Introduction

When it comes to engaging in residential building work, it’s essential to understand the statutory warranties provided under the NSW Home Building Act 1989 (the HBA). These warranties serve as vital protections for homeowners, ensuring that their investment is safeguarded.

In this article, we will explore the six main statutory warranties that are implied into every building contract that homeowners, lot owners and Owners Corporations should be aware of when dealing with defective building work.

Do statutory warranties under the NSW Home Building Act (1989) apply to my building contract?

You may be surprised to know that contrary to common misconceptions, statutory warranties under the Home Building Act apply to all residential building work in NSW without any monetary threshold. Even if the contract price is below $12,000 the warranties still apply, and homeowners have the right to make home warranty claims. This is the case even if the builder lacks valid insurance coverage as these warranties operate separate from the insurance provisions of the HBA.

What are these warranties that apply to my building contract?

Each of the warranties implied into your building contract under the HBA and each of them are equally important and valid under the law. It will be considered a breach of the statutory warranties if the builder does not meet all of the following implied warranties. If you suspect any of these warranties have been breached during the construction work, it is highly recommended to seek legal advice from expert construction lawyers to understand what your rights are and how to enforce them.

Warranty of Proper and Workmanlike Performance

Under this warranty, builders are obligated to perform the work in a proper and workmanlike manner, in accordance with the plans and specifications set out in the building contract. The interpretation of the “proper and workmanlike manner” test is typically done on a case-by-case basis, considering the quality of work, adherence to established standards and any circumstances under which the scope of the work is limited by. For example, if the building work project was done under a strict budget, the budget may limit the “workmanlike manner” accepted.

The second major element of this warranty requires that the building work done must meet the requirements of the plans. If the plans conflict with the Building Code of Australia (BCA), the builder must get written instructions from the owner (or architect) on how to proceed. Failing to comply with the BCA means not meeting this warranty. Construction certificates are given only if work meets BCA standards.

Warranty of Materials’ Quality and Suitability

This warranty ensures that builders must ensure that all materials supplied for the project are good and suitable for their intended purpose and that, unless otherwise stated in the contract, they must be new materials. And yes, this also means that builders cannot use any defective materials in the building project. It is crucial for builders to consider any specific requirements communicated by the home owner, such as the planned use of the work or other related work that may impact material selection. For example, did the home owner express an intention to render the walls? or build a pool in the yard? If so, the builder should get written approval from the homeowner for choices of material in such cases.

Warranty of Diligent and Timely Completion

This warranty implies into all building contracts an obligation of the builder to carry out the work with due diligence and within the stipulated time frame mentioned in the contract. In cases where no specific time is stipulated, the work should be completed within a reasonable time. Additionally, contractual provisions, such as extensions of time, may apply to this warranty with an example being Clause 11 of the MBA residential contract which provides for an extension of time.

Warranty of Reasonable Fitness for Occupation

If the work involves construction of, altering, repairing, renovating, decorating, or providing protective treatment to a dwelling, this warranty ensures that the completed work, to the extent of the work conducted, is reasonably fit for occupation as a dwelling.

Obtaining an occupation certificate normally satisfies this warranty. However, in cases where no occupation certificate is issued or required, the warranty should be assessed on a case-by-case basis. Further, home owners should note that if obtaining the occupation certificate is not within the agreed scope of work with the builder, the responsibility of obtaining an occupation certificate rests with the home owners. 

Warranty of Reasonable Fitness for Specified Purpose or Result

This warranty applies when the owner expressly communicates to the builder or person responsible for the work the particular purpose or desired result of the project, demonstrating reliance on the builder’s skill and judgment. Both the work and any materials used should be reasonably fit for the specified purpose or result. This warranty complements the warranty mentioned in (b) above but applies to both materials and workmanship.

In Conclusion

Understanding the statutory warranties provided under Section 18B of the Home Building Act 1989 is vital for home owners seeking protection in relation to the building and construction of residential works in NSW. Particularly, where building defects are found (such as structural defects, home owners and Owners Corporations can make a claim a breach of these warranties under section 18B of the HBA and recover from the Builder the losses suffered.

If you suspect a breach of statutory warranties in your building contract, our team at PBL Law Group can provide the expert assistance you need. Our construction and strata lawyers specialise in handling such cases and can offer guidance and representation tailored to your situation. From assessing your claim to providing legal advice and pursuing remedies for defective building work, we are committed to protecting your rights.