NSW Fair Trading provides information to home owners and licensed contractors to assist them in resolving disputes that may arise from residential building work. When parties to a dispute are unable to reach agreement, the home owner or the building contractor can lodge a complaint at the nearest Fair Trading Centre. Both parties to the dispute need to agree to the attempt at resolution.
You may find the following information helpful in understanding what happens once a complaint has been lodged.
In most instances, once a dispute is lodged by a consumer or trader, a customer service officer will contact the other party, usually by telephone, to discuss the issues in dispute and try to reach a mutual agreement between the homeowner and the contractor.
Please keep in mind that customer service officers cannot order or direct either party to resolve the complaint.
Fair Trading is successful in reaching a resolution between the parties in the majority of cases. Should a complaint not be resolved, the next course of action will depend on the issues in dispute. If the complaint relates to defective or incomplete building work, the complaint may be referred to a Building Inspector.
If the complaint relates to a contractual issue such as deposits, the home owner may be able to lodge a building claim with the Consumer, Trader and Tenancy Tribunal seeking an order for the payment of moneys or another course of action to resolve the complaint.
Contractors may also lodge building claims with the Tribunal for the payment of money owed by home owners, such as progress payments, additional amounts for variations or other claims for payment provided in the building contract.
For some complaints, Fair Trading may require a Building Inspector to look at the defects or incomplete work. If so, the Building Inspector will arrange for both the home owner and the contractor to meet them on site.
The Building Inspector's role is to help resolve disputes and they will inspect the defects or incomplete work reported in the complaint. The Inspector will then discuss their findings with the home owner and contractor with a view to resolving the issues in dispute.
The Inspectors do not do a general inspection of the building work but visit the site to look at only those items that are the subject of the complaint. Where a home owner needs a technically qualified person to do a general inspection of the building work, they should arrange this through an appropriately qualified private consultant.
If the contractor fails to attend a site inspection the Building Inspector may determine the matter in the contractor’s absence.
In most instances, Fair Trading will attempt to resolve the complaint by having the contractor return, provided they are appropriately licensed to do the work. Generally, while a contractor is willing and appropriately qualified to carry out the work, Fair Trading will encourage resolution by way of the contractor fixing the work.
Where the Inspector determines that there are defects, incomplete work or damage as a result of the contractor's work, a Rectification Order may be issued. The Order will describe what items require rectification and a date by which the work is to be completed under the Order. It will also state any conditions the home owner must comply with, such as permitting access to undertake the work. A copy of the Order is given to the home owner and the contractor.
The home owner may lodge a building claim with the Tribunal if dissatisfied with the outcome of the dispute resolution process. If a Rectification Order is issued and the homeowner lodges a building claim before the date of expiry of the Order, the Order automatically terminates. The contractor may lodge a building claim with the Tribunal if they are seeking payment of unpaid moneys from the homeowner. The contractor cannot appeal the Rectification Order.
If the period for rectification of work under a Rectification Order has expired and, the contractor has failed to carry out work as provided in the Order, the home owner can lodge a building claim with the Tribunal which may make a binding determination. If the contractor fails to comply with an Order of the Tribunal or fails to comply with a Rectification Order, disciplinary action may be taken.
Home warranty insurance is mandatory for residential building work for contracts over a certain value.
From 1 February 2012, home warranty insurance is required to be obtained for work 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.
Home warranty insurance allows consumers to make a claim for a loss (eg. financial loss or damage) caused by the contractor’s defective or incomplete work in the event of the contractor’s insolvency, death or disappearance.
Home warranty insurance policies issued from 19 May 2009 onwards enable home owners to be able to make a claim under the policy where the licence of a contractor they are using is suspended because the contractor failed to comply with a money (compensation) order in favour of the home owner made by a Court or the Consumer, Trader and Tenancy Tribunal.
If Fair Trading detects that the residential building law has been broken, it will evaluate the breach and determine whether disciplinary action is required. Please keep in mind that this action has no bearing on the resolution of a dispute.
Some types of building complaints will be referred by Fair Trading to the Tribunal without Fair Trading intervention. These include any complaints relating to:
For all other residential building complaints, the Tribunal will require the parties to participate in the dispute resolution before accepting a claim. The Tribunal member hearing the claim will be provided with the report of the Building Inspector where a site visit has occurred.