Major vs Minor Home Building Defects in NSW

18 October 2025 in Building and Construction Law | 8 min read | skip to FAQs

This article provides an overview of the concepts of major defects and major elements of a residential building and the requirements for establishing that a major defect has occurred within a major building element of residential building works.

Warranties

Section 18B of the Home Building Act 1989 (NSW) implies (in other words incorporates) statutory warranties into every home building contract. These statutory warranties are set out below and imply obligations in the contract that the builder must ensure that:

1. The work will be done with due care and skill and in accordance with the plans and specification set out in the contract;
2. All materials supplied will be good and suitable for the purpose for which they are used and that, unless the contract states otherwise, the materials will be new;
3. The work will be done in accordance with the Home Building Act 1989 (NSW) and any other law;
4. The work will be done with due diligence and within the time stipulated by the contract or, if not stipulated, then within a reasonable time;
5. The work, if it consists of the construction, alterations, additions, repairs, renovation, decoration and/or protective treatment of a dwelling, will result in a dwelling that is reasonably fit to be occupied as a dwelling.

Section 18G of the Home Building Act 1989 (NSW) states that any clause in a contract which purports to restrict or remove the warranties is void. In other words a builder cannot, by agreement, contract out of the warranties.

Section 18D of the Home Building Act 1989 (NSW) states that the statutory warranties extend to a successor in title. In other words, the warranties are implied into the contract to do residential building work. In the event that the home owner sells the property, the purchaser will also have the benefit of the warranties, even though the new purchaser was not a party to the contract to do the residential building work.

Limitation Period

Statutory warranties have a limitation period, which means that the statutory warranties are valid for that period of time. A home owner must commence legal proceedings within the limitation period, otherwise the statutory warranties will lapse and no longer be available to the home owner. A common misconception is that notifying the builder of a dispute or breach of statutory warranty is sufficient to ensure that the time limit is satisfied, this is not correct or sufficient.

Section 18E(1)(a) of the Home Building Act 1989 (NSW) states that, legal proceedings for breach of a statutory warranty, whether or not expressly stated in the contract, must be commenced prior to the end of the warranty period, as specified below:

1. Six (6) years for a breach that results in a major defect in the building works (see section 18E(1)(b) of the Home Building Act 1989 (NSW)); or
2. Two (2) years in any other case (see section 18E(1)(b) of the Home Building Act 1989 (NSW)), these are generally known as minor defects, although the Home Building Act 1989 (NSW) does not itself use such a term.

The warranty period will commence:

1. Upon the completion of the work to which it relates (however this does not prevent proceedings from being commence prior to the completion of the works); or
2. If the work is not completed, then as explained by section 18E(1)(c)-(d) of the Home Building Act 1989 (NSW), the warranty period will commence on:
3. The date the contract is terminated, or
4. If the contract is not terminated, the date on which the work under the contract ceased; or
5. If the contract is not terminated and the work under the contract is not commenced, then the date of the contract.

A breach of any contract by one party does not prevent that party from taking action regarding any breach by the other party. That principle of contract law also applies to any breach of a statutory warranty. A home owner may commence proceedings for breach of a statutory warranty even though the home owner may have committed a substantial breach of the contract (see generally the cases of, Rockwall Constructions Pty Ltd v Llamas [2019] NSWCATCD 75 at paragraph [52] and Grace v Pepe [2016] NSWCATAP 157 at paragraph [49]).

What is a Major Defect?

The term “major defect” is defined by section 18E(4) of the Home Building Act 1989 (NSW) to mean:

1. A defect in a major element of a building which is attributable to:

1. Defective design;
2. Defective or faulty workmanship;
3. Defective materials;
4. A failure to comply with the structural performance requirements of the National Construction Code; or
5. A combination of any of the above; and

One or more of the above causes, or is likely to cause:

1. The inability for the building (or part of the building) to be inhabited or used for its intended purpose;
2. The destruction of the building, or any part of the building; or
3. A threat that the building (or any part of the building) will collapse.

A major defect also includes:

1. A defect which is of a kind that is prescribed by the Home Building Regulation 2014 (NSW), particularly section 69A which discusses when a major defect in the external cladding of a building more than two (2) stories high can occur; or
2. Where a building product, within the meaning of section 5 of the Building Products (Safety) Act 2017 (NSW), is used in contravention of that Act. In particular, section 5 of the Building Products (Safety) Act 2017 (NSW) defines building products to include any product, material or other thing that is or could be used in a building. An example of the use of a product in contravention of the Building Products (Safety) Act 2017 (NSW) is where a product that has been banned by the relevant authority is subsequently used in residential building work (see generally section 9 and section 15 of the Building Products (Safety) Act 2017 (NSW)).

What is a Major Element?

