Changes to the NSW Home Building Act - How it Affects You!

Nick Kallipolitis

What are the Key Changes?

Statutory Warranty Regime
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:
  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.

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 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:

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