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Improper house construction icon as a sign of building dispute in Sydney | Contracts Specialist

What is the Home Building Act?

The Homebuilding Act and how it applies to building disputes

The Home Building Act 1989 is the law that regulates the residential building industry and certain specialist work in New South Wales. The Act outlines the minimum statutory rights of homeowners, builders, and contractors. This includes warranties, payments, deposit, insurance, and other matters relating to residential construction work.

The main concern of the Home Building Act is residential building work done by a contractor or tradesperson. This can be the construction of a new home, or the alteration or renovation of a dwelling such as building an extension to an already existing home or structure, and updating a bathroom or kitchen.

 

The legislative scheme consists of the following acts and rules:

NSW Home Building Act 1989 regulates the residential building industry in New South Wales | Contracts Specialist

Home Building Act 1989 (NSW)

NSW Home Building Act 1989 regulates the residential building industry in New South Wales | Contracts Specialist

Home Building Regulation 2014 (NSW)

NSW Civil and Administrative Act 2013 (NCAT) deals with tenancy conflicts and construction works. | Contracts Specialist

Civil and Administrative Act 2013 (NSW)

NSW Civil and Administrative Act 2013 (NCAT) deals with tenancy conflicts and construction works. | Contracts Specialist

Civil and Administrative Tribunal Rules 2014

Home construction or renovation work is quite a big investment for homeowners, so the Home Building Act was created to give homeowners some level of protection.

How the Home Building Act protects homeowners

Home construction or renovation work is quite a big investment for homeowners, so the Home Building Act was created to give homeowners some level of protection.

Homeowners are protected by the Home Building Act because under the Home Building Act:

  • only licensed builders can enter into home building contracts;
  • certain information and terms and conditions are required to be included in home building contracts; 
  • home building works are required to be insured; and  builders have statutory warranties that cannot be contracted out of.

Amendments to the Home Building Act

Amendments have been made to the Home Building Act and some were put into effect in 2014 to ensure that the home building laws reflect current practices and reduce any unnecessary red tape for the construction industry. 

 

The changes made were meant to add more appropriate protection for traders and builders, and required homeowners to act promptly and immediately lodge complaints when defects are discovered.

Builders photo – Home Building Act | Contracts Specialist

What does the Home Building Act regulate?

The Home Building Act regulates a number of matters and here are some of them:

  • builders and tradespeople are required to hold a contractor’s license for the work that they do
  • the incapacity of unlicensed contractors to claim damages under a contract in the case of a building contract dispute
  • what the residential building contract should state when the project price is below $5,000 and when it is $20,000 or more
  • the need for insurance and the details of what such insurance contracts should state and insure
  • the importance of contracts and insurance to be implemented before work for the construction projects begins
  • the maximum amount of a deposit
  • how to deal with variations
  • how to deal with progress payments
  • the warranties for consumers  and contractors

A building dispute arises when a party to a contract fails, or is perceived to have failed, to comply with their legal or contractual obligations to a contracting party.

The Home Building Act covers details that can come up in a residential building dispute.

Contractor and Engineer photo – Home Building Act | Contracts Specialist
  • A homeowner’s non-payment, underpayment, or late payment for work done by a builder 
  • building work was not done as agreed in the contract
  • disagreement as to the scope or quality of works
  • delay with progressing with the work or abandonment of works
  • Incomplete or defective home building work
  • Insurance claims
  • Poor communication between the parties leading to relationship failure and then giving rise to points the points above or a combination of those

Construction Defects according to the Home Building Act

A defect must be a result of defective design, poor and faulty workmanship, use of defective or wrong materials, or a failure to comply with structural performance requirements of the National Construction Code.

Under the Home Building Act 1989 (NSW), there are two types of defects, non-major defects and major defects.

Non-major Defect: A non-major defect is any other defect that arises other than normal wear and tear.

Major Defect: In 2015, the concept of ‘major defects’ replaced the term structural defects’ in the Home Building Act 1989 (NSW). 

A two-step test is used determine if a defect in the construction work is a major defect. For something to be considered as such, these criteria are the steps to be taken.

Step 1: Assess whether the defect in a major element of the building
Step 2: Assess the seriousness of the defect’s potential consequences

 

‘Major elements of the building’ refers to:

  • internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns and beams)
  • fire safety system
  • waterproofing;

These major construction defects are believed to likely result in:

  • the inability to inhabit or use the building (or part of the building) for its intended purpose;
  • the destruction of the building or any part of the building;
  • a threat of collapse of the building or any part of the building

Building Dispute Resolution

In terms of building dispute resolution, the Home Building Act states that the NSW Fair Trading will first attempt to negotiate a suitable outcome between the homeowner and the builder.

Should mediation by Building Dispute Inspectors and negotiation be unsuccessful, the homeowner will be given information about what his other options are and this includes dispute resolution by the Home Building Service or the involvement of the NSW Civil and Administrative Tribunal (NCAT).

Who can be consulted when a building dispute comes up?

A lawyer specializing in building and construction law or a Building and Construction Solicitor may be asked for legal advice when a building dispute occurs. 

 

We fully understand that building disputes can be frustrating and confusing to clients. As construction law experts, Contract Specialist deal with construction contract and residential building disputes in NSW day in and day out. We are experienced to investigate and carefully consider all the factors that contribute to the worsening of your building dispute. You can be assured that you will be getting the right legal advice. 

 

We work very hard to determine what is the most practical and cost efficient dispute resolution process for our clients. As your trusted construction lawyer, we aim to minimise your stress and confusion while you go through the process. The Contracts Specialist team has the technical experience and know-how on how to deal with a variety of legal issues. We have acted on behalf of home owners, building professionals and developers in a variety of building disputes in the New South Wales Civil & Administrative Tribunal and the Courts. We aim to get you the outcome you deserve so that you can get have peace of mind and just focus on things that are more important to you.

 

If you’re in a situation, it would be wise to give us a call. Your first consultation is free. It will cost you nothing to know where you stand legally so get in touch with our specialist building dispute lawyer now.