Home Building Tips for Builders in NSW
Statutory Warranties and
Building Claims

Statutory Warranties:

The statutory warranties are automatic legal promises made by the builder to the client covering the following (the important parts of each warranty have been highlighted):

1. that the work will be carried out in a proper and workmanlike manner, and in accordance with the contract (including the plans and specifications)
   
   
2. that all materials supplied by the builder will be good and suitable for the purpose for which they are used, and that those materials will be new (unless the contract states otherwise)
   
   
3. that the work will be done in accordance with the law
   
   
4. that the work will be done with due diligence and within the time stipulated in the contract (or if no time is stipulated, within a reasonable time)
   
   
5. that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result in a dwelling that is reasonably fit for occupation as a dwelling (to the extent of the work conducted)
   
   
6. that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the client expressly makes known to the builder or the builder’s representative, the particular purpose for which the work is required or the result that the client desires the work to achieve, so as to show that the client relies on the builder’s skill and judgment
   

The statutory warranties (all six of them) will always be part of your contract, and cannot be excluded in any way.  Note that these legal promises will last for SEVEN (7) years after the completion of the building works, and these legal promises also protect all later owners of the property, up to the end of the seven year period.

If a client or future owner who is entitled to the benefit of a statutory warranty has enforced a 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 building work 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 legal action to enforce the warranty for the other defect is made within the seven year period.

What is a building claim?

A “building claim” means a claim for:

1. the payment of a certain amount of money, or
2. the supply of specified services, or
3. relief from payment of a specified sum of money, or
4. the delivery, return or replacement of specified goods or goods of a specified description, or
5. a combination of two or more of the above, that arises from a supply of building goods or services. 

“Building goods or services” means goods or services supplied in connection with the carrying out of ‘residential building work’.  This definition covers a much wider range of things than the statutory warranties, which only cover the above six (6) warranties.

A building claim in relation to building goods or services must be made within THREE (3) years.

Summary

If something goes wrong sometime after the building works are complete, the builder should ask himself:

Does the problem (defect in a product, or defects in certain works) fit within one of the six statutory warranties?

YES – the client may make a claim for a breach of a statutory warranty within seven (7) years

NO - the client may only make a building claim within three (3) years