Statutory warranties under the Home Building Act 1989 (NSW)

What it is

The Home Building Act 1989 (NSW) implies a fixed set of statutory warranties into every contract to do residential building work in NSW. The builder gives these warranties by operation of law, whether or not the contract writes them down. They sit on top of whatever the parties agree. A clause that tries to water them down has no effect. They apply to every residential building contract in NSW regardless of what the contract itself says.

Why it matters

For a homeowner, these warranties are the backbone of the right to have defective work put right. For a builder, they set a baseline that applies to every residential job, so it pays to understand them before signing. Because the warranties run with the property, the builder's exposure is not limited to the original client. A later owner can enforce them too, within the same time limits.

How it works in NSW

Section 18B of the Act implies the following statutory warranties into a contract to do residential building work. The builder warrants that:

• the work will be done with due care and skill
• the work will be done in accordance with the plans and specifications set out in the contract
• all materials supplied will be good, suitable for their purpose and new unless the contract states otherwise
• the work will comply with the Act and any other applicable law
• the work will be done with due diligence and within the time stated in the contract, or within a reasonable time if no time is stated
• where the work creates a new dwelling, the result will be reasonably fit to live in
• the work and any materials used will be reasonably fit for the purpose or result the owner made known

These warranties do not stay with the first owner alone. Under section 18D, a successor in title (a later owner of the property) has the same rights as the original owner for the rest of the warranty period. A non-contracting owner, such as an owner who did not personally sign the building contract, is also covered.

Section 18E sets the time limits for acting on a breach. A claim must be started within six years where the breach results in a major defect, or within two years in any other case. Both periods run from completion of the work. A major defect is a defect in a major element of the building, such as a load-bearing component essential to its stability, a fire safety system, or waterproofing. To be major, the defect must stem from defective design, faulty workmanship, defective materials, or a failure to meet the structural performance requirements of the National Construction Code. It must also make the building or part of it unable to be lived in or used for its purpose, or cause or threaten collapse.

Section 18G makes the warranties impossible to sign away. Any clause in a contract or other document that tries to restrict or remove a person's rights under a statutory warranty is void. A builder cannot ask an owner to waive these rights. A signed waiver carries no weight.

Common pitfalls

• Believing the contract overrides the Act. It does not. Section 18G voids any clause that tries to cut back the warranties.
• Forgetting later owners. A purchaser who buys the home within the warranty period inherits the right to claim, so the builder's risk continues past settlement.
• Treating all defects the same. The six-year cover applies only to major defects. Other defects fall under the two-year period.
• Counting from the wrong date. The limitation periods run from completion of the work, not from when a defect first appears.
• Assuming verbal assurances replace the warranties. The statutory warranties apply by law on every residential job, regardless of what was promised on site.

For the contractual side of this topic, see the related entry on the defects liability period in NSW.