Claiming for Building Defects: A guide to limitation periods

Claiming for Building Defects: A guide to limitation periods

Before contemplating litigation for building or strata defect claims the first thing that you need to ask yourself is “Am I out of time?” When claiming for building defects there are limitation periods.

With nearly every type of legal action there is a limitation period. This is the period of time after which no action can be taken. If your claim is brought out of time then it’s probably doomed to fail from the outset. This is especially the case in claims involving defects in residential building work.

The Home Building Act 1989 (the Act) and its regulations provide for limitation periods for claiming under the statutory warranties found in section 18B of the Act. These warranties are automatically implied into a building contract for “residential building work” and include:

(a) building works “will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract”; and

(b) materials will be “good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract that those materials will be new”; and

(c) “work will be done in accordance with, and will comply with, the Act or any other laws”; and

(d) “the work will be done with due diligence and within the time stipulated in the contract”, the “dwelling is reasonably fit for occupation”; and

(e) materials used are “reasonability fit for the specified purpose”.

If your builder breaches these statutory warranties it often results in defects occurring and an owner may commence an action for damages against the builder (or developer).

It used to be the case that an owner had a period of 7 years from the date of completion of the work within which to commence proceedings for a breach of a statutory warranty however the legislation was amended reducing that period to 6 years for a “major defect” and 2 years for a “minor defect”.

More often than not owners are confused as to what limitation periods applies to their situation. If the date of your building contract is:
1.before 1 February 2012, the limitation period for all defects is 7 years from the date of completion of the work;
2.between 1 February 2012-15 January 2015, the limitation period for “structural defects” is 6 years and minor defects 2 years from the date of completion of the work; and
3.from 15 January 2015 onwards the limitation period for “major defects” (previously referred to as structural defects) is 6 years and minor defects (being a defect that is not a Major Defect) is 2 years from the date of completion of the work

The limitation period commences from the date of completion of the work. Section 3B of the Act refers to this date as the date of “practical completion”, which is often recorded in the Building Contract. If the Building Contract is silent on the issue or there is no Building Contract, it is determined by the earliest of the date that:
 the Builder hands over possession to the Owner;
 the Builder left the site; or
 Occupation Certificate is issued.
It’s also extremely important now to understand what a “major defect” is and what a “minor defect” is. We will address this in part 2 of this series.

If you have recently retained a builder who you are not happy with or you are the Owner of a house or a residential unit in a Strata Scheme and you are interested in claiming for building defects, contact us for advice as to how to best protect yourself.

This article contains general information and is prepared without taking into account your specific objectives.  Before acting on the contents, you should obtain specific legal advice in relation to your own circumstances.