Building a New Home? Facts About Your Protection
The Domestic Building Contract Act is intended to protect consumers from the "shonky" home builder. Anyone entering into a building contract, whether owner or builder, and those involved in the sale of residential developments need to be thoroughly familiar with this important piece of legislation.
Application of the Act
Statutory warranties
Builders' Warranty Insurance
Contractors
Owners/body corporate
Valuers and real estate agents
Application of the Act
Any residential building work in Queensland done by contractors must comply with the Act. The Act covers a wide range of building works, from minor maintenance and renovations to the construction and sale of multi-level residential buildings. It also covers a range of tasks incidental to building dwellings, such as fences, gates, retaining walls, tennis courts, garages, driveways, paths and agricultural drainage.
The Act assumes that those who enter into residential building contracts are likely to be mums and dads who rely heavily on the knowledge and experience of the contractor performing residential building work.
The Act requires that contracts to perform residential building work must be in writing. It also sets out the form of domestic building contracts. The Building Services Authority administers the Act in Queensland.
Statutory Warranties
A system of statutory warranties imposed by the Act is to ensure that the work performed under a residential building contract:
Is carried out in a proper and workmanlike manner;
Is in compliance with all relevant laws; and
Produces a dwelling that is reasonably fit for occupation.
The application of statutory warranties means that a contractor?s guarantee that the work is performed satisfactorily, and has a longer life than the usual defects liability period attached to traditional building contracts.
Builders' Warranty Insurance
The Act makes it compulsory for all contractors to have Builders' Warranty Insurance where the residential building contract is over certain monetary value. The Act prescribes what an insurer must cover under its Builders' Warranty Insurance and what an insurer is entitled to exclude.
The duration of cover is linked to the period of currency of the statutory warranties
Contractors
Contractors must be careful to meet the specific statutory and operational requirements in force. Failure to strictly comply with the provisions can lead to the imposition of monetary penalties, possible licensing restrictions and perhaps even the inability to recover monies for work performed.
Owners/Body Corporate
The statutory warranties provide a key protection mechanism to ensure the satisfactory completion and/or rectification of defective work for a substantial time period. The ability to pursue any breach of warranty for the prescribed period and the inability for a builder to purport to restrict or remove those rights gives greater protection for the consumer.
Valuers and Real Estate Agents
The issues that might arise under the legislation may ultimately affect a dwelling's value. For example if a purchaser is unable to attach a requisite certificate of insurance to a contract for sale this may provide a purchaser with an opportunity to rescind the contract or to negotiate a lower sale price. Alternatively, financiers may raise concerns regarding a property's value where a valid Certificate of Insurance does not exist.
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