Changes to the NSW Home Building Act - How it Affects You!
What are the Key Changes?
Statutory Warranty Regime
The Act previously required work to be performed “in a proper and workmanlike manner'”– the legislation now requires that work is to be “done with due care and skill”. Terms in home-building contracts need to reflect this change.
The term “structural defect” is replaced with the concept “major defect” in order to cover significant defects that may not be structural in nature: in other words, the range of defects covered by the former “structural defect” enforcement regime has broadened generally. HOWEVER the new concept does not cover many defects, such as wall cracking, there were previously considered to be structural defects.
A “major defect” is generally defined as follows:
a defect in a major element of a building that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these), and that causes, or is likely to cause:
the inability to inhabit or use the building (or part of the building) for its intended purpose, or
the destruction of the building or any part of the building, or
a threat of collapse of the building or any part of the building.
A “major element of a building” is defined generally to mean:
a) 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
b) a fire safety system, or
c) waterproofing, or
d) or any other element prescribed by the regulations.
- The shorter limitation period for non-major defects has been the subject of protests by owners’ corporations because of the tighter time frame for claims to be made on defects that previously fell within the meaning of “structural defect”.
The defences available to a claim for breach of a statutory warranty have been expanded. It is a defence for the builder to prove that the deficiencies of which the owner complains arise from:
a) instructions given by the owner, contrary to the advice of the person who did the work (being advice given in writing before the work was done), or
b) reasonable reliance by the builder on written instructions (given before the work was done or confirmed in writing afterwards) by a
professional acting for the owner, who was independent of the builder.
Duties of Claimants
A person relying on the benefit of a Statutory Warranty now has obligations:
to mitigate loss;
to make reasonable efforts to give written notice to the builder within 6 months after the breach becomes apparent;
not to unreasonably refuse a builder or sub-contractor access to the site to rectify any defective work;
and failure to comply may be taken into account by a Court or Tribunal.
These provisions increase the options available to builders to defend claims.
Extension of Statutory Warranty Regime
The statutory warranties will now be implied into all contracts for the provision of residential building work.
This increases the chances that sub-contractors will be liable to the principal contractor for a breach of the statutory warranties.
Resolution of Building Disputes
The changes include broadening the rectification orders that can be made by Fair Trading inspectors, allowing for staged rectification with deadlines specified for the work to be completed. In certain circumstances, builders will be able to apply to have these deadlines extended.
The amendments require courts and tribunals to have regard to the “preferred outcome” – which is that rectification of defective work is to be done by the party responsible.
So if the fault lies with a sub-contractor, the preferred outcome is for that contractor to attend to the rectification, rather than it being the responsibility of the builder.
What should you do?
The changes are substantial and it is prudent for building contracts to be aligned with the concepts in the legislation. Nick Kallipolitis and Ray Frangi can deal with any changes that need to be made.
Nick can also advise about building and construction disputes and the ramifications of the changes to the legislation.
For further information contact:
Nick Kallipolitis, Principal
Accredited Specialist, Commercial Litigation
Phone: 02 9895 9210
Ray Frangi, Lawyer
Phone: 02 9895 9218