Residential building contracts under $40,000.00 – What if the time limit for a statutory warranty claim has passed? Consumer guarantees under The Australian Consumer Law may apply.

When a builder carries out residential building work, their work is covered by the statutory warranties which apply under the Home Building Act. The warranties include:

  1. that the work will be performed with due care and skill,
  2. that the work will be in accordance with any plans and specifications set out in the contract,
  3. that all materials supplied will be suitable for the purpose for which they are to be used, and
  4. that the work will be done in accordance with, and comply with, the Home Building Act and any other law.

Home owners have a time limit for commencing proceedings for a breach of statutory warranty, being six (6) years from completion for a major defect, and two (2) years in any other case. If the homeowner first becomes aware (or ought reasonably to have become aware) of the breach within the last six (6) months of the warranty period, then proceedings may be commenced within a further six (6) months after the end of the warranty period.

But what happens when a homeowner is out of time to commence proceedings?

Did you know that whilst the statutory warranties are the primary source of obligations for builders, The Australian Consumer Law may also apply?

Under The Australian Consumer Law, businesses must guarantee products and services they provide which are valued under $40,000.00, or which exceed that amount but are normally bought for personal household use. Like the statutory warranties under the Home Building Act, these guarantees are automatic and cannot be excluded by your contract.

The consumer guarantees include a guarantee that services will be rendered with due care and skill, and that goods will be of acceptable quality. “Acceptable quality” means that the goods are:

  1. fit for all the purposes for which goods of that kind are commonly supplied,
  2. acceptable in appearance and finish,
  3. free from defects,
  4. safe, and
  5. durable.

Unlike the warranties under the Home Building Act which have specific time limits, there is no particular timeframe for which goods are required to be free from defects or durable, for example. The standard by which acceptable quality is to be considered is that which a “reasonable consumer” fully acquainted with the state and condition of the goods would regard as acceptable, having regard to the nature and price of the goods, amongst other matters.

A consumer is able to commence proceedings under The Australian Consumer Law up to six (6) years after the date that the defect became apparent. This means that whilst a homeowner may be outside the limit for bringing a claim for breach under the Home Building Act, the homeowner may still have rights to bring a claim for breach under The Australian Consumer Law.

The available remedies for consumer claims depend upon whether or not the breach amounts to a major failure and whether the defect can be remedied (another article in itself!).

In practice, there can be different but overlapping obligations under the statutory warranties and consumer guarantees. If you are a homeowner or builder wanting to know more about your rights and obligations under the Home Building Act,  The Australian Consumer Law or the Design and Building Practitioners Act contact Roberts Legal for a Free Case Evaluation.

By Felicity Donald,
Special Counsel