“Don’t wait to buy real estate, buy real estate and wait.” – Robert G. Allen
However, sometimes the eagerness to enter the property game may not work out in your favour. Buying an off-the-plan property may seem like a secure and straightforward investment, but what happens when your expectations are not met? Namely, the troubles begin when your premise is littered with building defects and you aren’t sure whether to blame the builder, vendor, surveyor, or perhaps just pick up the hammer and fix it yourself!
Both statute and common laws do afford some form of comfort for you but it turns on each individual facts and circumstances.
Potential Actions Against the Builder
Usually, a property owner who suffers damage from defective building work can consider the following courses of action against the builder:
🔨 Breach of Contract
🔨 Tort of Negligence
🔨 Domestic Building Contracts Act 1995 (Vic)
🔨 Australian Consumer Law
🔨 Domestic Building Insurance
Breach of Contract
Maintaining a breach of contract claim is contingent upon whether a valid and enforceable agreement exists between you and the builder.
If your off-the-plan Contract with the vendor includes a phrase to the likes of “this contract is subject to and conditional upon the Vendor entering into a domestic Building Contract with a registered builder for the building works” then you are not privy to a contract with the builder and may limit your prospect of establishing a breach of contract as a cause of action.
Tort of Negligence
A claim in negligence may arise in circumstances where a builder has breached a duty of care by not satisfying the standard of care expected of a reasonable person in their position. As a result, this breach of duty of care has caused you to sustain economic loss. A negligence claim may provide compensation for loss where no contractual or statutory warranties are available. Moreover, the builder may be held accountable for the negligence of their subcontractors (e.g. tilers, plumbers etc).
Where the negligence claim for building matter pertains to pure economic loss, the Court places substantial emphasis on your vulnerability, the builder’s knowledge of the likely risk of harm and your reliance on the builder.
Domestic Building Contracts Act 1995 (Vic)
Another potential avenue in the absence of an enforceable contract between you and the builder may involve a claim for a breach of an implied warranty.
All domestic building contract contain implied warranties that “run with the property”. It is therefore possible to make a claim against the builder for breaching an implied warranty of the original building contract, despite the fact that you are not a party to it.
A list of the implied warranties that automatically apply to all domestic building work may be found in section 8 of the Domestic Building Contracts Act 1995 (Vic).
Australian Consumer Law
In accordance with the Australian Consumer Law, most building works provided by a builder is classified as a form of ‘service’ that carries automatic guarantees. Some of those guarantees include not ensuring that the building works are provided with due care and skill and that the final product, resulting from the rendered service, is reasonably fit for its intended purpose.
The remedies available under the Australian Consumer Law for a proven breach of consumer guarantees may include the following:
- The builder must remedy the failures within a reasonable time. If these remedies prove unsatisfactory, then you may be entitled to terminate relevant contracts or recover any reasonable cost incurred in the process of remedying the failures.
- Recovery of damages for any loss or damage suffered by you due to the builder’s failure to comply with the relevant consumer guarantees.
Domestic Building Insurance
If there is any concern of your builder disappearing or going insolvent, you may be able to turn to their domestic building insurance.
However, there is a limit to the rectification costs that can be covered.
Given the complexity of this field and the myriad of options available, it is highly necessary to secure competent legal advice with the focus of providing you with the most cost effective legal solution. At Nevile & Co we understand the importance of property as an investment for your future and that is why our services ensure that no screw is left loose. Contact us today at firstname.lastname@example.org
Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.