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Implied warranties
By law, you automatically get warranties from your builder, regardless of the cost of the construction work or whether you have a written contract. These warranties apply to any home building project, whether you are building a new house, renovating your home or adding an extension.
These implied warranties still exist if you sign a contract that appears to take them away.
Implied warranties require the builder to:
- carry out the work in a proper and workmanlike manner, in accordance with the plans and specifications set out in your contract
- ensure all materials supplied by the builder are good and suitable for the purpose and are new, unless otherwise stated in the contract
- carry out the work in accordance with all laws and legal requirements
- carry out the work with reasonable care and skill and complete works by the date (or within the period) specified by the contract
- ensure new homes, extensions, renovations, repairs and kit homes (or similar) are suitable for occupation when completed
- ensure other types of work and the material used are reasonably fit for your intended purpose.
You can use your implied warranties to make sure your building contractor:
- uses good workmanship
- delivers everything listed in your contract
- ensures everything is in working order.
The warranties apply to the building work for 10 years, even if the property is sold several times during this period.
Domestic building insurance
Domestic building insurance (also called builders warranty insurance) is taken out by a builder for you on works valued at more than $12,000.
Do not pay your deposit until:
- the builder gives you the domestic building insurance policy and certificate of currency that applies to your property
- you contact the insurer to check the policy number is correct and applies to your home.
Domestic building insurance only covers you if your builder:
- dies
- is insolvent
- disappears.
It covers costs up to $200,000 to fix:
- structural defects, for six years
- non-structural defects, for two years.
In all other cases, it is up to your builder to fix or complete works, or to pay any costs awarded.
If you claim on the policy for work that was not completed:
- you may find your claim limited to only 20 per cent of the contract price
- the policy will not cover your advance payments.
Who provides domestic building insurance?
If your policy was issued on or after 31 May 2010, the Victorian Managed Insurance Authority (VMIA) may be the insurer. If you do not have access to the certificate of insurance or your building permit (which list the insurer’s details), contact the VMIA to confirm if it is the insurer.
You can contact the VMIA on 03 9270 6900 or visit the Victorian Managed Insurance Authority website.
If your policy was issued before 31 May 2010, the VMIA will not be the insurer.
If you cannot find the certificate of insurance, contact the builder/building surveyor or local council to find out the name of the insurer and the policy number. This is usually listed on the building permit.
If you still cannot find the name of the insurer, contact each of these insurers to find out:
QBE Australia website
133 723
Calliden website
1300 880 037
Vero/Royal & Sun Alliance website
1800 554 255
Lumley website
03 8627 4333
CGU website
13 15 32
Builder insolvency
A builder cannot operate when insolvent. To find out if your builder is insolvent if:
- the builder is a company, contact the Australian Securities and Investments Commission
- the builder is a sole trader or partnership, contact the Insolvency Trustee Service Australia.
- you are not sure whether the builder is a company, sole trader or partnership, contact both.
A builder in administration may not be insolvent and can continue to operate. The administration process will work out whether the builder is insolvent. If the builder is in administration, the Australian Securities and Investments Commission and Insolvency Trustee Service Australia have registers of administrators and liquidators.
If you suspect your builder is insolvent, seek legal advice and contact us on 1300 55 75 59.
For more information on insolvency processes, visit the Australian Securities and Investments Commission and the Insolvency Trustee Service Australia websites.
The cost of legal advice is likely to be much less than the cost of an uninformed decision. Seek legal advice before:
- ending the contract with your builder and employing another builder.
- paying subcontractors.
Insolvent builders and work over $12,000
You should be able to claim on the domestic building insurance policy (also known as builders warranty insurance) if the builder is insolvent. To make a claim:
- lodge your claim within 180 days of becoming aware of the builder’s insolvency
- contact the insurer to lodge a claim. If you do not have a copy of the policy or certificate of currency, the builder, building surveyor or local council may be able to provide it. If not, you can contact insurance companies that provide domestic building insurance to check whether they issued insurance for your building.
Insurers that have offered domestic building insurance in Victoria at some time since 2002 include:
- Australian International Insurance Ltd (Australian Home Warranty) - 03 9855 5666
- Australian Unity General Insurance Ltd - 13 29 39
- Calliden Insurance Limited - 08 9215 1699
- CGU Insurance Limited - 13 15 32
- QBE Insurance Group - 13 37 23
- Vero Insurance Limited - 13 18 13
If your insolvent builder does not have domestic building insurance for work worth more than $12,000, contact us on 1300 55 75 59.
If the work required a building permit, seek legal advice on the building surveyor’s obligations to require a domestic building insurance (builders warranty insurance) certificate.
Insolvent builders and work worth less than $12,000
Builders are not required to have domestic building insurance for work under $12,000.
If the builder is in administration:
- Contact the administrator or liquidator and submit a claim as an unsecured creditor.
- Notices of administration often appear in the press or on the trader’s website.
- The Australian Securities and Investments Commission or Insolvency Trustee Service Australia can provide administrator or liquidator details and have factsheets on insolvency procedures.
- The insolvency process will determine whether you will receive any redress.
- If you paid by credit card or by debit card and selected ‘credit’, contact your card provider and request a ‘chargeback’.
If the builder is not in administration, seek legal advice.
For more information, contact us on 1300 55 75 59.
Last updated: 01/02/2012