The term “major element” of a building is defined by section 18E(4) of the Home Building Act 1989 (NSW) to mean:

1. 1. 1. 1. An internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns and beams); or
         2. A fire safety system; or
         3. Waterproofing; or
         4. Any other element that is prescribed by the Home Building Regulation 2014 (NSW) to be a major element of a building. We note that at the date of this article, the Regulation does not provide any additions to the definition of major element prescribed by the Home Building Act 1989 (NSW).

The Legal Test for Determining a Major Defect

The legal test for determining whether or not a defect in the building works is a major defect has been outlined by the NSW Civil and Administrative Tribunal (NCAT) in the case of Ashton v Stevenson; Stevenson v Ashton [2020] NSWCATAP 233 at paragraphs [63], [64]-[70], [130]-[131], [134]-[135], [169]-[170]. The case concerned a claim by the homeowners that there were defects in the balcony, roof, plumbing, cladding and windows of the building in question.

During its consideration regarding what constitutes a major defect, the Tribunal stated that the test of section 18E(4) of the Home Building Act 1989 (NSW) for determining whether or not a defect is a major defect is a two-part test:

1. Firstly, there must be a defect in “a major element of the building” which is attributable to one of the specified matters of 18E(4) of the Home Building Act 1989 (NSW)
2. Secondly, the defect must “cause” or “is likely to cause”:
   1. The inability to inhabit or use the building (or part of the building) for its intended purpose; or
   2. The destruction of the building or any part of the building; or
   3. A threat of collapse of the building or any part of the building.

Why Evidence is Important

Any party to litigation that asserts any fact or claim must be able to prove that assertion. Evidence, specifically Expert Evidence, will be necessary in order to establish:

1. The existence of defects in the building works;
2. That those defects are major defects within the meaning of section 18E(4) of the Home Building Act 1989 (NSW); and
3. That those defects will affect the ability of the homeowners to inhabit the building or cause the destruction or threat of collapse of the building.

Evidence Generally

Expert evidence must be of a type which is “comprehensible and reach conclusions that are rationally based” in order to “furnish the trier of fact with criteria enabling the evaluation of the validity of the expert’s conclusion” (see the case of Ashton v Stevenson at paragraph [135]).

For example, an entire roofing system is part of the waterproofing of a building and is therefore a major element of the building, as was found by the Tribunal in the case of Ashton v Stevenson (see paragraph [126]). In such an instance, when determining whether a defect in the drainage system is a major defect, the evidence will need to show that the defect will likely cause the premises to become uninhabitable in the future, for instance, due to flooding, even if such a rain event has not yet occurred.

Expert evidence generally includes:

1. A report which outlines the observations of an independent expert regarding the existence of any defects, and the type of defects (major or minor) following the expert’s inspection of the building works;
2. A Scott Schedule which includes what should have been done to comply with the contract or what should have been done in order to complete the works in a good and workmanlike manner, the defects claimed and the expert’s estimation of the costs to rectify the defects; and
3. Depending on the matter, the expert may also provide oral evidence of the expert’s opinion and observations during the course of the hearing.

Evidence by the Homeowner

The homeowner may also give evidence on such issues, including matters such as:

1. Observations about the absence of relevant elements of the work;
2. The location of the potential defect, such as water staining or the fact of water ingress during a rain or a flooding event;
3. The effect of such defects on the habitability of the home;
4. Photographs of such matters; and/or
5. Other observations that a person, who is not an expert, could give evidence about and which could rationally affect the determination of what is likely to occur in the future, taking into consideration the context of how long the defect has existed and whether it has caused damage that might indicate the likelihood the premises will become uninhabitable or destroyed in the future.

Key Takeaways

Important features of home building major defects cases include

1. Statutory Warranties: Obligations of builders are implied (a legal term for incorporated) into every home building contract which stipulates that builders must perform the building work with due care and skill, use new and suitable materials, and ensure the finished home is lawful and fit for occupation.

2. Limitation Periods: Homeowners have six (6) years to claim for major defects and two (2) years for minor defects starting from the date the work is completed.

3. Major Defects: A major defect is a fault in a major element of a building that results in the building (or a part of it) being uninhabitable, destroyed or threatened to collapse.

4. Importance of Evidence: Expert evidence and other evidence such as a Scott Schedule and the observations of homeowners (i.e. photos or signs of damage) are essential to prove and support claim regarding defects.

How can BSM Sydney Lawyers assist you?

The construction legal team at Brander Smith McKnight Sydney Lawyer have over 30 years of experience in the building and construction industry. BSM Construction Lawyers Sydney are renowned as building law experts. Our lawyers provide a professional legal service tailored to your needs with a fast and personal turnaround. BSM’s building and construction lawyers are experienced in representing both builders and the home owner in major home building defects. We are expert negotiators and will advocate strongly for you. Our lawyers have extensive experience in representing clients in tribunal hearings at NCAT. Our senior construction lawyers provide a free 20-minute consultation.

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