Domestic building disputes

Building Disputes

Building disputes often arise where consumers are not aware of their rights and obligations, or do not hold builders properly to account for delays, cost blowouts and other issues. Fortunately, there are many steps that you can take to limit the risk of a dispute arising with your builder, whether construction is yet to commence, is underway, or has been completed.

Domestic Building Regulation

Domestic Building Works performed in Victoria must comply with the relevant laws. This includes, but is not limited to:

• Australian Consumer Law and Fair Trading Act 2012 (Vic)
• Building Legislation Amendment (Consumer Protection) Act2016 (Vic)
• Building Act 1993 (Vic);
• Building Regulations 2018 (Vic);
• Domestic Building Contracts Act 1995 (Vic);
• Domestic Building Contracts Regulations 2017 (Vic);
• Local council laws; and
• Relevant case law.

Before Work Commences

• A domestic building contract is usually comprised of three separate documents: a building contract, specifications and plans. Make sure you seek independent advice on each of the documents. Do not sign any other document that falls outside this list. Click here for more information on building contracts from Consumer Affairs Victoria
• Beware of unregistered builders. There is usually a good reason why a builder is not registered! Click here to check the registration status of your builder
• Ensure that every item of work and associated materials are properly priced and that the price, where possible, is fixed in the contract.
• Ensure you are satisfied with the start date. If the start date is not known, request the builder to do everything reasonably possible to commence work as soon as possible.
• Ensure you are satisfied with the date the work will be finished, noting standard building contracts allow builders to claim extensions for delays outside their control, such as any variation to the works.
• Remember, you can withdraw from the contract within five (5) clear business days after you receive a signed copy (the cooling off period). However, you cannot "cool off" if you have received independent legal advice or have previously entered into a similar contract for the same work.
• Avoid large upfront payments. Such payments attract a high degree of risk, especially where the builder encounters financial difficulty during construction.
• Ensure the builder has valid home warranty insurance for the project. See here for more information

During construction

• Always ask your builder for copies of invoices, receipts or other documents that show the cost to the builder of any item or service.
• In the event the builder requests a variation to the contract price, plans or specifications, ensure any such request is made in writing. Remember, the builder is legally obliged to state why the variation is required and the length of time necessary to complete. Confirmation of the cost of variation and the overall impact on the contract price must also be explained by the builder. Builders cannot recover the cost of variations that were not necessary and were foreseeable at the time of entering into the contract.
• Lazy or disorganised builders often fall behind schedule toward the end of construction. Ensure you carefully scrutinise a builder's request for an extension to check that it is permitted by the contract.
• Ensure you have sufficient cash flow to maintain the progress payment schedule. Failure to make a payment in accordance with the contract may expose you to penalty interest or even suspension of works and liquidated damages.

After construction

• If you notice any defects with the building once construction is complete, make sure you notify your builder in writing during the "defects liability period." Claims for defective building work, however, can be made for a period of up to 10 years after the defect arose.
• Remember, compulsory home warranty insurance is there to protect you in the event that building works are defective. Such insurance will cover structural defects for up to six years, while non-structural defects are covered for only two years. Incomplete items are also covered but only for up to 20% of the contract sum including agreed variations.  For policies issued before 1 July 2014, the cap on such claims is $200,000.00 while for policies issued from 1 July 2014, the cap is $300,000.00. To check if a policy has been issued in relation to your property, go to https://www.dbi.vmia.vic.gov.au/
• Importantly, where the home warranty insurance policy was issued prior to 1 July 2015, cover will only be available in the event the builder is dead, has disappeared or has been made bankrupt.
• For policies issued from 1 July 2015, you can make a claim if any of the above occur or if a final order has been made against the builder by the Victorian Civil and Administrative Tribunal ("VCAT") (and the appeal period has expired).

Building Disputes: How can Sharrock Pitman Legal help?

If you find yourself in a building dispute, our Litigation team can assist you. For more information refer to our article on resolving building disputes effectively. Call Sharrock Pitman Legal today on 1300 205 506 or complete the form below.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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