In our line of work we see too many people who have let their building matters escalate and have paid too much money to a builder who is not providing the service that was promised. If you feel like this is you, then we can give you building consultancy advice for your matter. We can also mediate on your matter so we can find a resolution prior to the issue becoming a more costly exercise and avoid litigation.
BUILDING REGULATIONS AND CHANGES IN INSURANCE
NSW Home Building Act
The warranties that are required by the builder to be provided when working on a residential building were changed in NSW. The Home Owners Warranty Insurance is no longer required by the unit building which more than 3 storeys of residential construction (excluding the car parking, commercial and basement), but the builders1 warranty is still required.
These changes are applicable from 15th January 2015 and will include, (but are not limited to) the following:
- For all major defects, a warranty of 6 years and for the other defects, a warranty of 2 years.
- Clarification of when the work of the building will be completed. This clarification may include the period when the work is practically complete or expected to be occupied.
- For all the building work above $5,000, official contracts will be required.
- For contracts above $20,000, a cap amount of maximum 10% to be deposited.
- $340,000 will be the minimum mandatory Home Owners Warranty Insurance.
- The term major defect will be replacing the older used term of structural defect. This will be including all the important elements of the building such as waterproofing and fire safety systems. The word defect will be used to highlight the breach of a statutory warranty to a building failure.
- Those who are not covered by the major element definition, are safeguarded by the 2 year (builder’s) warranty. The obligation to mitigate loss applies to the homeowners.
- If the homeowners are aware of the defect within the first 6 months, they can make the claim.
Resolution of Disputes
Attempts will be made for identification of the defects in the building during the early stages. In the present times, most of the cases incur significant costs and take a considerable amount of time to be resolved as legal solicitors are involved in the claims and the technical reports largely vary between the two parties that are involved. Attempts will be made to identify defects early on and overcome problems related to incomplete pleadings, adjournments, problems of cost recovery and ambit claims.
An order can be directed to prevent the rectification work from being stalled, as it will oblige the consumers to pay off any amount of money under the contract with the builder.
Reasonable access must be provided to the builders in order to perform the rectifying works. The Court or NCAT can order nullifying of the work orders and prevent the homeowner from applying for a money order, if the homeowner refuses to provide builders with the access. The discussion over repeat offenders is also being carried out, where if the builder refuses from undertaking a work order, it can be regarded as a criminal offense and may also result in imprisonment of the person.
- Builders/Owners are required to present the names of all the owners of the property. A named owner will not be allowed to apply for a permit for 5 years.
- Builders/Owners cannot obtain statutory insurance and if the property is sold within the period of warranty, it must be stated in the contract that statutory insurance does not apply to the property.
- For work over $20,000, contractors who are working for the builder/owner will have to provide insurance certificates.
Since owners tend to perceive that they have insurance that can be claimed from the “Home Owner Warranty Insurance” the term will be changed. Several items that have been mentioned above, along with other factors determine the cover. The Home Owner Warranty will now be known as Home Building Compensation Fund.