Residential Building Law News, January 2010
Residential Building Work and protection for the Owner
The 7-Year Statutory Warranty
The Home Building Act establishes a number of binding warranties that apply to residential building work carried out for an Owner.
Under the Act, a builder warrants that building work will be carried out in a proper and workmanlike manner". Statutory warranties also mandate that a builder follow the plans included in the contract with the Owner.
The Owner for whom the building work is done, or a subsequent Owner, may sue under such a statutory warranty for a period of seven (7) years after:
- The building work is finished; or
- Where the work is incomplete, the completion date stated in the contract; or
- The date of the contract itself, where no completion date is specified.
Where a claim is made by an Owner under a statutory warranty, the builder subject to the claim is responsible for inspecting the building and, where the problem complained of is found to exist, the builder must rectify it.
Where a builder does not respond to the claim or claims of an Owner and a breach of a warranty is then found to exist, that builder may be ordered to rectify the relevant fault or to pay damages.
Defects Liability Period
The 7-Year Statutory Warranty Period operates separately from the "Defects Liability Period". This refers to the period after the completion of building work in which an Owner may provide the builder with a list of defects for the builder to rectify. A defects liability period is usually a contractual provision and can be from 3 months for small residential buildings to 2 years or more for major developments. Home owners entering into contracts with builders should negotiate the length of the Defects Liability Period if they are concerned with the amount of time offered by the builder.
Home Warranty Insurance
All residential building contracts must include home warranty insurance, except where the value of the work does not exceed $12,000. Home warranty insurance will cover an owner for any loss associated with the builder not completing the work because of the builder's death, insolvency, bankruptcy or disappearance. It will also cover the home owner for breaches of the statutory warranty in the same circumstances. The period of cover for losses attributable to structural defects is 6 years and 2 years for other losses, from the later of the completion of the work or the end of the contract.
Please contact us if you have any enquiries about the law regarding residential or non residential building works. We would be pleased to assist you.