Residential building advice
Know your rights as a home owner or as the builder of a residential development and get the right legal advice before entering building contracts to avoid future disputes.
All residential building work in New South Wales, everything from owner-builder work on single dwellings to large strata developments by property development companies, is regulated by the Home Building Act.
The Act imposes a slew of obligations on builders and developers. It grants a range of rights to home owners as well, even if the property has been sold and re-sold since the building work was done.
A snapshot of the important rights and obligations in the Act include:
Statutory warranties, which in simple terms hold both the builder and the developer liable to whoever owns the property for any defects in the building work that are noticed within 2 years (for minor defects) and 6 years (for major defects) following the completion of the building work.
A payment claim cannot be made under the SOPA unless there is an available reference date, being a date fixed by the contract, or the legislation, as a date for making payment claims. Unless the contract otherwise provides, only one claim can be made in any named month.
Once a payment claim has been submitted, the principal (or head contractor) has 10 business days to respond, unless the contract prescribes a shorter period. This response must be in writing and is called a ‘payment schedule’.
If the principal or head contractor fails to provide a payment schedule, within the required timeframe, it will be liable for the entire amount of the claim. The contractor can t hen recover this amount as a debt in court.
If the principal issues a payment schedule within time, but the contractor disagrees with the assessment, the claimant can make an ‘adjudication application’.
Contracting requirements, which oblige builders to enter into written contracts that address specific things, failing which they may lose the ability to enforce the contract at all.
The adjudication application is a written document that must be sent to the nominating authority within a fixed period, typically 10 business days from the date the payment schedule is served upon the claimant. The exact timeframe will depend on the circumstances.
The response to an adjudication application must be made within 5 business days of receiving the application, or 2 business days after receiving notice of the adjudicator having accepted their appointment, whichever is longer. Both timeframes are exceptionally short.
A claimant has an express right to withdraw an adjudication application. The respondent may object to the withdrawal if an adjudicator has been appointed.
Most importantly, the respondent is not entitled to include in its adjudication response any reasons for withholding payment that were not included in its payment schedule.
Once the time for a response has lapsed, the adjudicator is required to determine the application. Typically, this is done by reference to the application and the response, with neither party having any right to appear before the adjudicator. It is not uncommon for the adjudicator to seek further submissions from the parties.
The adjudicator’s determination is required within 10 business days of the respondent’s submission. Brief extensions are not uncommon if approved by the parties. The adjudicator’s decision is easily registered as a judgment debt at court, and enforced as such.
Insurance requirements, which in relation to many residential builds (but not all) oblige builders to hold insurance for the benefit of the home owner for any breach of statutory warranty. [include link to HWI article].
There are numerous risks that can arise for any party to a residential build, be they developer, builder or home owner. There are two key ways that we can assist to minimize those risks:
Get in touch with the lawyers at CCS legal to get residential building advice.
Contracting before the build
It is critical to contract correctly when getting involved in residential building work. The vast majority of disputes that we see arise because the parties did not contract well. Sometimes parties will enter into a very one-sided contract (it is common for inexperienced home owners to do this, for example). Sometimes parties will enter into a contract that doesn’t clearly and unambiguously allocate risk and responsibility. Sometimes parties will enter into a contract that doesn’t comply with the mandatory contracting requirements of the Home Building Act. Typically circumstances like this will lead to a dispute.
Disputes of this sort can typically be avoided by seeking legal advice on a contract before entering into it. We can assist with this.
Dealing with disputes
Where disputes do arise, they typically fall into one of a few categories. The most common dispute in the residential building space is simply around defective building work. Also common are disputes around variations to the original contract, damages associated with delays in the completion of the work, and disputes over the precise requirements of the contract.
Each individual dispute requires a tailored approach to resolve. We represent our clients in such disputes routinely. We understand all of the nuances of the law, and we have an excellent track record in resolving such disputes quickly and cheaply. Where disputes can’t be resolved through negotiation, we are experts in taking claims to court or to the NCAT and winning for our clients.