Reforms to the Home Building Act
The Department of Fair Trading previously announced that New South Wales will be undertaking a reform to the State’s building laws. Minister Anthony Roberts indicated that their first priority is to create a framework which will minimise the chance of problems which often arise during home building and to ensure there are measures in place to protect the consumer when things go wrong.
The Minister stated that the Home Building Act 1998 (NSW) (the Act) required reform to give certainty to the home building industry in light of emerging legal decisions. In particular, the reforms intend to review the home building contracts generally, the statutory warranties, dispute resolution mechanisms, licensing of owner-builders, home warranty insurance and disciplinary provisions for those undertaking building works without the appropriate licence.
Since that announcement, the Home Building Amendment Act 2011 (NSW)(the HBAA) has now been enacted. The purpose of this article is to outline some major changes which have been made as a result of same.
The Definition of Developer
If you are an owner of 4 or more dwellings which have been constructed or are in the process of being constructed, then you are considered to be a developer within the meaning of the HBAA, even if you never contracted with the builders of the dwellings. This amendment to the definition of developer means not only the person who developed the land is liable for the statutory warranties with respect to the construction works, the owners which fall within this definition will also be held liable for any beach of the statutory warranties with respect to the construction works.
Civil Liability Act 2002
The new changes to the HBA now exclude Part 4 of the Civil Liability Act 2002(CLA) for breach of statutory warranties pursuant to the Act. Part 4 are the proportionate liability provisions and as a consequence of its exclusion, builders and developers can now be held liable for defective or incomplete work for any construction works for which they were supervising and therefore cannot pass the buck onto subcontractors for defective works pursuant to the CLA, but rather, they will now be required to rely upon common law cross-claims and the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).
The definition of completion has now been extended to include the completion clauses within the definition of the construction contract and if there is no contract, or no provisions in the contract for completion, then the definition is to mean any construction works that can be used for its intended purpose and is free from major defects.
Time Limitation Period
The statutory limitation period to file a claim for breach of structural defects is 6 years. However, if the defect was a latent defect and only become known in the last 6 months of the 6 year limitation period, then the limitation period for home warranty insurance claims may be extended for an additional 6 months. The statutory limitation period for non-structural defects is 2 years.
Home Warranty Insurance
All domestic building works valued at $20,000.00 or greater must have home warranty insurance. This is an increase from the previous $12,000.00 value. Furthermore, domestic building works which are valued between $1,000.00 and $5,000.00 must be in writing.
This article is not legal advice and should not be relied upon as legal advice. All articles found on this website are intended to provide informative information, nevertheless, in many instances legislation and case law has been simplified and/or paraphrased. If you would like personal legal advice based on your current circumstances, you should contact MurdockCheng Legal Practice for a free consultation.