Owner Builders and Statutory Warranties

As an owner builder, if you sell your home within 6 years after you have completed your owner builder work, by law you must provide any subsequent home owners of that property with certain statutory warranties. These are legal promises made by the owner builder that the quality of the residential building work carried out by or on behalf of the owner builder meet certain standards.

Generally, the statutory warranties that an owner builder must provide subsequent home owners are as such:

a warranty that the work was performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract
a warranty that all materials supplied and used by the owner builder are good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials were new
a warranty that the work that was done was in accordance with, and complies with, the law
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 resulted, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling

The above statutory warranties must last the following periods of time:

(a) Major Defects - 6 years after the work was completed; and

(b) All other defects - 2 years after the work was completed.

Under the law, a 'major defect' means a defect in a major element of a building that is attributable to defective design, defective or faulty workmanship or defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these), and that causes or is likely to cause:

the inability to inhabit or use the building (or part of the building) for its intended purpose; or
the destruction of the building or any part of the building; or
a threat of collapse of the building or any part of the building.

A 'major element of a building' of a building means:

any internal or external load-bearing component of the building that is essential to the stability of the building or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns and beam); or
a fire safety system; or
waterproofing.

If a defect in the work carried out does not fit within the descriptions above, then it is likely that the statutory warranty period for that defect will be 2 years from the completion of the work.

Consequences of breaching a Statutory Warranty

Where a subsequent home owner claims that an owner builder has breached a statutory warranty, that subsequent home owner may be able to file a claim for damages, and this is usually done in a court of law or the NSW Civil and Administrative Tribunal. If it is later shown that the owner builder did in fact breach a statutory warranty, then the owner builder could be liable to pay compensation to the subsequent home owner, where the compensation would equate to the cost of the subsequent home owner engaging other individuals to rectify the defective building work.