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Your rights when renovations go wrong

Reported by Anne Lampe
Thursday, February 7, 2013
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By Anne Lampe

Money magazine, February edition


Renovations are all the go but what about bad work? Anne Lampe explains

I recently had my home renovated and found a number of defects. Is my builder obliged to remedy them?

Your first step should be to read your contract with the builder, particularly the clauses relating to remediating defective work. The Master Builders Association in each state and Fair Trading departments have detailed dispute resolution processes and defect remediation backup, which works under the home warranty insurance policies that builders must take out for all jobs exceeding about $5000. But it is expected that you try to sort out your problem with your builder first.

Your contract should also set out the dispute settlement procedure. It helps if you choose a builder who is licensed and check out other renovations they have done to ensure you have not hired a builder who quotes the lowest price but also delivers the lowest-quality work.

As with financial advisers, it is vital that you check the credentials of the service provider you are dealing with before they proceed to demolish a wall. Reading the contract usually also makes it clear that if you ask the builder to vary your plans, say by moving a wall by eight centimetres once it is in place, this will involve extra work, extra time, extra materials and extra cost.

You cannot expect to make changes at will without expecting to pay additional amounts for those changes. But this issue is different from defective workmanship.

I contacted the builder, pointed out the defects and asked him to remedy them, but he refused. What should my next step be?

Contact the Office of Fair Trading in your state in writing and outline the nature of the dispute. The OFT will write to the builder and ask him to remedy the fault or arrange a mediation conference at the Consumer and Tenancy Tribunal for you and your builder to resolve the dispute.

You and the builder will sit down with a mediator to sort through the problem. Mediation carried out by a Fair Trading department is free to both parties. The Fair Trading websites feature a building section which sets out the complaints and dispute resolution procedures.

If this fails and your relationship with the builder breaks down completely, the home warranty insurance back-up is triggered. Home warranty insurance compensation kicks in if your builder dies, goes broke or disappears or the dispute resolution process fails. All licensed builders have to take out these insurance policies.

The builder may be ordered by the CTT to fix the defects. But if the relationship between you and the builder deteriorates to such a degree that you won’t have him back or have lost faith in his ability to fix the defect, a money order may be made for another builder to come in to do the work.

Can the builder design a contract that gets him out of the defect remediation obligation?

No, and no client would sign a contract that contains such a get-out clause. The building regulations in your state would not allow a licensed builder to rely on such a clause.

I got in such a state about these defects that I didn’t complain about them straight away. How long do I have to notify about the defects and get them fixed?

Generally you have a two-year window to complain about non-structural defects, such as cracked tiles or cracks in the plaster, although the sooner you identify them to the builder, the less likelihood there will be that your actions, or normal wear and tear, can be blamed.

For structural faults, such as leaking pipes undermining the foundations or unstable walls, you have six years to ask for remediation. Each situation is different. A leaking bathroom does not necessarily involve structural damage.

One complaint the MBA has found not uncommon is that people build their gardens too close to foundations and cover soil with woodchips. These chips may contain white ants that move on to demolish the foundations. Such damage to foundations cannot be blamed on the builder, but on the landscaper.

Most states have the six-year and two-year remediation windows, but the time windows may vary slightly in the ACT and Western Australia.

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22/12/2014 09:14Sydney, Australia. 22 December,2014
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