Practical Completion and Handover in Tasmanian Building Contracts

What it is

Practical completion is the hinge of a Tasmanian residential build. It fixes when the final claim falls due, when the owner takes the keys and when the clock starts on the builder's warranty exposure. Get it wrong and every downstream deadline moves with it.

Tasmania defines practical completion in the statute. That needs saying, because the common assumption is that it is purely a creature of contract. It is not.

The statutory definition

Section 4 of the Residential Building Work Contracts and Dispute Resolution Act 2016 (Tas) defines the date of practical completion as the day by which three things are true.

First, the work is completed in compliance with the contract, including all plans and specifications and all statutory requirements applying to the work. Second, it is completed without any defects or omissions other than minor defects or minor omissions that will not unreasonably affect occupation. Third, if the owner claims there are minor defects or minor omissions, the builder has given the owner a defects document for them.

That third limb is the one builders miss. Where the owner raises a minor defects list, practical completion has not occurred until the defects document is handed over. A builder cannot reach practical completion by declaring it.

Section 14(1)(g) requires the contract to specify the date of practical completion or the method for estimating it. The Determination on Mandatory Contract Provisions adds that the contract must list the circumstances for claiming an extension of time and state the liquidated damages to be added or deducted for unreasonable delay.

The notice and the final claim

Section 40 requires a commencement notice within 10 business days of work starting, stating the estimated date of practical completion. Section 43 then requires the builder, within 10 business days after the date of practical completion, to give a notice of practical completion to the owner and to the building surveyor where a certificate of likely compliance was required. Both carry penalties.

CBOS treats the notice date as the date final payments fall due. The final claim is still constrained by section 42: no amount other than the deposit may be demanded unless it is directly related to the progress of the work at the building site.

Withholding for defects

There is no express statutory right for an owner to withhold the final payment against defects. That right, if any, comes from the contract. What the Act gives instead is stronger in one respect: if the owner claims minor defects and no defects document is produced, practical completion has not happened, so the final claim is not triggered at all.

The defects document and the six months

Section 44 governs what follows. Where on or after the completion day the owner claims minor defects or omissions and the builder agrees they exist, the builder must give the owner a defects document as soon as practicable. Section 4 requires that document to list the agreed defects, state when they will be remedied, list the defects the owner claims but the builder disputes and be signed by the builder.

Section 44(3) then requires the builder to take all reasonable steps to correct the defect as soon as practicable and in any case within 6 months after giving the defects document. Note where that period runs from. It runs from the defects document, not from practical completion.

This matters because Tasmania has no statutory defects liability period. The phrase is contractual. The statutory analogue is the section 44(3) six month correction duty, and it is narrower: it attaches only to defects recorded in a defects document. Section 44(4) gives the builder a defence where the owner does not provide the access reasonably required to do the work.

The limitation position

Section 32(1) requires proceedings for breach of a statutory warranty to be commenced within 6 years after the date of practical completion. Section 32(3) supplies a cascade where that date cannot be established by reasonable diligence: the date a completion certificate issues under the Building Act 2016, failing that the date an occupancy permit issues, failing that 2 years after the building permit issued, failing that 2 years after the building surveyor gave authorisation.

The same 6 year period gates the dispute pathway. Section 47(1A) bars a notice of dispute lodged with the Director of Building Control more than 6 years after the date of practical completion.