Home Warranty Insurance in NSW and the ACT
New South Wales
Home warranty insurance needs to be provided by:
- a builder or tradesperson before taking any money (including a deposit) from a home owner (including an owner-builder) under a residential building contract and before starting any work under that contract
- a ‘spec’ builder before starting any residential building work on a property owned by the builder
- a developer before entering into a contract for the sale of a property on which a builder is doing or has done residential building work for the developer
- an owner-builder (ie. a home owner who did owner-builder work under an owner-builder permit) before entering into a contract for sale of the property on which residential building work was done within the previous 6 years.
From 1 February 2012, home warranty insurance is required to be obtained where the contract price is over $20,000 or, if the contract price is not known, the reasonable market cost of the labour and materials involved is over $20,000. Prior to 1 February 2012, the threshold was $12,000.
Where the contract price or the reasonable market cost of the labour and materials involved does not exceed $20,000, there is no legal requirement for home warranty insurance to be obtained.
Contractors who carry out residential building work must still hold an appropriate licence with Fair Trading where the labour and materials involved are valued at over $1,000.
Persons who contract and/or carry out specialist work (ie. electrical wiring, plumbing, gas-fitting, air-conditioning and refrigeration) require a licence regardless of the value of the work.
Australian Capital Territory
Residential Building Warranty Insurance
This insurance protects the current building owner and future owner if a loss or damage is suffered because of the insolvency, death or disappearance of the builder as a result of:
- a breach of the statutory warranties by the builder,
- being unable to enforce or recover under the contract,
- subsidence of the land due to the builder’s negligence.
Every contract to carry out residential building work to which a builder is a party, is taken to contain the following warranty.
- that the residential building work has been or will be carried out in accordance with the Building Act 2004
- that the work has been or will be carried out in a proper and skilful way and—
- in accordance with the approved plans; or
- if the work involves or involved handling asbestos or disturbing friable asbestos—in accordance with approved plans that comply with the Act in relation to the asbestos
- that good and proper materials for the work have been or will be used in carrying out the work
- if the work has not been completed, and the contract does not state a date by which, or a period within which, the work is to be completed—that the work will be carried out with reasonable promptness
- if the owner of the land where the work is being or is to be carried out is not the builder, and the owner expressly makes known to the builder, or an employee or agent of the builder, the particular purpose for which the work is required, or the result that the owner desires to be achieved by the work, so as to show that the owner is relying on the builder’s skill and judgment—that the work and any material used in carrying out the work is or will be reasonably fit for the purpose or of such a nature and quality that they might reasonably be expected to achieve the result.
The Statutory warranties have a limitation period of 6 yearsfrom the completion day in respect of a structural element.
The Statutory warranties have a limitation period of 2 yearsfrom the completion day in respect of a non-structural element.
NOTE: There is no Government Statutory Insurance for Residential Swimming Pool Construction available in the ACT