The Home Building Amendment Act 2014 was passed by the
NSW Parliament on 28 May 2014. The Act contains numerous amendments
to the Home Building Act 1989
("HBA"). NSW Fair Trading has announced
that the changes to the HBA in relation to the statutory warranties
scheme will commence from 15 January 2015. As well, new regulations
(the Home Building Act Regulations 2014) have been
proposed and are expected to commence at the same time as the
amendments to the HBA.
The amendments to the HBA will abolish the current distinction
between structural and non-structural defects. Of particular
significance is the introduction of the concept of a "major
defect". Under the amendments, a "major defect"
would require a building to be uninhabitable or under threat of
collapse. The six year statutory warranty period will only apply in
the case of "major defects". For all other defects, the
statutory warranty period will be limited to two years.
A "major defect" is defined as
a defect in a major element of a 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 National Construction Code (or any
combination of these), and that causes, or is likely to
the inability to inhabit or use the building (or part of
the building) for its intended purpose, or
the destruction of the building or any part of the
a threat of collapse of the building or any part of the
a defect of a kind that is prescribed by the regulations as a
A "major element of a building" is
an internal or external load-bearing component of a
building that is essential to the stability of the building, or any
part of it (including but not limited to foundations and footings,
floors, walls, roofs, columns and beams), or
a fire safety system, or
any other element that is prescribed by the regulations as
a major element of a building.
As the amendments to the HBA currently stand, the definition of
a "major defect" will omit serious structural defects
such as defective waterproofing and fire safety issues that do not
render the building (or part thereof) uninhabitable or threaten its
The statutory warranty period provided under the HBA begins to
run from the date on which the works are completed. The amendments
provide that the date from when the statutory warranty period
begins to run in respect of strata schemes is the date on which an
occupation certificate is issued, authorising the use and
occupation of the entire building. The date of completion will
generally be the date of issue of the occupation certificate.
The defences available to a builder for a breach of the
statutory warranties contained in the HBA will be broadened under
the amendments to the HBA. A builder may be able to defend a claim
for a breach of a statutory warranty on the basis that the defects
arise from their reasonable reliance on written instructions from
an independent professional (for example, an architect or an
engineer) acting for the party who contracted the work.
NSW Fair Trading has announced that the changes to the HBA will
commence from 15 January 2015, however the proposed changes to the
HBA will not apply to claims where proceedings have been commenced
before the date the changes commence.
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.
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