I have dealt with numerous builders and developers over the
years who have had their building company renovate a residential
property for their development company. The development company has
then entered into a contract for sale of the renovated property
with a buyer. The buyer later contacts the building company and the
development company in relation to defects in the property and asks
them to fix them.
The builder and developer (before they come to see me) initially
refuse to go back to the property to fix anything and say to the
buyer "the property was sold to you in the state that it was
in. Under the contract of sale the rule "buyer beware"
applies, that is, you as the buyer were required to make your own
inquiries in relation to the property and the state of the building
works. I also had a special condition put into the contract that
you rely on your own inquiries in relation to the condition of the
premises and the building works on it."
Unfortunately, this argument cannot work for the building
company as the building company (regardless of what the contract
between the development company and the buyer says) is still bound
by the statutory warranties under the Home Building Act. Statutory
warranties are promises which include that:
the work was performed in a proper and workmanlike manner.
all materials supplied are good and suitable for the purpose
for which they are used and that, unless otherwise stated, the
materials were new when used.
the work was done in accordance with and complied with the law
in place at the time of building.
the work has resulted in a dwelling that is reasonably fit for
the work and any materials used in doing the work will be
reasonably fit for the specified purpose or result, if the person
for whom the work is done expressly makes the purpose or result
known to the contractor, so as to show that the owner relies on the
contractors skill and judgment.
The builder/developer came to see me once they received an
application against them from the NSW Civil and Administrative
Tribunal seeking orders that they pay the buyer a sum of $110,000
for the cost of having another builder rectify the works.
I acted for the builder and negotiated a settlement of the
matter which involved a small payment to the owner. With the
assistance of some building and engineering experts I was able to
argue that while some of the defects with the property were as a
result of the renovation works carried out by the builder some of
the other problems had nothing to do with the work carried out by
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