New House Guarantees and Warranties

GUARANTEEI’m always a bit suspicious of guarantees and warranties!

In my opinion most Guarantees are really just a piece of paper that explains how the Guarantor will fulfill their legal liabilities. (In some cases they explain a process which is less than fulfilling their liabilities)

Bearing in mind I’m not a lawyer this is how I see the situation with regard to new house ‘Guarantees’ and ‘Warranties’

Standard of Build

Under the ‘Standard Domestic Building Contracts’ the builder is required to build a house that is ‘suitable for purpose’.

That is it complies with the building codes and regulations and will not suffer structural damage or have any other major defect.

If you suffer a problem you can go back to the builder under the contract. In effect you have an Implied Guarantee.

If the defect was as a result of his construction or the materials they supplied, the builder is liable to remedy as long as the time since the contract was completed is ‘Reasonable’.

What is Reasonable?

Well it will depend on the State laws but in Victoria Section 134 of the Building Act 1993 places a limit of 10 years on the builders liability.

Previously builders were being chased for problems arising 20 or 30 years later, which was considered unreasonable. (If you want to see how unreasonable some homeowners can be see this link: Unreasonable Behaviour)

Builders Warranty Insurance

One source of confusion is that the Builder Warranty Insurance for new houses only lasts for the following periods post completion (or contract termination):

  • 6 years for structural defects
  • 2 years for non-structural defects.

This warranty insurance can only be claimed by the home owners, if the builders can’t meet their liabilities through death, disappearance, or been declared insolvent. . . . If the builder is still trading its up to the builder to provide the remedy Not the Insurer.