Home Building Tips For Builders In NSW
NEW Changes to the Home Building Act

The following changes to the Home Building Act come into effect
from 1 April 2009

Requirement to notify the Office of Fair Trading of Court Order

From 1 April 2009, if a builder is ordered by a COURT to pay a client an amount of money as a result of a building claim made by the client, then within seven (7) days of that order being made, the builder must notify the NSW Office of Fair Trading in writing of the following details:

1. the amount of money ordered to be paid
   
   
2. the date on which such money is due to be paid according to the court order
   
   
3. the name of the person to whom the money is owed (the client).

Automatic Suspension of Licence

From 1 April 2009, a builder’s licence will automatically be suspended:

1. if a court or the tribunal orders the builder to pay a client an amount of money as a result of a building claim made by the client; and
   
   
2. the builder fails to comply with that order (i.e fails to pay the client the amount of money by the due date).

In the above situation, the builder’s licence will be automatically suspended 28 days after the date that the amount of money was required to be paid to the client.

When can an insurance claim be accepted?

Usually, a Home Warranty Insurance a claim can only be made by the client under that policy if the builder:

1. has died; or
   
   
2. is missing; or
   
   
3. is insolvent.

In all other cases, a client cannot make an insurance claim, and they can only take action directly against the builder in a court or tribunal.

However, from 1 April 2009, if the builder has its licence automatically suspended because a court or the tribunal ordered the builder to pay a client an amount of money as a result of a building claim made by the client (see above), and the builder failed to comply with that order (i.e failed to pay the client the amount of money by the due date), then the client can make a claim under the home warranty insurance policy for the amount of money that the builder was order to pay to the client.

Statutory Warranties

If a person entitled to the benefit of a statutory warranty (whether it be the client or a future owner of the land) has enforced the warranty in relation to a particular defect, that person may only enforce the same warranty in relation to another defect (“the other defect”) if:

1. the other defect existed when the work to which the warranty relates was finished; and
   
   
2. the person did not know, and could not reasonably be expected to have known, of the existence of the other defect when the warranty was previously enforced; and
   
   
3. the action to enforce the warranty for the other defect is made within the seven (7) year period.

The above changes all come into effect from 1 April 2009.

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