Statutory warranties applying to domestic building work

These warranties are implied by law under the Queensland Building and Construction Commission Act 1991 (‘the Act’) and apply to regulated domestic building contract works over $3,300. The implied warranties aim to protect homeowners from poor workmanship, defective materials, and/or work that does not comply with legal requirements.

Building contractors should be aware of their obligations to ensure compliance with the Act and to manage and mitigate against the risk of any future claims for a breach of these warranties.

What are the statutory warranties? 

Some statutory warranties apply to all domestic building contracts, and require the building contract to warrant that:

• All materials will be good and suitable for their intended purpose, and unless otherwise stated, will be new. 
• The work will be carried out in accordance with all relevant laws and legal requirements. 
• The work will be carried out in an appropriate and skilful way, and with reasonable skill and care.

Additionally, some warranties only apply to certain contracts and require the building contract to warrant that:

• The work will be carried out in accordance with any plans and specifications that form part of the contract.
• Where the contract is for the construction of a detached dwelling to a stage suitable for occupation, the home will be suitable for occupation when the work is finished.
• The work will be carried out with reasonable diligence.
• Provisional sum items or prime cost items have been calculated with reasonable care and skill, having regard to all the information reasonably available when the contract is entered into (including information about the nature and location of the site).

Why are the statutory warranties important?

The warranties are key considerations in the event of a dispute with a homeowner - whether during or after completion of the building works. If the homeowner believes that you have breached the statutory warranties, they may commence legal proceedings against you. Legal proceedings are often stressful and can be expensive so it is recommended that all parties engage a solicitor to assist you through this process.

If legal proceedings are commenced, the homeowner may seek:

• Rectification of the defective building work at the builder’s cost;
• Financial compensation for any losses they have suffered; or
• Enforcement or termination of the contract.

How long does the homeowner have to commence legal proceedings for a breach of statutory warranties?

If a homeowner believes a warranty has been breached, they have six years to commence legal proceedings against the building contractor for structural defects, and one year for non-structural defects.

However, if the breach only becomes apparent within the last six months of the warranty period, the warranty period is extended by a further six months, therefore allowing claims up to six and a half years from the start of the warranty period.

When does the warranty period start?

The warranty period starts from the completion of the work. If the work is not completed, the period starts from:

• If the contract was terminated - the date of termination
• If the contract was not terminated but work stopped – the date work ceased
• If work never commenced and the contract was not terminated - the dat the contract was signed

Defences available to the building contractor  

If a homeowner commences proceedings for a breach of the warranties, there are defences available under the Act. A building contractor may have a defence if they can prove that:

1. The owner had acted contrary to the building contractors written advice; or 
2. The contractor was not provided with reasonable access to rectify the complaint.

How can you protect yourself? 

Written instructions and correspondence are critical. Keeping a record of instructions and discussions with your client, particularly those that were contrary to what was advised, will assist you should a dispute arise.

If you are approached about a potential defect after completion, you should make multiple attempts at contacting the homeowner in relation to returning to site to remedy your workmanship. This should also be in writing.

Frequently asked questions

My client has sold the house to another person. Do these warranties still apply?

Yes. This is because the warranties run with the building, and not with your client – the original homeowner. This means the warranties will continue to apply to the building and every subsequent owner will be entitled to the same warranties as the original homeowner for the duration as outlined above. Should you fail to uphold your warranties, the subsequent owner(s) may commence proceedings against you for breaching these warranties.

Can I include a provision in my contract stating that one or all of the warranties does not apply?

No, the Act strictly prohibits contracting out of the warranties. Any provision in your contract that attempts to exclude or limit these warranties will be unenforceable. Also, the statutory warranties apply regardless of whether they are explicitly stated in your contract.

What should I do if a homeowner approaches me about a potential breach?  

To prevent the matter from escalating, we recommend that you:

1. Promptly acknowledge their concerns and organise a time to investigate their complaint. For example, a site inspection or client meeting.
2. Assess all of the information available to you and determine potential liability/fault.
3. If liability is ambiguous, we recommend engaging an expert to assist you in determining the cause of the issue.
4. Communicate your position in writing, outlining any proposed actions or reasons for disputing the claim. You should clearly advise how you intend to proceed.

What if I disagree with the homeowner’s claim?

Whenever a dispute arises, each party may disagree about who is at fault and whose responsibility it is to resolve the issue. You are always entitled to dispute a homeowners claim.

If you have done your due diligence by inspecting the matter, and determine that you are not at fault, you should advise the homeowner as such (supported with reasons).

However, the homeowner may decide to escalate their dispute and commence further proceedings. Typically, this may mean engaging a lawyer who will demand that you take some specific action. If this does occur, we recommend that you engage a lawyer to assist you in disputing the issue.

To find out more, contact HIA's Contracts and Compliance team

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