Builders Warranty Report

The experts in the field

Quality Building Management is widely recognised as a leader in the building management industry, with over 40 years dedicated experience protecting property owners, bodies corporate and workplace managers from the ever-changing complexity of building legislation—and ensuring you stay One Step Ahead.

If you are searching for Builders Warranty Report New South Wales, Builders Warranty Report Sydney, Builders Warranty Report Newcastle, Builders Warranty Report Queensland, Builders Warranty Report Brisbane, Builders Warranty Report Townsville, Builders Warranty Report Cairns or Builders Warranty Report Sunshine Coast, QBM is the answer.

QBM operates throughout Australia and has an extensive network of franchisees successfully servicing all Bodies Corporate and Owner’s Corporations with the same knowledge and expertise that the founder, Donald Pitt demonstrates.

2 level townhouseWhat is a Builders Warranty Report?

A Builders Warranty Report is a written report prepared by QBM that identifies all defects within a complex and makes recommendations if the defects would be classified as covered by the builder’s warranty.

All States have differing laws on the responsibilities of builders to rectify defective works.

Currently only Queensland has a Government entity that registers builders and insures building owners against builders defects.

QBM undertakes Builders Warranty Reports in Queensland and New South Wales to comply with the legislative requirements of these states.

Builders Warranty Report Queensland

Directions to Builders and Insurance

The Queensland Building Services Authority Act (1991) is the legislation under which builders are licenses and regulated by the QBCC. The regulation extends to ordering builders to rectify defective building work. There is an insurance scheme to fund alternative builders to carry out work where the original builder cannot or will not comply with a valid direction,

Does this apply to your scheme?

Any licensed builder can be required to comply with a direction issued by the QBCC. There are important limitations on the ability to the QBCC to make a direction, and a builder can challenge whether it is a valid direction. The insurance policy is only applicable to buildings having three (3) storeys or less (not including car parks).

How do you make a claim?

An individual owner can process their own claim by lodging the applicable form at the QBCC. If there is a common property aspect to the problem, it’s necessary for all owners to consent to the QBCC dealing with the body corporate claim.

You must act promptly

Normally, the QBCC can’t issue a direction more than six (6) years and three 3) months after the building work was completed or left in an incomplete state (QBSAA, s72(8)). It can extend this time period if there is good reason in the circumstances of a particular case.

It can only give directions in relation to ‘Category One’ defects within (6) Six year and three (3) months of the completion of the building, but must be lodged within 3 months of the defect becoming apparent and ‘Category Two’ defects within six 6) months after the building work was completed or left incomplete.

What is ‘Category One’

Movement

  • It is faulty or unsatisfactory because it adversely affects the structural performance of a building;
  • It adversely affects the health and safety of persons residing in or occupying the building;
  • It adversely effects the functional use of the building; or
  • It allows water penetration into the building.

What is ‘Category Two’

structural_engineering

  • If the work does not meet the reasonable standards of construction and finish or is a “settling in period defect” in a new building. (QBCC policy “Rectification of Building Work).

QBCC

Once the QBCC has a fully completed form, and this involves a reasonable degree of research by the claimant to identify who the builder is and when the work was carried out, the QBCC activates a dispute resolution process before moving to the formal processes of ordering a builder to carry out work. (QBSAAs71A)

No direction given

The QBCC will notify the complainant of its decision and its decision wither t give a direction or not is reviewable before the Commercial and Consumer Tribunal provided an application is made within 28 days of notification of the QBCC decision.

The QBCC form lodged for the process also serves to be a claim on the QBCC insurance policy. Exactly the same time periods and work categories apply.

How much is available on claims?

The maximum claim for an individual unit is $200,000 and for common property it is up to $1m. This is a rough guide as the amount available on a particular case depends on whether there has been any work carried out so far on the individual units or building.

There are important definitions of the work that is covered by the policy. Overall, it must be “residential construction work”. “Primary” building work is distinguished from “associated” building work, and the policy responds in different ways depending on how the problem is properly categorized. Typical “associated works” are fencing, landscaping, painting, air conditioning and driveways. One problem is that associated work is only covered if the work was required to be carried under a fixed-price building contract. The next problem is that if the associated work wasn’t done at all, the policy responds, whereas if the work was done but it is faulty, the policy won’t pay for rectification works. (QBSAA Regulations 9-12)

Can a claim under the policy be prejudiced?

Any of these things will make a claim under the insurance policy problematic:

  • If repairs were completed or rectified without the prior approval of QBCC;
  • If there is defective design, where the owner of the land at the time of the multiple dwellings being constructed commissioned the engineer, architect or design drafter who designed the residential construction work.;
  • Gradual deterioration of the residential construction work caused by fair wear and tear or by lack of maintenance or neglect;
  • Typical insurance exclusions such as pressure waves by aircraft, earthquake, erosion, floor, storm and tempest, land lip, tidal wave, change of water course, theft, malicious or accidental damage;
  • Repairs, replacements or cleaning of carpet or vinyl floor coverings, whether defective, damaged or improperly installed not covering any circumstances.

