What Every Homeowner (and Builder) Should Know
When it comes to building or renovating your home in Queensland, you want assurance that the construction will meet the required standards. That’s where implied warranties under Part 3 of Schedule 1B of the Queensland Building and Construction Commission Act 1991 (QBCC Act) come into play. These statutory warranties are automatically included in every “regulated” residential building contract and offer protections to homeowners, ensuring that building contractors meet their legal obligations. These implied warranties cannot be “contracted out” of.
In this blog post, we break down what these implied warranties are, how long they last, and why they matter to both homeowners and builders.
What Are Implied Warranties?
Implied warranties are legal promises that are automatically included in “regulated” residential building contracts, even if they’re not explicitly mentioned. To re-cap, a “regulated domestic building contract” is defined in Schedule 1B of the QBCC Act as:
- a domestic building contract for which the contract price is more than the regulated amount;
- a cost plus contract under which the total amount payable for the contracted services is reasonably estimated to be more than the regulated amount;
- a mixed-purpose contract under which the amount referable to the contracted services is more than the regulated amount (however a contract is a regulated contract only to the extent to which the contract relates to the contracted services).
The regulated amount currently prescribed by regulation is $3,300.
The implied warranties aim to protect homeowners from poor workmanship, defective materials, or work that does not comply with legal requirements.
The key implied warranties under Schedule 1B of the QBCC Act ensure that:
- Materials Used Must Be Suitable
All materials supplied for use in the subject work must be good and, having regard to the “relevant criteria”, suitable for the purpose for which they are used and, unless otherwise stated in the contract, will be new. Note: some exclusions apply.
“Relevant criteria” means generally accepted practices or standards applied in the building industry for the materials or specifications, instructions or recommendations of manufacturers or suppliers of the materials. - Compliance with Legal requirements
The subject work will be carried out in accordance with all relevant laws and legal requirements including, for example the Building Act 1975. - Standard of Work and exercise of care and skill
The subject work will be carried out in an appropriate and skilful way and with reasonable care and skill. - The Building Must Comply with Plans and Specifications
If plans and specifications from part of the regulated contract, the subject work will be carried out in accordance with those plans and specifications. This ensures that the homeowner gets exactly what they contracted for. - Suitability of Premises for Occupation
If the subject work includes construction of a detached dwelling to a stage suitable for occupation or involves the renovation, alteration, improvement or repair of a home that is suitable for occupation, the detached dwelling/home is suitable for occupation when it is finished. - Carrying out work with reasonable diligence
The subject work will be carried out with reasonable diligence. - Calculation of provisional sums and prime costs items
If the regulated contract contains provisional sums or prime cost items, that they have been calculated with reasonable care and skill having regarding to all of the informational reasonably available when the contract is entered into (including information about the nature and location of the building site). Refer also to our previous article here.
Duration of the Warranties
Proceedings for a breach of a statutory warranty under Schedule 1B of the QBCC Act must be started before the end of the “warranty period” which is 6 years for a breach that results in a structural defect (as prescribed by regulation), or 1 year in any other case. However, if the breach of statutory warranty becomes apparent within the last 6 months of the warranty period, proceedings may be started within a further 6 months after the end of the warranty period.
The warranty period starts:
- if the subject work is completed—on completion of the work; or
- if the subject work is not completed and the contract is terminated—the date the contract is terminated;
- if the subject work is not completed and the contract is not terminated—the date on which work under the contract ceased; or
- if the subject work is not completed and the contract is not terminated and work under the contract was not started—the date the contract was entered into.
A breach of a statutory warranty becomes apparent when any person entitled to the benefit of the warranty first becomes aware, or ought reasonably to have become aware, of the breach.
Relevantly, in proceedings for a breach of a statutory warranty made by an owner against a builder, it is a defence for a builder to prove that—
- the deficiencies of which owner complains arise from instructions given by the person for whom the work was done contrary to the written advice of builder or the person who did the work; or
- the builder was not reasonably given access to rectify the deficiencies of which the owner complains.
Transfer of Warranties
It is important to note that the warranties transfer to new owners if the property is sold within the warranty period. So, if you are purchasing a newly built or recently renovated home, these protections will apply to you as well (subject to certain exceptions outlined in Schedule 1B of the QBCC Act such has having knowledge of the breach).
Why Implied Warranties Matter
For Homeowners:
Implied warranties offer homeowners crucial peace of mind, knowing that they are protected irrespective of any deficiency or inconsistency in the regulated domestic building contract. Homeowners can rest assured that their builder is obligated to meet statutory minimum standards. If defects appear within the warranty period, homeowners have the right to request the builder carry out rectification work or, failing that, make a QBCC complaint.
For Builders:
While these warranties place significant responsibilities on builders, they also provide a clear framework for maintaining minimum standards. Builders who adhere to these requirements not only protect their clients but also enhance their reputation, the reputation of the industry and avoid costly legal disputes. Builders can always agree to a higher standard in their contracts if they seek to maintain an advantage over their competitors.
Common breaches of Implied Warranties we see
Some of the common breaches of implied warranties include:
- Failing to proceed with the work diligently – For example, builders not maintaining reasonable progress of works and in some cases not doing work on site for months without any excuse. While failing to reach practical completion by the date for practical completion may not be a breach of the contract because time is not of the essence, failing to proceed with the work diligently can be established in certain circumstances.
- Departure from plans and specifications – Builders departing from the plans and specifications without the owners’ knowledge or consent. Any such departure is a variation that must be documented and approved even if it ultimately is a no cost variation.
- Failure to properly calculate provisional sums and prime costs items – Builders not taking reasonable care and skill when calculating provisional sums and prime costs and then attempting to claim amounts from owners well in excess of the those amounts without justification. Builders should be able to provide some evidence at the time of entering into the contract to establish the reasonableness of the allowance e.g. a quote.
- Compliance with Legal requirements: Builders who do not adhere to the NCC and refuse to rectify such non-compliance.
What Happens If there is a breach?
If a builder does breach any of the implied warranties, homeowners have the right to take action for breach of that statutory warranty.
The first step is usually to raise the issue with the builder directly and request that they rectify the breach. This usually involves issuing a formal notice under the contract. If the builder fails to remedy the breach, homeowners may, in some circumstances, have a right to terminate the building contract (always obtain legal advice before terminating a building contract).
Most standard form domestic building contracts also have a dispute resolution process that includes a requirement for a homeowner to lodge a complaint with the QBCC before taking steps to litigate. The QBCC have a dispute resolution process that may assist the parties resolve their dispute.
The QBCC’s powers include, in the appropriate circumstances, directing the builder to rectify a defect or taking disciplinary action against the builder for non-compliance with a statutory requirement.
Owners also have a right to commence proceedings for breach of a statutory warranty as outlined above.
Conclusion
Implied warranties under Schedule 1B of the QBCC Act are a powerful tool for homeowners, ensuring that domestic building work is carried out to mandatory standards.
For builders, these warranties set a clear standard of responsibility, emphasising the importance of professionalism, compliance, and transparency in every project.
Understanding these warranties and your rights as a homeowner or obligations as a builder can prevent costly disputes and ensure a smoother construction process. Always be sure to consult with a construction law expert if you need advice on your rights or obligations under the QBCC Act.
Aleisha MacKenzie, Legal Practice Director, Construct Law Group
This article is provided for general information and educational purposes only and should not be taken to be legal advice. Each set of facts is different and therefore you should obtain specific legal advice. If you require advice, please do not hesitate to contact our team on (07) 3139 1874 or email us at info@constructlaw.com.au.
