Building Defects: How and When to Make a Claim

16 Aug 2022

By David Marsh

Building Defects – How and When to Make a Claim

Unfortunately, building and defects go hand in hand. Whether you are the owner of the building built or a subsequent purchaser – you will face defects. So how do you deal with them, what are your options and what are the barriers to recovery?

Where you engaged the builder, your best option for full recovery will almost always be under the building contract itself; although, in certain circumstances, you can make claims under the Building Services (Complaint Resolution and Administration) Act 2011 to the Building Commissioner (Building Complaint), or through the Courts for negligence and even breaches of consumer legislation, primarily the Australian Consumer Law (ACL).

Lodging A Building Complaint

As a general rule, especially for homeowners, the most cost-effective and user-friendly option would be to make a Building Complaint. The Building Commissioner can deal with the complaint, send it to conciliation or send it to the State Administrative Tribunal (SAT) – all of which are cost-effective solutions.

The SAT in particular utilises experienced builders as part of this process and has a group of well-trained mediators who have an excellent strike-rate in resolving building disputes. The SAT is also a good forum for unrepresented parties.

Contract Claims

While a claim under your building contract is most likely to yield the best outcome under Australian law, they generally have to be run in Courts or, for many home-build contracts, by arbitration. These can be more expensive routes (arbitration generally more so) and almost certainly will require legal assistance. However, for example, if you want the builder to provide you with something that you specifically included in the contract, then your best option might be a Contract Claim.

With respect to negligence and claims under the ACL, these again must be brought in Court (or arbitration) and carry more uncertainty than contract claims or Building Complaints. However, they may, for example, be used to bring a claim against someone who you did not have a contract with but the builder did, like an architect, subcontractor or consultant.

For subsequent owners, the only building defect claims possibly available may be a Building Complaint or a Negligence Claim. It is possible to get contract claims assigned to you but this is a case-by-case matter and not something that regularly happens – especially in the home building or residential apartment market.

Latent Defects

Irrespective of which avenue you might choose, one of the most frustrating problems for building owners is that many building defects do not materialise until well after the building is completed. This is true for all kinds of building defects, be they home building defects or commercial building defects. These types of defects are known as Latent Defects.

The problem then is that the question as to whether the limitation period has expired or not will determine which avenue might be available, if any. Generally, most avenues to claim expire about six years after the building is completed. However, in some limited cases for negligence and ACL claims you might have longer than six years.

Latent defects can even cause problems when selling a home if they are structural defects and are picked up by the purchaser’s building inspector. While the standard REIWA terms for the sale and purchase of property provide for this circumstance, it can be a nasty surprise for a seller and lead to some difficult decisions – especially where claims against the builder are no longer available because they are time-barred.

The Importance Of Timing

A well organised owner might schedule an inspection of the buildings at about five and half years after completion. This should leave enough time for the owner to take action if latent defects are discovered during the inspection. While many home builders will carry out their own inspection prior to the 6 year mark, it remains in the owner’s interest to have an independent inspection undertaken. Indeed, rather than speaking to a lawyer first, if an issue arises, it is usually in the owner’s interest to speak to an expert.

Want To Know More About Building Defects?

If you have any questions regarding building defects, contract claims or our Construct Law services, please do not hesitate to contact David Marsh on 9282 5888.

We have extensive experience in a vast array of defective workmanship and design from major energy and resources projects, to residential strata developments and home building defects.