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NSW Home Building Act Changes to be aware of

Posted by Joanne Anderson on 28 March 2015

What changes were made in January 2015?

*Previously, the Act used the term structural defect which has now been replaced with the term major defect.  This change means that some work that came within the definition of structural defect may now not be covered eg wall cracking, unworkmanlike / defective work.  Major defects are covered by a 6 year warranty however, all other defects are only covered by a 2 year statutory warranty (which period starts from completion of the work to which it relates).

*Home building contracts should now also refer to work being done with due care and skill, rather than in a proper and workmanlike manner.

*If you are relying on the benefit of the statutory warranty, you now have an obligation to:

  • make reasonable efforts to notify the builder of the breach within 6 months of when the breach becomes apparent;
  • not unreasonably refuse the builder access to the building work concerned as the builder may require to rectify the breach;
  • mitigate their loss

*Rectification orders that can be made by Fair Trading inspectors now can be made as a staged rectification order which must specify a date by which the requirements of the order must be complied with.  In some circumstances, the builder will be able to apply to have that date extended.

*Home Warranty Insurance is now no longer offered or obtainable in relation to owner-builder work.

A person who obtained an owner-builder permit (or a successor in title to that person) must not enter into a contract for sale of the property unless the contract includes a conspicuous note stating:

  • that an owner-builder permit was issued in relation to the land (specifying the date on which it was issued), and
  • work done under an owner-builder permit is not required to be insured under the Act unless it was done under a contract (ie by a contractor to the owner-builder).

This requirement does not apply:

  • to a sale of land more than 7 years and 6 months after the owner-builder permit was issued, or
  • if the reasonable market cost of the labour and materials involved does not exceed $20,000 (inclusive of GST), or
  • if the owner-builder work carried out under the owner-builder permit is of a certain Home Building Regulation.

If the conspicous note is not included when required, a purchaser may rescind the Contract for Sale before settlement.

It is important to be aware of the changes if you are doing residential building work, or are purchasing a property to which residential building work has been undertaken within the last 7 years.  Get in contact with us if you have any concerns or queries about the changes.

Author: Joanne Anderson

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