Home Building Tips for Builders in NSW
Sub-Contractors and
Defective Building Work

Where a builder performs defective building work for a client, then it is well known that the law makes the builder liable to the client for the rectification of that work, or paying to the client the cost of rectification.

However, what happens if a sub-contractor engaged directly by the builder is solely responsible for the defective building work?

The Home Building Act provides that the Statutory Warranties are given by the “holder of a contractor licence” and are implied into every contract to perform ‘home building work’.  Based on this, because a subcontractor is the ‘holder of a contractor licence’, it is assumed that this also includes all subcontracts between a builder and a subcontractor, and not just contracts between the builder and the home owner. 

The fact that subcontractors performing ‘home building work’ are required to hold a licence demonstrates that subcontractors too have legal obligations in relation to defective work that they perform.

Even if a subcontractor is required by law to hold a licence, but the subcontractor does not hold a licence, the subcontractor will still be liable for defective work that it performs.

Where a sub-contractor engaged directly by the builder is solely responsible for defective building work, and the home owner naturally takes action against the builder, the builder will be able to also take action against the subcontractor for the amount that the home owner is claiming.

However, builders should note that as the principal contractor, they have a legal obligation to supervise all work that is being performed on site.  If the builder has supervised all of the work performed on site and has done all it can to ensure that the works performed are ‘defect free’, and the subcontractor nevertheless performs building works that are defective, it is likely that the builder will be successful in claiming the full amount against the subcontractor, being the amount that the home owner is claiming against the builder.