Current at: 24 February 2010
QC1 and practical completion (Qld)
Practical completion can be a confusing time for both the owner and builder when the correct procedures outlined in the contract are not followed. Owners have a perception that every single item will be completed in accordance with the contract. However, for a number of reasons outside the builder’s and owner’s control the home may be practically complete for the purpose of handover and payment and not be absolutely complete.
Definition of Practical Completion (Schedule 2, page V)
Under the QC1, QC2 and QC3 Contract, ‘Practical Completion’ means the stage when the works:
| (a) |
have been completed in accordance with the contract and all relevant statutory requirements apart from minor defects or omissions; and |
| (b) |
are reasonably suitable for habitation. This definition is also stated in section 67 of the Domestic Building Contracts Act 2000. The reason the definition of practical completion excludes minor defects and omission is to enable the owner to take possession of the home while retaining rights to have all work completed. |
The Practical Completion Process
| 1. |
The owner may request from time to time a non-binding estimate of when practical completion will occur. The builder must give the owner the non-binding estimate. |
| 2. |
When practical completion is reached a builder must give the owner a Notice of Practical Completions and a Final Claim. |
| 3. |
If the owner agrees that Practical Completion has been reached , the owner must pay the Final Claim within 5 days after the builder has given the owner a defects document that:
- lists minor defect and omissions that the builder and owner agree;
- states when the builder will rectify the defect or omission;
- lists the owner’s claimed defect the Builder does not agree with;
- the builder has signed
- the builder has made a reasonable effort to have the owner sign.
|
Good contract administration practice may be to send the owner a Final Claim and Notice of Practical Completion 5 days before handover. Practical completion is not the same as handover.
If the owner does not agree that Practical Completion has been reached
| 1. |
The owner must give written notice why the works are not at practical completion within 5 days of receiving the builder’s Notice of Practical Completion; and |
| 2. |
The owner’s requirements for reaching practical completion; and |
| 3. |
State the provision under the contract that relates to each requirement in that notice. |
Builder Response
| 1. |
On receiving the owner’s notice the builder must attend to those items the builder believes are necessary to reach Practical Completion. . |
| 2. |
On completion of that work the builder will give the owner a second Notice of Practical Completion. |
Finally, if the owner continues to disputes that the works have reached practical completion, then the parties may make an application to the Queensland Civil and Administrative Tribunal (QCAT).
For more information call the HIA member Hotline on 1300 650 620.
DISCLAIMER – the above is intended to provide general information in summary form. The contents do not constitute specific adive and should not be relied upon as such. Formal specific advice should be sought by members with respect to particular matters before taking action.