The NSW Home Building Act is changing

Recent reforms to the NSW Home Building Act may be of interest to many property industry professionals and home owners in NSW. The first round of changes took effect on 25 October 2011, while a second round is due to commence on 1 February 2012.

The changes that took effect on 25 October 2011 were:

  • home owners may be able to make delayed home warranty insurance claims outside the insured period if certain conditions are met
  • home owners must notify the insurer in writing if they become aware of any defects or incomplete work that may be subject to future claims
  • for home warranty insurances dated before 1 July 2010, all claims must be lodged within 10 years of the work being completed
  • better definitions of the term ‘developer’ and job ‘completion’
  • limiting the use of proportionate liability to ensure builders, not subcontractors, are fully responsible for compensating home owners for defective residential building work.

The changes that will take effect on 1 February 2012 include:

  • changing the statutory warranty periods to six years for structural defects and two years for non-structural defects (which matches the Home Warranty Insurance warranty periods). The current statutory time limits are seven years for both structural and non-structural defects
  • all residential building work worth more than $20,000 must be covered by home warranty insurance. The current threshold is $12,000
  • introducing a new simpler requirement for written contracts for ‘small jobs’ worth between $1,001 and $5,000. A small job contract must be in writing, dated and signed on behalf of both of the parties and contain certain minimum information. Full home building contracts will only be required for work over $5,000
  • the minimum level of home warranty insurance cover is increased from  $300,000 to $340,000
  • strengthening the definition of parties ‘related to’ a builder or developer to prevent abuse of the home warranty insurance scheme.

For more detailed information about these reforms, go to the Home Building Amendment Act 2011 page on Fair Trading’s website.

Source: Fair Trading Property Industry news

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