The most common complaints lodges 2012/13

Fire Separation 299
Roof drainage 206
Wall/ceiling internal plasterboard 186
Shower screen recess 137
Steel sheet (roof cover) 127
Decks 126
Aluminium window/ door installations 121
Timber window / door installation 116
Ceramic floor installation 109
External cement render 91

 

Should my body corporate manager know about this process?

Most body corporate managers will be aware of the processed under the legislation. The STA-registered managers have access to educational updates.

What should the committee do?

  • Ensure all owners are aware of these processes
  • Act promptly to notify the QBCC of defects in relation to common property
  • Take legal advice promptly where there is an unsatisfactory result (the strict time frames for instituting an appeal from a QBCC decision is problematic considering that an EGM is required for approval of legal proceedings).

Builders Warranty Report New South Wales

Magnetic NorthHome warranty insurance

The Home Warranty Insurance Scheme is established under the Home Building Act 1989 and commenced on 1 May 1997. It is an integral part of the consumer protection package for home owners having building work undertaken.

After new home warranty insurance arrangements for NSW commenced on 1 July 2010 the NSW Self Insurance Corporation trading as NSW Home Warranty Insurance Fund took over as the sole provider of home warranty insurance within NSW.

Home warranty insurance policies issued before the commencement of the new Government underwritten scheme will remain in force, and the insurer that issued the policy will remain on risk for the duration of the period of cover.

When does it need to be provided

Home warranty insurance needs to be provided by:

  • a builder or tradesperson before taking any money (including a deposit) from a home owner (including an owner-builder) under a residential building contract and before starting any work under that contract
  • a ‘spec’ builder before starting any residential building work on a property owned by the builder
  • a developer before entering into a contract for the sale of a property on which a builder is doing or has done residential building work for the developer
  • an owner-builder (ie. a home owner who did owner-builder work under an owner-builder permit) before entering into a contract for sale of the property on which residential building work was done within the previous 6 years.

From 1 February 2012, home warranty insurance is required to be obtained where the contract price is over $20,000 or, if the contract price is not known, the reasonable market cost of the labour and materials involved is over $20,000. Prior to 1 February 2012, the threshold was $12,000.

Where the contract price or the reasonable market cost of the labour and materials involved does not exceed $20,000, there is no legal requirement for home warranty insurance to be obtained.

Contractors who carry out residential building work must still hold an appropriate licence with Fair Trading where the labour and materials involved are valued at over $1,000.

Persons who contract and/or carry out specialist work (ie. electrical wiring, plumbing, gas-fitting, air-conditioning and refrigeration) require a licence regardless of the value of the work.

Home owners should be wary of any builder or tradesperson who says they do not need insurance if the value of work exceeds $20,000, or who suggests you obtain an owner-builder permit while they carry out the work for you.

Certificate of insurance

The certificate of home warranty insurance should be an original issued by the insurer and should have the name of the contractor, home owner, property address and total value of the contract. The builder’s name shown on the insurance certificate should be exactly the same as that on the building contract and the builder’s licence.

It is recommended that prior to making any payment under a sale or building contract, home owners check the validity of the certificate of home warranty insurance by contacting the approved insurance agent whose contact details appear on the certificate.

Caution: A certificate of insurance is separate to a certificate of eligibility. A certificate of insurance is home warranty insurance cover issued specifically for your project, but ‘eligibility’ merely means that the builder has been assessed by an approved insurance agent and has been granted the entitlement to apply for job-specific certificates of insurance. Make sure the certificate of insurance you receive is a job-specific certificate issued for your project.

Examples of a certificate of insurance and a certificate of eligibility can be found on the Home warranty insurance page for Tradespeople on Fair Trading’s website.

Minimum cover

From 1 February 2012, home warranty insurance policies must provide cover of at least $340,000. Between 28 February 2007 and 31 January 2012, the minimum cover that had to be provided was $300,000. From 1 May 1997 to 27 February 2007 the minimum cover was $200,000.

Future increases in the minimum cover provided under the scheme will be in line with any corresponding increase in the Producer Price Index, which measures change in the price of wholesale goods and services.

The cover may be subject to limitations relating to over payment of deposits and progress payments and other limitations specified in the policy.

Claims for incomplete work are limited to at least 20% of the contract price (up to a maximum of the cover provided under the policy).

Multi-storey buildings

General exemption

Construction of a new multi-storey residential building does not require home warranty insurance cover to be in place. For the purposes of the exemption from the home warranty insurance requirements, a multi-storey building is a building that:

  • has a rise of more than three storeys, and
  • contains two or more separate dwellings.

A rise in storeys has the same meaning here as in the Building Code of Australia. A storey does not include a space within a building which is only intended to accommodate vehicles.

