Requirements Applicable to All Residential Building Contracts

The following contracting requirements apply to all contracts for residential building work under the Home Building Act 1989 (NSW) (subject to applicable exemptions).

Deposit

The maximum amount of a deposit that may be demanded or lawfully received for residential building work is 10% of the contract price (Section 8).

Statutory Warranties

The following warranties are implied in every contract to do residential building work regardless of the contract price (Section 18B(1)):

  1. A warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract,
  2. A warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,
  3. A warranty that the work will be done in accordance with, and will comply with, this or any other law,
  4. A warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,
  5. A warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling,
  6. A warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder’s or person’s skill and judgment.

Charges Over Land

A contract may not create an interest in any land, and a provision in a contract is void to the extent that it purports to create such an interest (Section 7D(1)).

However, a clause in a contract that creates a charge over the land will not be void if:

  1. The charge relates to the land non which the contract work is or was to be carried out, and
  2. The charge is created to secure the payment to the holder of the Contractor License of money found to be due under the Contract by a Court or Tribunal that has made an Order or Judgment that such a payment be made (Section 7D(3)).

Disclaimer

The above information is intended as a guide only and does not address all types of contracts regulated by the Home Building Act or Regulation.  This information in no way constitutes or substitutes legal advice.  Roberts Legal accepts no responsibility for any actions taken or not taken on the basis of the information above.

You should obtain specific legal advice on any matters of interests arising from this article.

Call now to speak to one of our Building & Construction Lawyers.
1300 553 343

By Sam Roberts,
Managing Director, Accredited Specialist (Commercial Litigation)