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Demanding payment without sufficient home warranty insurance

by in Building & Construction

In our previous article titled what happens if you don’t obtain sufficient insurance? We discussed the consequences for building contractors who perform works without sufficient home warranty insurance. In this article, we discuss whether a licenced contractor can demand payment in these circumstances.

Pursuantto s 92 of the Home Building Act 1989(NSW) (the “Act”), contractors cannot demand payment for uninsured work. In the case of Huk v Da & Da McKenzie Pty Ltd (Home Building) [2011] NSWCTTT 128, a builder issued a notice to suspend works in accordance with the written contract. The homeowner rejected the builder’s right to suspend works and accordingly issued legal proceedings in the Consumer, Trader and Tenancy Tribunal alleging that the builder had unlawfully suspended works.

It was held that the builder was not entitled to suspend works for the failure of the homeowner to pay the progress claim because the builder failed to obtain home warranty insurance pursuant to s 92of the Act.

Tips

  • If you do not have home warranty insurance but are still completing works and are owed money, seek advice immediately as you may be able to rectify the problem.
  • If you did not obtain home warranty insurance and the building works have completed, however, you are now having a problem getting paid, seek legal advice before you take any action to recover the monies or suspend the works.

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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.