If a home owner is planning to buy a unit that is part of a multi-storey residential building, the developer is not required to attach a certificate of home warranty insurance to the contract for sale.

Not exempted

Conversely, construction of a new multi-unit residential development (where the rise is three storeys or less, eg. villa units, town houses, low and medium rise projects etc) does require home warranty insurance cover to be in place. In this instance, a developer is required to attach the certificate of home warranty insurance to the contract for sale of such dwellings.

Similarly, home warranty insurance cover must also be taken out before residential building work is done on an existing multi-storey building (eg. repairs, maintenance, alterations and additions etc).

Exemptions

Section 97 of the Home Building Act 1989 allows the Director General to grant an exemption from the home warranty insurance requirements contained in Part 6 of the Act, if satisfied that there are exceptional circumstances or that full compliance is impossible or would cause undue hardship. (Clause 72 Home Building Regulation 2004 prescribes persons entitled to apply for an exemption).

An exemption will not be considered where home warranty insurance cannot be provided because of a contractor’s financial or business circumstances or where building work has already commenced.

Residential building work done by some Government departments is automatically exempted from the insurance provisions (section 103E Home Building Act 1989; clauses 76 and 76A Home Building Regulation 2004).

Council requirements

Under the legislation governing the operation of the development and construction approval process, the Council/principal certifying authority is required to be notified of the builder for the project. It is also a condition of the approval for a project that home warranty insurance be obtained. Where home warranty insurance is not obtained, the Council/principal certifying authority may not be able to issue an occupation certificate for the completed building work. This may impact on the ability of the property to sell and its market price.

Home warranty insurance claims

A claim under a home warranty insurance policy may be lodged with, or notified to, an insurer by a home owner (including a subsequent purchaser) in the event of a loss being suffered as a result of a builder, tradesperson, developer or owner-builder (as the case may be) failing to complete or commence work and/or failing to rectify defective work and the home owner cannot recover financial loss nor have the work rectified or completed.

In order for home owners to safeguard their position under a home warranty insurance policy, once they become aware of defective or incomplete work they should immediately notify the home warranty insurer of a loss. By law, this notification must be in writing and provide such information as may be reasonable necessary to put the insurer on notice as to the nature and circumstance of the loss.

The Home warranty insurance claims page on the Fair Trading website has information about making a claim, periods and types of cover provided as well as claim notification and lodgement procedures. More information is also available on the Resolving building disputes page.

Scheme Board

The Home Warranty Insurance Scheme Board was established to oversee the operation of the home warranty insurance scheme. As part of its ongoing scheme monitoring role, the Scheme Board is examining how the scheme may be improved for the benefit of home owners and builders. For more information, refer to the Home Warranty Insurance Scheme Board page on the Fair Trading website.

Approved insurance agents

Insurance agents authorised to provide home warranty insurance services on behalf of the NSW Home Warranty Insurance Fund for residential building work under the NSW Home Building Act 1989 are; Calliden Insurance Limited and QBE Insurance (Australia) Limited. For more information go to the Approved insurance agents page on the Fair Trading website.

For information on insurers that were previously approved to sell home warranty insurance, go to the Past approved insurers page on the Fair Trading website.

Certificate of insurance

The certificate of home warranty insurance should be an original issued by the insurer and should have the name of the contractor, home owner, property address and total sum. The builder’s name shown on the insurance certificate should be exactly the same as that on the building contract and the builder’s licence.

It is recommended that prior to making any payment under a sale or building contract, home owners check the validity of the certificate of home warranty insurance by contacting the home warranty insurer whose contact details should appear on the certificate.

Complaints against insurers

Fair Trading is able to investigate complaints about insurers approved to provide home warranty insurance in NSW under the Home Building Act 1989. For more information, refer to the Complaints against insurers page on the Fair Trading website

(http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Home_building_and_renovating/Home_warranty_insurance.page)

We’ve got you covered

Builders Warranty Reports are just one of the many services offered by QBM, to help you manage your building effortlessly and in the most optimal way. Below is a list of other areas in which we can offer you guidance and assistance, taking a load off your mind and keeping you One Step Ahead.

 

  • 12 Month Maintenance Report
  • Balcony and/or Balustrade Report
  • Builder’s Warranty Report
  • Building Condition Assessment
  • Building Condition Report
  • Building Inspection
  • Caretaker Agreement Performance Assessment
  • Condition Report
  • Conditon Assessment
  • Dilapidation Report
  • Division 10 (Section 58) Report
  • Emergency Evacuation Diagrams
  • Fire Compliance
  • Fire Plan
  • Insurance Valuation
  • Safety Inspection
  • Safety Report
  • Section 62 Report
  • Sinking Fund

 

Contact Quality Building Management today to organize your Builders Warranty report and ensure your complex is fully insured and to meet your legal obligations.