Statutory warranties

Background

The Residential Building Work Contracts and Dispute Resolution Act 2016 (‘the Act’) requires builders to provide warranties on all building work they perform. These are called statutory warranties and they must be included in all residential building contracts. 

What are the statutory warranties?

Builders are to provide the following warranties to their clients in relation to the work completed under their residential building contract:

• All materials supplied will be suitable for the purpose for which they are used and will be of good quality.
• All materials supplied are new, unless stated in the contract.
• The work will be performed in accordance with all relevant laws and legal requirements.
• The work will be carried out appropriately and with reasonable care and skill.
• Work will be performed in accordance with all plans and specifications as set out in the contract.
• The dwelling will be suitable for occupation (where applicable).
• The work will be performed with reasonable diligence.
• Any provisional sums or prime cost items are calculated with care and skill.  Builders must take into account all information available at the time of entering the contract. 

How long do the statutory warranties last?

The statutory warranties last for six years from the date of practical completion in the case of a permit or notifiable work.  If the property is sold, the new owners get the benefit of the warranties until the end of the original 6 year period. 

Owners can commence breach of warranty claims against their builders at any point within that six year period. These claims can also be made against owner builders.

What do the warranties mean for owners (including subsequent owners)?

The statutory warranties provide grounds for which an owner may pursue a builder for breach of one or multiple statutory warranties.  If an owner’s claim is successful they may be entitled to damages to compensate for the cost of rectifying the defective building work.  

Builders must be aware of their obligations when they are notified of defective building work. 

What about the manufacturer’s warranty on materials and supplies? 

Suppliers or manufacturers may provide a warranty on certain products for a limited amount of time promising that if the product fails they will provide a repair or replacement. 

These warranties are separate to the statutory warranties that apply to building service providers for the residential building work they perform. The statutory warranties apply whether a manufacturer or supply warranty exists or not. If a defect arises outside of the manufacturer/supplier warranty period, a builder may still be required to fix it. 

It is always a good idea to choose products that have reasonable warranties as this may assist you where the alleged defect arises during the manufacturer/supplier warranty period. 

What if the client specified the building product? 

The Act provides some flexibility in relation to the statutory warranty of suitability of materials. 

Where an owner has elected that the contract be administered by an agent such as a building designer, architect or engineer and the builder is directed to use specified products by the engineer, the builder may not be held responsible for the suitability of those materials. 

A builder also may not be held responsible for the suitability of materials where the owner has nominated building materials and:

• There are no reasonable grounds for the builder to not use them; or
• There are reasonable grounds for not using the materials and the owner insists on using them despite written advice explaining why they should not be used from the builder. 

Despite the flexibility in relation to suitability of products, builders should always work with products and supplies they are familiar with. It is important to remember that even if a client or their representative has specified an item, the builder using or installing the product or supply may still be held liable for incorrect installation or interfering with the item.

Can a claim be brought against a builder once the 6 year period ends?

A claim in relation to the statutory warranties cannot be brought against a builder once the 6 year period ends. However homeowners may be able to commence an action against the builder within a period of 10 years from when the occupancy permit if the owner has suffered loss from defective building work.  This is a separate cause of action under the Building Act 2016 (TAS).