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Builders need to be aware that warranties apply for all residentail building work carried out in New South Wales, writes the MBA New South Wales Legal Department (NSW).

The Home Building Act 1989 implies a number of warranties into contracts for all residential building work carried out in NSW.  They apply irrespective of whether they are included in a written contract.

Contrary to what some builders think there is no monetary threshold after which the warranteis apply. They apply to all residential building work.  This is separate from the insurance provisions of the Act.  Although the Act requires Home Warranty Insurance where the contract price exceeds $12,000, the warranties apply regardless of the contract price or whether the builder has a valid insurance policy.

The substance of the warranties is contained in s18B of the Act and includes:

The first part this warranty, the "proper and workmanlike manner" test, is generally interpreted on a case-by-case basis.  It usually incorporates an assessment of the work done and the work as it should be have been done.  It may also include an assessment of the circumstances under which the scope of works was established.  That is, where the work is done to a budget, the workmanlike manner may be limited to the degree provided for by the budget.

The second part of this warranty is a comparison between the work actually performed and the requirements of the plans.  If the plans conflict with the Building Code of Australia (BCA), the builder should seek instruction in writing from the owner (or, if applicable, the architect) regarding how to proceed.  A failure to comply with the BCA is a failure to satisfy the warranty that the work will comply with applicable laws.  Construction certificates are issued subject to the requirement that the work done complies with the BCA.   As discussed below, any alternation to the work necessary for compliance with the BCA is a deemed variation.

The builder should take into consideration any representations made by the owner as to the planned (or even possible) use of the work.  This may include other work to be performed by the owner which may affect or be affected by your scope of work.  For example, will the owner be installing a saltwater pool?  Will the owner be rendering the walls?  Where there is no disclosure of this intention it is not the builder's responsibility to make enquiries; however, where the prospect is raised it should be addressed and the selection of materials should be approved in writing by the owner.

The MBA rsidential contracts contain clauses which provide for compliance with the requirements of local and other authorities and inspections.  The relevant clause is cl 12 in both the BCA and Cost Plus contracts.  This clause provides that any change to the scope of works whichi is required to comply with this warranty is a variation.

This warranty is subject to contractual provisions. Clause 11 of the MBA residential contracts provides for extensions of time.

Obtaining an occupation certificate should satisfy this warranty.  However where an occupation certificate is not issued or not required, the application of this warranty would need to be considered on a case-by-case basis.  It should be noted that, unless the obtaining of the occupation certificate is included within the scope of works, this responsibility rests with the owners.

This warranty is similar to warranty (b) above but applies to work as well as to materials.