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Builders Defects Liability Period. is 4 months enough?

We had a new house built for us which we took possession of in July 2018. Prior to awarding the contract to the builder, I noted that the “standard” defects liability period on the "standard| Master Builders Association (MBA) was four months (I checked on line and it was correct). There was no way I was going to sign that! we negotiated with the builder and extended the Defects Liability Period to 12 months (this covers a full cycle of seasons).

It is now late October of the following year. Structural warranties are still covered, but non structural defects are not. There are still approximately 135 non structural defects to be addressed (he has fixed about 70 of them - but usually creates a new one each time or a new one appears). We discovered the 8th water leak a couple of days ago.

I am now of the opinion that even 12 months is not an adequate period of time given the amount of investment - and really, houses are supposed to last for generations. Even cars have longer warranty periods.

any thoughts on the matter people?

Evan

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What State are you in?

Most state government provide advice in relation to recommended defect periods for structural and non-structural defect building work. In Queensland for example,

  • Structural Defective Work – The owner can submit a complaint within 6 years 6 months from when the work is completed and within 12 months of noticing the defect.
  • Non-structural Defective Work – As a contractor, you may provide a 6 or 12 month statutory warranty from the date of practical completion for non-structural defects. Typically, this is part of the contract conditions for new home construction. If the owner notices a defect within the warranty period, they can request (in writing), that you fix the defect. The owner can also submit a complaint to the QBCC no later than 12 months from noticing the defect.

4 months is not near enough for non-structural defects as it can take time to a building to settle and some non-structural defects such as minor cracking of plasterboard to appear. Also agree that seasonal changes, especially changes in temperature can cause drying of structural timbers movement within the frame which could result in non-structural defects to appear (such as a sticking door due to frame movement or windows which don’t close properly). You have done the right thing to negotiate 12 months as this is consistent with that recommended by the Qld state government and also covers any defects resulting from seasonal changes/drying of the frame.

Have you checked to see what your local state government suggests in relation to non-structural and structural defect periods?

It is also worth noting that the Australian Consumer Law provides for unfair contract terms. One could argue that if a signed building contract states defect periods less that that recommended by a State government, that such terms may be unfair as they could be seem to advantage the builder at the expense of the owner.

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Depending on what you are referring to as a water leak, per the QBCC (Qld only)

Defective building work usually falls into 2 categories:

  • Structural – e.g. leaking roof, leaking shower, health and safety issues*
  • Non-structural – e.g. sticking drawer, minor cracking of plasterboard.*

Work such as electrical and plumbing also needs to be code compliant. As well as the household piping, the roofing and guttering is plumbing work. The Queensland Standards and Tolerances Guide provides some direction on building construction defects.

It’s also referenced in the previous link provided by @phb for Qld.

It does however side step the rectification of non compliant workmanship that is prescribed work, if it is not apparent within the 6-12 month contract liability period for non structural defects. The consequences or evidence of substandard plumbing or electrical work for instance may not be apparent for many years. Hopefully any damage caused is insurable, however where there is no damage the cost of rectification would appear to be at the owners risk. The presumption is that licensed contractors carrying out prescribed work never make errors or sign off non compliant or substandard workmanship, hence there is nothing more to consider?

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For NSW:

Then again:

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In general, I believe that the warranty period normally provided for what is most likely the most expensive purchase a consumer will ever make [probably followed in $ terms by their vehicle(s)] is totally inadequate.

As has been alluded to by @phb & @mark_m, often the defects or other problems only become apparent after a considerable period has passed. In my opinion dwellings (houses, apartments, etc) would be expected to last ‘several life times’. Dwellings used to be passed down through the generations. More recently with higher churn rates, they are nowdays bought and sold far more frequently, but buyers expect previously owned dwellings to last without faults.

Would it be unreasonable to say we are looking at a 50 year life in return for the very large financial investment? Surely then the warranty should be commensurate with the expected lifetime of the dwelling, and cost of the home? The median Australian dwelling price was $538,668 as of 31/10/2018. If we say that an average fridge is valued at $1,000 and has a warranty of 2 years, then pro rata a average dwelling should have a warranty of in excess of about 1,076 years!.

Clearly a 1,000 year warranty is patently ludicrous, but it highlights that the warranties provided currently are wowfully inadequate based on the amount of money that the consumer has spent…

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Western Australia.

Can hear the sound of water one drop at a time in the external wall of the study for a day or so after it rains… hmmm leak 9?

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