test at this stage, because a deposit request is a concrete figure that can be set against the table.

After the deposit, payments follow the work

The same logic carries through the build. Once the deposit is paid, the Consumer Building Guide says the owner and the contractor may agree on the number and timing of progress payments, but each claim must relate to work actually completed on site and be no more than the value of that work. In the guide's own example, half the price should not be paid until at least half the work is done.

One piece of paper at the start confirms that the job has been registered with the regulator. Home warranty insurance is compulsory for residential construction work valued above $3,300 when a licensed contractor does it. The premium is collected from the owner through the contract price and paid by the contractor to the QBCC. Under the Consumer Building Guide, that payment is due within 10 business days of signing or before work starts, whichever is earlier, and the owner should receive an emailed Notice of Cover within two weeks of signing.

The Notice of Cover is therefore a check in its own right. If it has not arrived a fortnight after the contract was signed, the owner has a simple question to put to the contractor and, failing an answer, to the QBCC.

What the licence says about solvency

A QBCC licence is partly a financial test. The Commission's minimum financial requirements apply to licensees at all times as a condition of holding the licence. On the QBCC's description, a licensee must keep net tangible assets of at least $0 and a current ratio of no less than 1:1, which means current assets at least equal to current liabilities. Working capital has to support the licensee's annual turnover, up to the maximum revenue shown on the licence record.

The QBCC uses annual financial reports and its own monitoring to check these requirements. Sole traders in the two smallest financial categories, SC1 and SC2, do not lodge annual reports but must still meet the requirements. The regulator says it takes enforcement action where there is a demonstrated risk in a licensee continuing to trade.

None of this is a guarantee: the QBCC itself calls the requirements a baseline, and a business can deteriorate between reports.

Unlicensed work and the offer at the front door

Carrying out building work without the right licence is an offence under section 42 of the QBCC Act. As quoted by the QBCC in a prosecution notice published on 11 February 2024, the maximum penalty is 250 penalty units for a first offence, 300 for a second, and 350 penalty units or one year's imprisonment for a third or later offence, or where the work is tier 1 defective work.

The cases are ordinary in scale. On 11 August 2026 the QBCC reported that a man who had never held a licence was fined $8,000 in the Maroochydore Magistrates Court, and ordered to pay compensation to the home owner, over a retaining wall, a fence and associated landscaping and drainage built at a Sunshine Coast home in 2023. In the same notice the QBCC's chief executive and commissioner, Angelo Lambrinos, urged owners to check the licence, the compliance history and the maximum deposit before paying.

For the owner the cost is the loss of the safety net. The Consumer Building Guide warns that work done by an unlicensed contractor may not be covered by the Queensland Home Warranty Scheme. The QBCC's home owner pages name two signals: missing licence details in an advertisement, and an unusually low price.

A separate risk arrives unannounced. The Office of Fair Trading has warned Queenslanders about travelling traders it calls bitumen bandits, who knock on doors offering driveway resurfacing with supposedly leftover materials. In a media statement on operators around Ipswich, the Office described vans with no business name, invoices with false addresses, low quotes that rise sharply once work starts, pressure to pay on the spot, and large deposits taken before the trader disappears.

The Australian Consumer Law gives a specific protection here. According to the ACCC, an unsolicited agreement worth $100 or more, made after a trader approaches the consumer at the door or by phone, carries a cooling-off period of 10 business days. During that time the trader may not supply services or take payment, with exceptions only for electricity, gas and emergency repairs. Where a trader does not disclose the cooling-off period, gives no written agreement or starts work inside it, the period for cancelling extends to six months.

If the builder stops work or becomes insolvent

The QBCC's insolvency fact sheet lists the early signs: work stopping without explanation, temporary fencing removed, trades leaving the site or complaining they have not been paid, a website that goes offline, frequent delays and poor communication. None proves anything alone.

Where an owner suspects trouble, the fact sheet's sequence is to search ASIC's records for a company or AFSA's bankruptcy register for an individual, to keep every contract, message and document, and to obtain financial and legal advice before acting. If the builder is recorded as insolvent, it says to contact the appointed insolvency practitioner straight away, because the practitioner may not know the contract exists and may never write to the owner.

The Consumer Building Guide is firm on one point: independent legal advice comes before terminating a contract. Ending it incorrectly can have serious financial and legal consequences and can reduce the owner's protection under the Home Warranty Scheme.

On the licensing side, when a liquidator, administrator or controller is appointed to a company, the QBCC excludes its directors, secretary and influential persons from holding a licence, after confirming the event with ASIC and giving written notice. A sole trader who becomes bankrupt is excluded in the same way.

A claim for non-completion under the Home Warranty Scheme has conditions, which the fact sheet sets out together. The contract must be for a fixed price. The contractor must be bankrupt or in liquidation with the licence cancelled. The contract must have ended within two years of the day work started. And the claim must be lodged within three months of the date the contract ended. The three-month limit is short, which is why the first search and the first call to the QBCC are best made early.

The licence, the history and the company record can all be read before the deposit is paid. Afterwards, the same searches only explain what went wrong.

Where to ask and where to report

Each concern has its own door. The QBCC handles licensing questions, suspected unlicensed work, deposit and contract breaches by licensees, defective work and home warranty claims, and can be reached on 139 333. Before a building dispute can go to the Queensland Civil and Administrative Tribunal, the Consumer Building Guide says the owner needs a letter from the QBCC stating the outcome of its dispute process; the first steps are a written notice to the contractor and the QBCC's free early dispute resolution service.

The Office of Fair Trading takes reports about door-to-door traders on 13 QGOV, which is 13 74 68. Company insolvency questions go to the appointed practitioner named in ASIC's records, and personal insolvency to AFSA.

How far any of these applies depends on the contract, the price and the builder's structure, and an owner's own position is a matter for legal advice.

Kooky, from Shaka

Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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