Statutory warranty
The Building Act provides a statutory warranty for building work that is:
- on a residential building
- requires a building approval; and
- has a cost of $12,000 or more.
This does not include structures you can’t live in such as swimming pools, driveways, and fences.
The statutory warranty does not apply to work carried out by or for the Territory or the Commonwealth, or by a licensed owner–builder.
Provisions
The warranty covers every contract for the sale of a residential building. Every contract to carry out residential building work to which the builder is a party (excluding owner–builder licence holders) is taken to contain a warranty. It does not need to be written into the contract for the warranty to be valid. Any provision in a contract that limits the statutory warranty is void.
Under these provisions the builder warrants:
- That the residential building work has been or will be carried out in accordance with the Building Act.
- That the work has been or will be carried out properly and skillfully and:
- by the approved plans or
- if the work involves or involved handling asbestos or disturbing friable asbestos, in accordance with approved plans that comply with the Building Act about asbestos.
- That good and proper materials for the work have been or will be used in carrying out the work.
- If the work has not been completed, and the contract does not state a date by which, or a period within which, the work is to be completed, the work will be carried out with reasonable promptness.
- If the owner of the land where the work is being or is to be carried out is not the builder:
- The owner expressly makes known to the builder, or an employee or agent of the builder, the particular purpose for which the work is required or the result that the owner desires to be achieved by the work to show that the owner is relying on the builder’s skill and judgement
- that the work and any material used in carrying out the work is or will be reasonably fit for the purpose or of such a nature and quality that they might reasonably be expected to achieve the result.
The statutory warranty operates for:
- six years after the completion day for the residential building work about a structural element of a building, which includes components of external walls (including weatherproofing) and
- two years after the completion day for the work for residential building work in relation to a non-structural element of a building
The completion day is the day the work is completed or the day the contract relating to the work ends, whichever is later.
The statutory warranties apply to any warranty the seller or builder may have provided.
You do not have to be the original purchaser for the warranty to apply. You are entitled to the remainder of the warranty period if you purchase the building within the warranty period. For example, if you buy a building four years after completion, you will have the remaining two years on the statutory warranty for structural elements.
Residential building insurance
Building work on residential houses and apartment buildings three storeys and below, excluding any storey used exclusively for car parking, must also be covered by complying residential building insurance.
This is sometimes referred to as warranty insurance or builder’s warranty insurance, but it includes coverage for more than the statutory warranty, including subsidence and other matters.
A complying policy is either:
- a certificate issued by an approved insurer stating that the insurer has insured the work under a residential building insurance policy or
- a fidelity certificate for the work issued by the trustees of an approved fidelity fund scheme (currently the Master Builders Fidelity Fund)
The residential building insurance or fidelity fund scheme will cover you for:
- A maximum of $85,000 of insurable residential building work
- A deposit of $10,000
- A period of insurance of five years
- A period of 90 days to make a claim
The builder is responsible for obtaining the appropriate insurance. They must also provide the landowner with evidence of the insurance. If you are engaging a builder, you should check that all details on the insurance policy, insurance certificate or fidelity certificate are complete and accurate, including the cost of the work and the builder's name.
If the work requires residential building insurance, the building certifier must be satisfied there is a complying residential building insurance policy before the certifier can issue a commencement notice to the builder.
If you need to make a claim against the insurance, the person who issued the policy is not entitled to avoid liability under a complying residential building insurance policy only because the policy was obtained by misrepresentation or nondisclosure by the builder.
Like the statutory warranties, the insurance granted insures the owner and the owner’s successors in the title should the building be sold or transferred to another party.
Complaints and disputes
If there is a dispute between you and your builder or other professional, there are options for you to resolve your dispute or make a complaint.
