The Home Building Compensation fund, in conjunction with the Home Building Regulation 1989 and 2014, require that all builders provide a warranty claim policy that insures their work and protects the consumer. This provides for a homeowner to seek compensation for incomplete or defective work product during the course of the construction and thereafter.
The monetary threshold for the warranty requirement to be enforced requires that a construction project meet, or exceed, $20,000.00 or more in materials and labor costs. If a project does not rise to that level of cost, the builder is not required to purchase a policy for their client. In most instances of new construction, the value of the cost of labor and materials will exceed the threshold and a purchase of warranty insurance will be required of the builder.
Warranty coverage is defined by the Home Building Compensation Fund found in conjunction with Fair Trading. The following threshold requirements must be met with regard to coverage and claims;
- Subsequent to February 1, 2012 the minimum coverage must be $340,000.00
- Coverage for loss for defective work is 6 years from the date of loss for major defects
All other defects are covered for 2 years from the date of loss. For incomplete work the period for claiming the loss is 12 months from the date of the loss, or from the contract commencement date, or the date when the work ceases, whichever is the later.
The extent of the coverage allows for the home builder to recover for any of the following issues;
- Breach of statutory warranty
- Faulty design
- Alternative accommodations costs in the event of delay; including storage and removal
- A lost deposit or the loss of partial payments
- Materials or goods provided in a kit home that prove defective or substandard
- Kit home designs that contain faults or Kit homes that are not supplied as agreed upon
- Non-completion of work
- Legal fees for the cost of recovery under the warranty policy
- Disappearance of the builder
In this instance of a builder disappearing, it is important for the homeowner to report this to the Fair Trading Commission. The Fair Trading offices will assist the homeowner in attempting to locate the builder. If the builder cannot be located the Fair Trade will issue a letter stating the same. This information can then be used as evidence in the claim filing process.
It is important to be aware that warranty coverage is not just for new residence building. There are many categories that qualify for a warranty building policy that fall short of building of an entire residence. If any of these types of construction projects are being done to your dwelling, and the composite cost for materials and labor is in excess of $20,000.00, then you are still entitled to receive a warranty for the work.
These projects include, but are not necessarily limited to, the following examples;
- Non-attached buildings such as; garages, carports, guest homes and storage buildings
- Indoor renovations including; kitchens, bathrooms, laundry areas, additions of living space including additional bedrooms and family living areas
- Recreational areas; swimming pools, patios, landscaping, screened in living areas, tennis courts, Jacuzzi tubs, saunas and steam rooms
- Atriums and conservatories
- Foundational lifting or repair
- Relocation of the home
With regard to renovation construction, there are additional steps a homeowner can take to protect themselves. It is important that the homeowner makes the appropriate contact with their current homeowner’s insurance agent. The purpose of this conversation should be to clarify what other issues are covered during the course of the new construction. It is important for the homeowner to know if any, or all, of the following possible situations is covered by their current policy.
To properly give notice to your homeowner’s insurance company, you should do the following;
- Inform your insurance company, in writing, of the nature and type and time line for the renovation construction
- Ascertain if the contents of your home is covered in the event that anything is damaged or stolen during the course of the construction
- Provide your lender with a current certificate of insurance
- Consider increasing the value of your homeowner’s insurance by the increased value of the home as a result of the new construction
Whether you are building a new residence or doing substantial renovations to your existing home, it is important to confirm that your builder has purchased the correct warranty insurance policy for the value of the work being done. If your builder has not purchased the proper insurance policy, it is imperative that the policy be purchased prior to the beginning of construction. Furthermore, in the event that as the homeowner you run into issues regarding defective or incomplete work, it is extremely important that you seek advice immediately. By doing so you will protect your right to seek relief within the prescribed time limits for claiming the same.
In the event that you, or someone you know, is experiencing issues with homeowner warranty claims or coverage, please contact The law offices of Owen Hodge Lawyers. We are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.