Home Building Act & Home Warranty Insurance

The Home Building Act 1989 is the principal piece of legislation regulating the home building industry in NSW. It provides homeowners with a level of protection from the risks associated with building or renovating a home, which represents a substantial investment for most homeowners. The Act requires builders and tradespeople to be licensed for the work that they do, and to implement appropriate contracts and insurance before the home building projects commence.

Clients should be aware of the recent amendments to the Home Building Legislation in NSW, which include:

• Definition for the date of completion to overcome the previous difficulties faced by owners corporations in establishing the date of completion;
• Exclusion of the Civil Liability Act 2002 for residential building work;
• In respect of building contracts entered into after 1 February 2012, a claim to enforce statutory warranties must be commenced within 6 years for structural defects and 2 years for other defects from the date of completion of the works;
• Insurance claims have an extension period of 6 months for any losses that become apparent in the last 6 months of the period of insurance;
• Beneficiaries must enforce statutory warranties after loss becomes apparent;
• Developer includes the owner of land who also owns, or will own, four or more units in the development even if they are not a party to the building contract;
• Insurance threshold increased to $20,000.

The remainder of the reforms are likely to be implemented in 2014 through the Home Building Regulation 2004. With limited exceptions, the amendments will extend to apply to:

• Residential building work commenced or completed prior to the amendments;
• A contract of insurance entered into prior to the amendments; and
• A loss or liability that arose prior to the amendments.

The team of building and construction lawyers at CM Lawyers are able to assist our clients to find practical solutions to a variety of building and construction related disputes and can advise on building and construction legal requirements concerning the following:

• Preparation for and legal requirements of building or renovating;
• Selecting a licensed tradesperson or builder;
• Legislative requirements and the building process;
• Preparation of building and or construction related contracts;
• Home warranty insurance;
• Becoming an owner-builder;
• Building a pool;
• What happens after you build or renovate; and
• Resolving building disputes e.g. building defects.

Mandatory home warranty insurance is a key feature of the regulation of home building in New South Wales and in all other Australian jurisdictions except Tasmania. In essence, the Home Warranty Insurance Scheme is intended to provide a safety net for homeowners.

With regards to the Act, the home warranty insurance scheme sits at the end of a comprehensive consumer protection regime for homeowners undertaking residential building projects in New South Wales where the contract price exceeds $20,000.

Where a builder is unable to honour their commitments under a contract due to insolvency, death or disappearance, home warranty insurance provides a safety net for homeowners including subsequent purchasers. Similarly, where a builder is unwilling to honour such commitments and their licence is suspended for failing to comply with a monetary (compensation) order in favour of the homeowner made by a Court or NCAT, home warranty insurance provides protection to the homeowner.

The specialist building and construction law team at CM Lawyers is always here to provide you the necessary assistance in your home warranty insurance claims. Fill out a contact form to speak to a solicitor today.