Practical Completion and Handover in QLD Residential Construction

What it is

Practical completion is the point in a Queensland residential build where the work is substantially performed and the home can be handed over to the owner. It is defined inside Schedule 1B of the Queensland Building and Construction Commission Act 1991 and inside the wording of the regulated contract the parties signed. Once practical completion is reached, the builder issues a notice of practical completion, the owner pays the final progress claim and the defects liability period starts.

It is not the same as "all finished" or "every snag closed". A build can be at practical completion with a punch list still open if the items left over are minor and do not stop the owner using the home for the purpose it was built for.

When QLD law treats the build as complete

Under Schedule 1B of the QBCC Act and the standard QBCC Level 1 and Level 2 residential contracts, building work is treated as complete when three things line up.

Substantial performance

The contracted scope is built. Walls, roof, services, fitout, finishes and external works listed in the contract have been carried out. Variations have been priced and signed. Provisional sums have been adjusted. Prime cost items have been supplied at the values agreed.

Only minor defects or omissions remain

A defect or omission is minor if it does not prevent the owner from reasonably occupying and using the home. A missing tap washer is minor. A leaking shower waste is not. A bedroom door that needs adjustment is minor. A bedroom door that will not close is not. The QBCC and QCAT have long held that the test is functional, not cosmetic perfection.

Final inspection issued under the Building Act 1975

The building approval pathway has to be closed. For most QLD homes that means the private building approver issues a Form 21 final inspection. A Form 21 cannot be issued unless every required stage inspection has been signed off, the plumbing final has been done by the Form 4 or Form 9 pathway and any pool, energy efficiency or termite management documents are on file.

If a Form 21 is missing, the home is not legally complete even if the builder has finished work on site.

What handover should include

Handover is the day the builder gives the owner control of the home. A clean handover in QLD usually includes:

• Notice of practical completion in writing with the date
• Final progress claim invoice
• Form 21 final inspection
• Form 16s for inspections carried out by competent persons (waterproofing, termite, structural)
• Plumbing compliance documentation (Form 4 or Form 9)
• Electrical safety paperwork covering the connected work
• Manufacturer warranties for installed equipment such as the hot water unit, oven, cooktop, rangehood, air conditioning and alarm
• Operation and maintenance information for those items
• Keys, remotes, alarm codes and any letterbox key
• The QBCC home warranty insurance notice if not already provided

Walk the home with the owner and record a defects list. Date it. Sign it. Give the owner a copy. That list becomes the start of the defects liability period.

Defects liability period in QLD

The defects liability period on a QBCC residential contract is typically 12 months from practical completion for general defects. Statutory warranties under Schedule 1B run longer. Structural defects sit under a six year warranty period and non structural defects sit under a one year warranty period from the day practical completion is reached.

During the defects liability period the builder has to attend and fix items that fall inside the warranty. The owner has to give the builder reasonable access. If a dispute starts, the QBCC early dispute resolution pathway is the first stop before QCAT.

Common reasons handover stalls

Most QLD handovers do not stall on the building work. They stall on the paperwork.

• Form 21 cannot be issued because a stage inspection was skipped
• Plumbing compliance has not been lodged with the local council
• The energy efficiency report does not match the as built window schedule
• Termite management notice has not been fixed to the meter box
• The owner has paid the second last claim and is refusing the final until a cosmetic list is cleared

Builders who pre check the document pack two weeks before practical completion avoid almost all of these.

Who signs off practical completion

The builder issues the notice. The owner can dispute the date inside the period set by the contract, usually five business days. If the owner does nothing inside that period, practical completion is taken to have been reached on the date in the notice. If the owner disputes, the QBCC dispute pathway or QCAT decides.

The building approver, not the builder, issues the Form 21. The builder cannot self issue the final inspection.

Practical takeaway for QLD builders

Treat practical completion as a paperwork milestone, not a clean up milestone. The trades are usually ahead of the documents. Book the final building inspection early. Chase the plumbing final and the Form 16s. Print the warranty pack. Hand over in person, not by email. Record the defects list on the day. That is the shortest path from last trade on site to final payment cleared.