Two families in Adelaide’s northern suburbs are facing a “worst nightmare” after purchasing newly built homes riddled with structural defects and lacking occupancy certificates. According to ABC News, the builder, Khorshed Alam, has been fined $75,000 by the Consumer and Business Services’ Building Industry Response Team for operating without a license and failing to obtain mandatory building indemnity insurance.
Why are these homeowners in legal limbo?
The core of the issue lies in the lack of an occupancy certificate, which serves as the legal guarantee that a property is safe for habitation. Rimple and Preet Sharma, who purchased one of the $800,000 properties, were informed by a council representative after moving in that they could not legally live in the home. While the council has since reinstated the certificates, they issued a letter to the residents advising them to seek independent legal advice regarding the “unsatisfactory and outstanding building work,” as reported by ABC News on June 9, 2026.
Under South Australian law, any individual who sells or rents two or more buildings they have constructed within a five-year period is legally classified as a building work contractor, according to information provided by ABC News.
What regulatory gaps allowed this to happen?
Industry experts argue that current regulations regarding owner-builders are insufficient to protect buyers. Will Frogley, chief executive of Master Builders SA, stated that the legislation is “open to abuse” by individuals who pose as owner-builders to bypass the stringent requirements placed on licensed construction professionals. Master Builders SA has been lobbying the state government to implement a permit system to monitor owner-builders more closely, ensuring they remain under regulatory oversight throughout the project lifecycle.
What legal recourse do affected buyers have?
The path to compensation remains complex because the properties were built without the required building indemnity insurance. Brett Humphrey, Commissioner for Consumer and Business Services, confirmed that his agency is investigating potential breaches of Australian consumer law. According to Mr. Humphrey, if the charges against the trader are proven in court, there may be an opportunity for the affected families to seek financial compensation through the judicial process. The investigation also extends to the building supervisor’s license suitability.
Always request a copy of the building indemnity insurance certificate and verify the builder’s license status with the local consumer affairs regulator before finalizing a property purchase, especially for new builds.
Frequently Asked Questions
What is an occupancy certificate?
An occupancy certificate is a document issued by a local council that confirms a building has been inspected and meets all required building standards to be considered safe for residents to occupy.
What are the legal requirements for owner-builders in South Australia?
Owner-builders are prohibited from constructing multiple properties as a business. If a project costs $20,000 or more and requires council approval, the builder is legally required to hold a building work contractor license and maintain building indemnity insurance, according to reports from ABC News.
Can I get compensation for building defects?
If a builder is found to have breached consumer law or construction standards, courts may order compensation. However, if the builder failed to obtain mandatory insurance, the process for recovering costs can be significantly more difficult for the homeowner.
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