Complaints about defects after building
Residential apartment buildings
Building complaints handled by Fair Trading
Who can make a residential building complaint
Information needed to make a complaint
NSW Fair Trading offers different services to help reduce the number of defects in NSW homes, either before completion under the Residential Apartment Building (Compliance and Enforcement Powers) Act or after receiving a complaint from an owner after completion.
Complaints about defects after building
Where a homeowner or other person has a complaint about home building work, NSW Fair Trading provides a free complaint handling service to help resolve disputes.
This is for houses and multi-unit dwellings as well as the quality of specialist trade work (electrical, plumbing, gasfitting) in residential or commercial buildings.
Fair Trading can help with complaints in relation to the Home Building Act 1989.
A homeowner has statutory warranties (6 years for major defects and 2 years for minor defects).
Before making a complaint, you should try to resolve the matter with the contractor/builder.
If you can't reach an agreement, the homeowner for a house, or owners corporation for a strata building (residential apartment building), can make a complaint at their nearest Service NSW centre.
Building practitioners can also raise any concerns about defects or the quality of work noted during construction.
In many instances, parties will be able to participate in Fair Trading’s complaint handling service before proceeding to a court or Tribunal to resolve the issue.
Building complaints time limits
The following times limits apply for homeowners to commence proceedings for a breach of statutory warranty:
Major defects – 6 years from completion of the work
All other defects – 2 years from completion of the work
- If you find out there has been a breach of warranty in the last six months of the statutory warranty period, homeowners have an extra 6 months after the end of the statutory warranty period to commence proceedings.
- If the complaint is about incomplete work, the period commences from the date of termination of the contract or, where the contract hasn't been terminated, the date work ceased.
- If it is nearing the end of the statutory warranty period, you can still access Fair Trading’s complaint handling service but you should also lodge an application with the NSW Civil and Administrative Tribunal to preserve your rights under legislation.
- If the statutory warranty time periods have passed (putting the work is outside the statutory warranty period), Fair Trading and the Tribunal may not be able to deal with your application.
Tip: It is the responsibility of the homeowner to apply to the Tribunal before the expiry of the statutory warranty period.
A major defect is defined as a defect in a major element of the building due to defective design, workmanship or materials, or failure to comply with the National Construction Code structural performance requirements.
This may include but is not limited to:
- a load-bearing component essential to the stability of the building such as foundations, footings, floors, walls, roofs, columns or beams
- fire safety system
The Home Building Act 1989 provides homeowners with the following statutory warranties that state the work will:
- be done with due care and skill and in accordance with the plans and specifications;
- comply with relevant laws;
- be done with due diligence within the time stipulated in the contract (if no time is stipulated, within a reasonable time)
- where appropriate, result in a dwelling that is reasonably fit for occupation.
The materials will be:
- reasonably fit for the specified purpose or result
- new and suitable for the purpose used unless stated otherwise in the contract.
Residential apartment buildings
The Residential Apartment Building (Compliance and Enforcement Powers) Act 2020 commenced on 1 September 2020.
It is focused on the construction phase of a residential apartment building (class 2) before an occupation certificate is issued. This is because once an occupation certificate is issued for a building the developer can require purchasers to settle purchases.
The Residential Apartment Buildings (Compliance and Enforcement Powers) Act enables NSW Fair Trading to enter a construction site for a residential apartment building to investigate if there are any serious defects.
If there are defects, an order can be given to prohibit an occupation certificate, or for building work to be rectified or for building work to stop.
This interaction is between the developer and NSW Fair Trading but is for the benefit of the consumers who will eventually buy a unit in the building.
Broadly, serious defects in a building are where building work fails to comply with the performance requirements of the Building Code of Australia or includes defective design or faulty workmanship relating to:
- fire safety
- structural matters
- enclosures or cladding
For residential apartment buildings (4 storeys or higher) where the contract was made 1 January 2018 the developer has to lodge a building defects bond of 2% of the building contract price before applying for an occupation certificate.
The developer has to appoint a building inspector to inspect the building and prepare a report of defects. If the developer doesn't rectify the defects the building defect bond can be used to fund that rectification.
The following information explains what happens once a complaint has been lodged.
Building complaints handled by Fair Trading
Building disputes that relate to the quality of workmanship including defective or incomplete work. This includes complaints about the building elements in residential apartment buildings such as waterproofing, fire safety and defects of a serious nature.
Fair Trading can accept complaints against a building practitioner in relation to:
- houses: freestanding, townhouse or row house (class 1)
- multi-unit dwelling: 3 storeys or less (class 1 or class 2)
- multi-unit dwelling: 4 storeys plus and high rise (class 2).
Fair Trading can also help with complaints about building certifiers
Who can make a complaint about a residential apartment building
Once an apartment building is completed and occupied, complaints about defects that affect the common property of an apartment building are best made by the owners corporation or their representative such as a strata managing agent.
These representatives will most likely have the information Fair Trading needs to help resolve the issues.
Complaints can also be made by individual lot owners where the defect only affects their lot, or the lot owner/s can't get a response to the defect from their owners corporation or strata manager.
Building practitioners who become aware of defects in apartment buildings that are under construction or completed are also encouraged to make a complaint.
Information needed to make building complaints
The complaint form will guide you through the information we require depending on the type of residence, house, multi-unit or residential apartment.
Fair Trading needs information about:
- the property owner
- details of the contractor who undertook the work
- the type of work done and date commenced including plans and contracts
- evidence of the date the work was completed. For example, occupational certificates
- copies of correspondence about the dispute
- copies of reports or photos in relation to defects.
For complaints within a multi-unit dwelling (class 2), Fair Trading will also need information about the builder, developer, certifier and strata managing agent.
Frequently asked questions
What do we do to help resolve complaints?
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 homeowner may be able to lodge a building claim with the NSW Civil and Administrative Tribunal (NCAT) seeking an order for the payment of money 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 homeowners, such as progress payments, additional amounts for variations or other claims for payment provided in the building contract.
What does a building inspector do?
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 homeowner 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 homeowner 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.
What if the consumer doesn't want the contractor back?
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.
What if an agreement is not reached?
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 homeowner must comply with, such as permitting access to undertake the work. A copy of the Order is given to the homeowner and the contractor.
What if the homeowner or contractor disagree with a Rectification Order?
The homeowner 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 money from the homeowner. The contractor cannot appeal the Rectification Order.
What if the Rectification Order is not complied with?
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 homeowner 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.
What about insurance under the Home Building Compensation Fund?
Insurance under the Home Building Compensation Fund is mandatory for residential building work for contracts over a certain value.
Insurance under the Home Building Compensation Fund 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.
Insurance under the Home Building Compensation Fund 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.
Insurance under the Home Building Compensation Fund policies enable homeowners 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 homeowner made by a Court or the NSW Civil and Administrative Tribunal (NCAT).
Information on Home Building Compensation disputes is available on the State Insurance Regulatory Authority website.
What happens if the law has been broken?
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.
What happens when a Building Claim is lodged with the Tribunal?
Some types of building complaints will be referred by Fair Trading to the Tribunal without our intervention. These include any complaints relating to:
- appeals against a decision of an insurer under a contract of insurance required to be entered into under the Home Building Act 1989
- debt recovery by a contractor
- disputes between head contractors and subcontractors for defective work
- claims arising from work done by an owner builder
- cross claims referred by the Tribunal
- claims where the time for lodging a claim is due to expire within 3 months
- matters involving unlicensed contractors, including a licensed contractor working outside the scope of the licenses they do hold.
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.