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Home Building Act NSW
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The Home Building Act NSW is one of the most significant legal acts that regulate residential construction projects and all its subjects. In the following blog post, we’ll see what are the main areas this act covers, and what rights you have as a homeowner according to the act.
Table of Contents
What is the Home Building Act 1989?
The Home Building Act of 1989 regulates all aspects of residential construction projects and the licensing of contractors. The act regulates and defines the statutory rights of residential property owners, builders, and developers, including payments, warranties, disputes, insurance, and other construction and legal matters. The Home Building Act regulates all contractors’ work in residential homes including new home construction, alterations, renovations, updates, and extensions.
Home Building Act also regulates specialist (contractors) work such as electrical work, plumbing, air conditioning, drainage work, gas fitting work, and similar.
However, this act doesn’t regulate work where labour and material cost doesn’t exceed $5,000.
What is the purpose of the Act?
The main purpose of the Home Building Act is to protect homeowners (residential property owners) by defining the necessary requirements contractors must follow. Contractors must be licensed and must include in their building contracts some terms and conditions that serve as protection to homeowners. Moreover, all construction work on residential homes should include statutory warranties and other insurance methods.
Home Building Act regulation areas
The act regulates a wide variety of construction work in the residential property sector, including:
- Requirements for contractors’ licences,
- The necessary elements of the residential building contracts,
- Project insurance and what it should include,
- What to do in cases of disputes,
- The maximum amount of deposits,
- Payments and progress payments,
- The warranties for homeowners and contractors.
Amendments to the Home Building Act from 2014
In 2014, some amendments were made to the original Home building Act 1989. Some areas of amendments include:
- Clarifying major building defects,
- Simplifying the necessary home-building contract terms,
- Renaming the home warranty insurance,
- Broadening the ground for disqualification of contractors without a valid license,
- Redefining disciplinary measures and litigation,
- Increasing the maximum deposits for projects over $200,000,
- Other small matters.
What happens during building disputes?
Building disputes happen frequently, usually when one party fails to comply with the contract and its legal obligations. The Home Building Act covers different aspects of residential building disputes, such as:
- Delays by a contractor,
- Errors or defects in planning, design, or construction,
- Changes and variations in the design,
- Late payments,
- Insurance claims,
- Disagreement between parties regarding the quality of the work.
The Home Building Act helps in addressing those issues by defining the minimum legal rights and obligations of all parties of a construction project. In case a dispute occurs, the Act defines what can be done in that particular case, and what legal actions should be taken.
How can a dispute be resolved?
In an ideal case, building disputes should be resolved before any legal action is undertaken. The first step would be to try to communicate with your contractor or homeowner to resolve any potential misunderstandings. If it’s not possible, and if it’s clear that one party violated the contract, you can contact NSW Fair Trading, and they will try to negotiate a satisfactory outcome for all parties. The NSW Fair Trading can help in negotiation in the following cases:
- Defective or incomplete building work,
- Damages to the property caused by the construction work,
- Issues regarding the specialist work.
Should negotiations prove unsuccessful, the residential property owner will be notified of what other options they have in claiming their rights.
What are the building defects?
Construction defects are all deficiencies in the building that can originate from poor design, structural, material, or human error. Those defects produce a poor construction outcome that doesn’t align with the construction regulations and contract terms. Those defects can cause damage to a person or a property, so they should be addressed with the highest priority by all affected parties.
According to the Home Building Act 1989, there are two types of defects:
- Non-major defects — a non-major defect that occurs not from normal wear and tear, but from other causes,
- Major defects — a defect in the major element of the building, or the defect can have serious potential consequences (for example defects in building foundations, footings, walls, roofs, columns, fire safety, waterproofing).
Builders’ licensing requirements
According to the Act, all contractors (on projects with material and labour costs that are higher than $5,000) or individuals who perform specialist work in the residential building sector should possess a valid contractor licence. To obtain a licence, contractors, or specialists, must demonstrate the ability and capacity to perform the type of work for which the licence is required. Some criteria for the licence include previous solvency, number of previous complaints and penalties, and insurance claims on previous projects.
Individuals who are not licensed but perform residential building work or specialist work need to be supervised by the holders of the relevant licences.
Do you need a consultation for your building project in NSW?
With more than 20 years of experience in the construction industry, we will be more than happy to help you with our professional advice regarding the mandatory NSW building regulations. Contact us on (02) 9522 6407 or via the contact form.
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