The Home Building Amendment Act 2011 is now in force. It amends the Home Building Act 1989, the Home Building Regulation 2004 and the Civil Liability Act 2002.
The Overview of the Bill, before it was passed by Parliament, stated that the objects of the Bill (amongst others) are:
- To expand the list of persons who are not required to be beneficiaries under a contract of home warranty insurance because they are "related" to a developer or contractor to include related entities and related parties under the Corporations Act 2001,
- To provide a comprehensive scheme for determining when residential building work was completed
- To align the statutory warranty periods for home building work with those for home warranty insurance (being six years for structural defects and two years for other defects)
- To clarify the application of the Act to developers so as to include as a developer the owner of land on which a developer does residential building work,
- To raise the threshold for the requirements for written home building contracts from $1,000.00 to $5,000.00 and to introduce a written "short form" contract requirement for work between $1,000.00 and $5,000.00,
- To raise the threshold for the requirement for home warranty insurance, and a five day cooling off period, for residential building work, from $12,000.00 to $20,000.00.
- To reduce the $500.00 excess for home warranty insurance claims to $250.00.
- To increase the minimum home warranty insurance cover from $300,000.00 to $340,000.00,
- To exempt a liability arising from a breach of statutory warranty under the Act from proportionate liability under the Civil Liability Act 2002.
Some changes came into effect on 25 October 2011, and these include:
- Home owners may, in various circumstances that are set out in the Act, be able to make delayed home warranty insurance claims outside the insured period if certain conditions are met
- Home owners must notify the insurer in writing if they become aware of any defects or incomplete work that may be subject to future claims
- For home warranty insurances dated before 1 July 2010, all claims must be lodged within 10 years of the work being completed
- Limitations on the use of proportionate liability to ensure that builders, not sub-contractors, are fully responsible for compensating home owners for defective residential building work.
Other changes will come into effect on 1 February 2012, including:
- Changing the statutory warranty periods to six years for structural defects and two years for non-structural defects (which is in line with the Home Warranty Insurance warranty periods). The current statutory time limits are seven years for both structural and non-structural defects
- The threshold above which residential building work must be covered by Home Warranty Insurance is raised from $12,000.00 to $20,000.00
- The introduction of a new simpler requirement for written contracts for "small jobs" worth between $1,001.00 and $5,000.00. A small job contract must be in writing, dated and signed on behalf of both of the parties and contain certain minimum information. Full Home Building Contracts will only be required for work over $5,000.00
- The minimum level of Home Warranty Insurance cover is increased from $300,000.00 to $340,000.00
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.