HIA Victorian New Homes Contract
For illustration purposes only

When is There a Defect?

A defect, or defective works, exist when the builder deviates from the plans and specifications, when the workmanship employed is substandard, when there is early deterioration in the works, or when the builder breaches the Statutory Warranties listed out in your contract.

A few specific examples include:

  • The builder installs a front loading washer in the bathroom, right next to the toilet, with almost no space between them, impeding the former’s use
  • Your plans specify a swimming pool with certain maximum depth, but the builder instead constructs a shallow wading pool 
  • The builder constructs a staircase so narrow, using it becomes a safety hazard
  • The tiler uses substandard materials which lead the tiles to be uneven and prone to 
  • breaking away from the surface

Statutory Warranties

HIA VIC Building Defects Statutory Warranties
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As previously mentioned, a breach of any of the Statutory Warranties by the builder may be considered a defect. If you are using the 2020 version of the HIA Victorian New Homes Contract, you will find the Statutory Warranties on Section B, Clause 11.

It basically says that the builder warrants that: 
the building works will be
:

  • carried out in a proper and workmanlike manner
  • in accordance with the plans and specifications
  • compliant with law and regulations
  • completed by the end of the building period
  • suitable for occupation at the time the building works are completed

and the materials supplied and used should be:

  • good and suitable for the purpose (and new, unless otherwise stated in the contract)

Dealing with Defects

What should you do if you find out there are defects after the builder claims that the building project has been completed?

Inspecting the Premises

First, you will know if there are defects by inspecting the premises. This is done upon completion of the building works.

Completion of Works and Final Inspection

When the builder considers that the building works have reached completion, the builder has to give you a Notice of Completion, as well as the Final Claim. 

Within 7 days of receiving the Notice of Completion and Final Claim, you are to meet with the builder at the site, to carry out an inspection.

HIA Completion of Works Clause Victoria
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List the Defects

So the building works have reached completion, you’ve inspected the site and found defects. What next?

Victorian HIA Contract List of Defects Clause
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Under Clause 37 of Section E of your 2020 HIA New Homes contract:

1. Give the builder a written list of all defects and incomplete work.

2. Sign the list and keep a copy. The builder should do the same.

3. The builder should then carry out the work needed to: 

  • rectify the defects, or
  • to do any incomplete part of the building works.

4. Once done, the builder should give you a written notice that he’s finished the required work.

Additional Defects

Some defects are latent, or are not immediately apparent during the Final Inspection. What if the defects manifest after the handover of the property, and after you’ve paid the Final Claim?

Defects within the 3 month period clause HIA Vic
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After you’ve taken possession of the property, or after the builder hands over possession, whichever comes first, you still have 3 months within which to notify the builder in writing of any additional defects. 

At the end of those three months, the builder has 21 days to fix the additional defects.

When Defects Turn Into Dispute

Sometimes, builders refuse to rectify the defects. Or, they charge the cost of fixing the defects to the owner. As such, the issue of defects may be considered to have ripened into dispute. 

The HIA contract provides the procedure for settling disputes.

1. Your first course of action would be to meet with the builder and try to resolve the matter amicably.

HIA Building defects VIC disputes
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2. If that doesn’t work, you may take the matter to the Domestic Building Dispute Resolution Victoria (DBDRV). This is called a “referral.”

3. After you’ve referred this domestic building work dispute to the chief dispute resolution officer of the DBDRV, you must, within 5 days, give a copy of the referral to the builder.

The referral should be:

  • in writing
  • signed by the referring party/representative
  • identify relevant domestic building contract
  • specify particulars

4. If the dispute still isn’t resolved at the DBDRV level, your next option is to lodge an action with the VCAT. Some guidelines:

a. Before the VCAT accepts your matter, you need to submit a certificate of conciliation.

b. This certificate conciliation is issued by the DBDRV’s chief dispute resolution officer, certifying that the dispute – (a) was not suitable for conciliation; or (b) was not resolved by conciliation.

5. At the VCAT, your matter will undergo directions hearings, which may include an order to undergo ADR (alternative dispute resolution) like conciliation, mediation, and the like, or further hearings. At the final hearing, you will know how your matter is resolved.

6. If your matter remains unresolved at the VCAT, or if you’re unsatisfied with the tribunal’s decision, you may then lodge a complaint in court.

How we can help

There is no cut and dry, academic definition of defects under the law. It is hence always a good idea to consult a specialist construction lawyer who has extensive experience handling similar matters, to help you to determine what your legal options are, and to help you make an informed decision on what the best course of action is for you. Construction Lawyer Melbourne has over ten years’ experience in construction contracts and building dispute resolution. Feel free to give us a call should you need efficient legal advice.