NSW waterproofing rectification claims process for homeowners

What it is

A waterproofing rectification claim in NSW is a homeowner action against the builder under the statutory warranties in section 18B of the Home Building Act 1989 (NSW). The warranties apply automatically to any residential building work where the contract price was over the threshold. They cannot be contracted out of. They run with the property so a subsequent owner can also claim within the relevant period.

The warranties cover all residential work including waterproofing of wet areas roofs balconies basement tanking and below ground membranes. Where a leak appears inside the warranty period the owner has a right to rectification at the builder cost or to compensation calculated on rectification cost.

The two warranty periods that matter

Section 18E of the Home Building Act 1989 sets the limitation periods for claims under section 18B.

Six years for major defects

A major defect is defined in section 18E(4). The definition has changed over time. From 1 February 2012 onwards a major defect means a defect in a major element of the building that is attributable to defective design defective or faulty workmanship defective materials or a failure to comply with the structural performance requirements of the NCC and that causes (or is likely to cause) the inability to inhabit or use part of the building for its intended purpose the destruction of the building or part of it or a threat of collapse.

Waterproofing failures in showers bathrooms balconies and roofs that cause inhabitability of a room (loss of use) regularly fall within the major defect definition. The six year window runs from the completion date of the work not from the date of discovery.

Two years for everything else

All other warranty breaches sit under section 18E(1)(b) with a two year window from completion. Minor cosmetic waterproofing issues like a hairline crack in a balcony tile grout that has not caused water ingress would typically fall here.

The three step claim path

Step one: written notice to the builder

The owner gives the builder written notice of the defect with photos and a request for rectification within a reasonable time. Most building contracts require this step first. Even where the contract is silent the Civil and Administrative Tribunal expects the owner to have given the builder a chance to fix the defect before tribunal action.

Step two: NSW Fair Trading complaint

If the builder does not rectify the owner lodges a complaint with NSW Fair Trading. Fair Trading runs a building inspection scheme where a fair trading building inspector attends the site and issues a Rectification Order if the inspector finds a breach of warranty. A Rectification Order is binding on the builder. Failure to comply with a Rectification Order is a breach of the builder license and can be referred to the licensing branch.

Step three: NCAT application

If the builder still refuses or if the Fair Trading process does not produce a Rectification Order the owner applies to the NSW Civil and Administrative Tribunal Consumer and Commercial Division. The Tribunal has jurisdiction up to $500000 for building claims. The application is a Home Building Application. Filing fees are modest. The Tribunal hears the matter and can order rectification compensation or both.

When the builder is gone: HBCF

Where the builder has died disappeared become insolvent or had their license suspended for failing to do work the Home Building Compensation Fund (HBCF) administered by icare comes into play. HBCF was historically Home Warranty Insurance. The HBCF claim has its own process and deadlines. Cover is up to $340000 per dwelling. The claim must be made within the same warranty period that applies to the underlying defect. Six years for major defects two years for minor.

What evidence wins a waterproofing claim

NCAT decisions show the same pattern. Owner claims succeed where:

• Photos of the defect show the leak path or water staining clearly.
• An independent building consultant report identifies the cause as a breach of AS 3740 (wet areas) or AS 4654 (external waterproofing).
• The report quantifies rectification on a like for like basis.
• Communication with the builder showing requests to rectify is in writing.

Claims fail or are reduced where the owner has carried out rectification without giving the builder the opportunity to inspect and quote first or where the owner cannot produce a consultant report tying the defect to a workmanship or design breach.

Time bar trap

The six year and two year windows are hard cut offs. They run from completion of the work not from the date the leak appeared. A leak that shows up in year five of a major defect is recoverable. A leak that shows up in year seven is statute barred even where the defect was caused by the original work. Owners who delay the claim past the warranty window have no statutory remedy left and must rely on general contract law or negligence which is a steeper hill.