15 January 2015 saw the commencement of the newest round of amendments to the Home Building Act 1989, narrowing the scope of claims that can be made. This is excellent news for builders, but not such good news for home owners.
Previously, a homeowner could bring a claim against the builder any time during the 6 years following construction if the building contained a ‘structural defect’, defined broadly as a defect to a structural element of the building that was likely to prevent the practical use of any part of the building or cause physical damage to any part of the building.
Now, the concept of ‘structural defect’ has been removed, and replaced with the concept of a ‘major defect’. The difference between the old concept of a structural defect and the new concept of a major defect is significant: a major defect only encapsulates defects that are likely to render a building uninhabitable or under the threat of collapse. This is a much higher threshold.
Claims relating to major defects can be brought within 6 years of the completion of the works. However, claims relating to any other defect must be brought within 2 years of completion.
The effect of these amendments is to significantly reduce the period of time for which home owners can seek compensation for any type of defect that does not fall within the relatively narrow definition of a major defect. As some defects can take years to emerge, this change represents a significant concession to builders.
Homeowners who have engaged builders to construct a new home, complete renovations on an existing home or who are buying off the plan would be well advised to keep track of the 2 year deadline, and conduct a thorough review of the house at the 18 month mark.