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The last thing you want to see after your builder hands over the keys to your brand new home, are cracks, leaks, faulty workmanship, or worse, structural inadequacies. Unfortunately these things can happen and when they do, you need to contact your builder immediately.
Under the Home Building Act 1989 (HB Act), there are implied warranties in every contract for residential building work, including that the work will be performed with due care and skill and that all materials used will be suitable for the purpose for which they are intended to be used.
Most of the time, if there is something wrong with a new home, the builder will perform remedial work without further charge. However, if it is necessary, you can take legal action against your builder for breach of warranty and, quite likely, breach of contract.
Generally, you have 6 years to take action against a builder for a breach that results in a ‘major defect’, and 2 years in any other case.
The term ‘major defect’ is defined in the HB Act to mean, in essence, a defect in a major element of the design, attributable to faulty design workmanship or materials that is or is likely to cause the structure to become uninhabitable or at risk of collapse.
All licenced builders are required to have a particular type of insurance referred to as ‘Home Warranty Insurance’ (HWI). However, it’s not a policy that can be called on unless your builder disappears or ceases to exist. This is more common than you might think, as most builders operate through companies. When a company is wound up because it can’t pay its debts, for example, it ceases to exist.
Importantly, the insurance company will want to know that a defect exists as soon as you are aware of it. Some policies require the defects to be brought to the insurer’s attention within 6 months of it becoming apparent.
Accordingly, if you find a defect in your house, contact your builder and speak to them about it. If your contract does not identify the HWI provider, ask your builder for this information. You should contact the HWI provider as soon as you become aware of a defect.
In our experience, it is worth insisting that that you get some confirmation of your notification in writing should a claim be necessary down the track. This may assist in refuting any attempt made by the insurer to deny liability on the basis that they were not notified.
If you noticed something that could possibly be a defect, but you’re not sure what to do, contact us and we can help you.
Lorri is a director of PDC Law. Lorri combines excellent technical expertise with a common-sense approach to best represent her clients. She is one of few Accredited Specialists in Commercial Litigation in the Illawarra and Shoalhaven. This accreditation is testament to Lorri’s expert knowledge and skill in dealing with commercial disputes. In 2019 Lorri was awarded Regional Lawyer of the Year by Women Lawyers Achievement Awards.
