Key points to remember:
Insurances

From 2 April 2002, all contractors must provide
Home Warranty Insurance for residential building
works valued at $12,000 or more. Previously
(between 1 May 1997 and 1 April 2002), insurance
was required if the works were $5,000 or more.

THE HOME BUILDING ACT 1989
General
The Home Building Act 1989 (‘the Act’) regulates
the residential building industry and certain
specialist work. Recent reforms have changed the
requirements on contractors, owner-builders and
insurers.
Builders and tradespersons must not undertake
any residential building work or specialist work
unless they hold a current contractor licence
(s4).
Residential building work is any work involved
in, or the co-ordinating or supervising of,
construction, alterations, additions, repairs,
renovations, decorations or treatments to a
dwelling (house, townhouse or unit).
Specialist work is any plumbing, gas-fitting,
electrical wiring, refrigeration or air-conditioning
work to a dwelling.
Building consultants who carry out pre-purchase
inspections of dwellings must also hold a current
building consultancy licence (s18H).
Contracts
If the cost of the work is more than $1,000.00 you
must have a written contract with your builder or
tradesperson (s7).
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
the contract should be signed and a copy
given to you;
the maximum deposit you should pay is: 10%
if the contract price is <$20,000; or 5% if the
contract price is >$20,000 (s8);
from 2 April 2002: if the value of the work is
>$12,000 then Home Warranty Insurance
cover is required;
if the contract is for residential building work
and the value of works is > $12,000, a 5-day
cooling-off period applies.
Call us on 9922 4994 for preliminary advice on any
contract you may wish to enter into PRIOR to
signing.
Warranties
Certain warranties are implied by law into the
contract (s18B) and run for 7 years from
completion of the work:
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the work will be performed in a proper
manner and in accordance with the plans and
specifications (s18B);
the work and materials will be suitable for
the purpose
the work will comply with the Act and other
laws;
the work will be done within the time stated
(if not, within a reasonable time);
if the contract is for work on a dwelling – it
will be reasonably fit for occupation as a
dwelling.
A successor in title to a person entitled to the
benefits of the statutory warranties (i.e. new
owner) is entitled to the same benefits, except
for work and materials already enforced by the
previous owner.
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The Act has also been amended to incorporate the
following changes to the Home Warranty
Insurance Scheme:

The period of cover for loss arising from noncompletion of work is 12 months;
 The period of cover is 6 years for structural
defects and 2 years for all other defects;
 The minimum cover must be not less than
$200,000;
 The insurer may not be liable for claims
<$500.00 if specified in the insurance
contract.
You must be provided with an original certificate
of insurance prior to any demand for payment
and commencement of works.
For your own protection you should also ensure
that the builder has builders all risk insurance,
public
liability
insurance
and
workers
compensation insurance.
Owner-Builders
Owner-builders should be aware of their
obligations when undertaking owner-builder work.
Any home building, renovation, addition or
maintenance where the value of the works
exceeds $1,000, must be covered by a written
contract between the licensed contractor and the
owner-builder.
All owner-builders must obtain a permit from the
Office of Fair Trading when undertaking
residential building work (including supervising
and coordinating) valued over $5,000 and
requiring development consent/that is a
complying development.
From 1 April 2002, if the value of works exceeds
$12,000 then the contractor must provide the
relevant Home Warranty Insurance. Previously
(1 May 1997 to 1 April 2002), insurance was
required for works valued over $5,000.00.
Owner-builders should also take out further
insurances such as Workers compensation, Public
liability etc for their own protection.
Subsequent Sale
With all other disputes, the Act provides for a
dispute resolution process by the Office of Fair
Trading (‘FTO’):
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Notify the FTO in writing of your dispute with
your contractor – a fee of $55.00 applies;
The FTO may investigate the matter and assist
the parties in resolving the dispute or issue a
Rectification Order to the contractor;
If the Order is not complied with the matter is
referred to the FTO where you may be advised
of other avenues, such as proceeding to the
Consumer Trader and Tenancy Tribunal.
The Tribunal has jurisdiction to deal with building
claims where the value of the claim is less than
$500,000 and the claim is commenced:
An owner-builder who decides to sell their home
within 6 years of completing works will need to
take out Home Warranty Insurance where the
value of the works was more than $12,000.00.

The Contract for sale must also include a note
that a permit was issued for the works and that
the works required Home Warranty Insurance.
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within 3 years of the supply - where the claim
relates to supply of building goods & services;
within 10 years of the completion of works where the claim relates to a contract of
insurance;
within 7 years of the completion of the works,
where the claim relates to an implied
statutory warranty.
For further information, contact the
Office of Fair Trading on 9895 0111, or
please don’t hesitate to contact us;
Grahame Jackson BEc.LLB
grahamejackson@gjalaw.com
9908 1700
Tel:
02
Fax:
02 9908 1755
If you are an Owner-Builder and considering
selling your home, contact us for an update on the
requirements for your Contract annexures.
Resolving Disputes
Grahame Jackson & Associates
Attorneys at Law
Where the works are valued at $12,000.00 or
more and Home Warranty Insurance was provided:


Suite 4, 3-7 Grosvenor Street
NEUTRAL BAY NSW 2089
Contact the insurer and follow their claimhandling procedures;
You
may
wish
to
attach
written
documentation evidencing your claim such as
independent reports, quotations for repairs,
photographs etc;
ABN: 31 099 497 551
© GJALAW Pty Ltd