Warranties Provided by The Home Building Act

29 April 2023 in Building and Construction Law

The Home Building Act 1989 (NSW) (“the Act”) is a comprehensive piece of legislation that sets out, among other things, the minimum standards for residential building work. One of the most important aspects of the Act is Section 18B, which deals with statutory warranties that are automatically incorporated into every residential building contract. These warranties provide important protections for homeowners and help to ensure that building work is carried out to a high standard.

Under Section 18B of the Act, there are several warranties that are included in every contract for residential building work. These warranties include:

1. The work will be carried out with due care and skill.
2. The work will adhere to any plans and specifications outlined in the contract.
3. All supplied materials will be appropriate and suitable for their intended use.
4. Unless otherwise noted, only new materials will be used in the work.
5. The work will comply with all applicable laws and regulations, including the Home Building Act.
6. The work will be completed with reasonable care and within the agreed-upon timeframe or a reasonable timeframe if not specified.
7. If the work involves constructing a dwelling, making alterations or additions to a dwelling, repairing, renovating, decorating or providing protective treatment to a dwelling, the resulting dwelling will be reasonably habitable.
8. The work and materials used will be suitable for the specified purpose or outcome communicated to the contractor by the owner, with the owner relying on the contractor’s skill and expertise.

These warranties apply to all residential building work in NSW, including new homes, renovations and extensions. They also apply to subcontractors and suppliers who are involved in the residential building work. 

One of the most important aspects of these warranties is that they are available not just to the original homeowner who enters into the contract for the building work, but also to any “successor in title” who acquires an interest in the property after the work has been completed (Section 18D(1)). This means that if a person purchases a property that has had residential  building work carried out on it, that person is still entitled to the benefit of the warranties.

This is an important protection for homeowners, as it means that if there are any defects or issues with the building work, the defects or issues can be addressed even if the homeowner did not have a contract with the builder and the original homeowner is no longer in the picture. This is particularly important for issues that may not become apparent until some time after the work has been completed, such as defects in the foundation or structural issues.

It is important to note that as the warranties are automatically included in all contracts, they cannot be waived by any party involved in the construction process. This means that even if the contract contains a clause that purports to exclude or limit the warranties, those exclusions or limitations will not be enforceable (section 18G).

Breaches of Warranties

In the event of a breach of any of the warranties provided under Section 18 of the Act, the homeowner may have the right to seek redress from the builder or any other party involved in the building work. The available remedies will depend on the nature and severity of the breach, but may include requiring the builder to rectify the issue at their own expense or seeking compensation for any losses or damages incurred as a result of the breach.

If the homeowner experiences a loss due to a breach, they have a legal responsibility to minimise that loss by taking reasonable actions. This includes providing written notice of the breach within 6 months after it becomes apparent (Section 18BA(3)(a)) and not unreasonably refusing access to the building work for the purpose of rectifying the breach (Section 18BA(3)(b)). 

Before starting legal proceedings for a breach of statutory warranties, claimants must determine whether the warranty period is still valid. If the work is complete, the warranty period will be determined based on the date of completion. Claimants will then need to determine whether the warranty period is valid.  The warranty period for major defects is six (6) years and two (2) years for any other defect and any legal proceedings must be commenced within the warranty period (Section 18E).  Section 18E(4) provides the definition of major defect.

Defences for Contractors

Section 18F of the Act provides defences for builders against statutory warranty claims regarding work carried out according to instructions from the homeowner or a professional (for example an architect or engineer). 

The builder (defendant) will not be liable if the builder can prove that the alleged deficiency resulted from instructions given by the homeowner against the builder’s advice, or reasonable reliance on instructions from an independent professional acting for the homeowner. 

Therefore, it is important that builders and contractors take measures to document their recommendations and opinions in writing to the homeowner if the builder or contractor is instructed to perform work that is contrary to their advice.  This should be documented prior to proceeding with the work.  The highly experienced Building and Construction lawyers at BSM can assist you and provide relevant and tailored legal advice.