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Cautionary Note 43 – Changes in Home Building Warranty Insurance
May 1, 2002
Based on data collected from inspection of over 50,000 buildings we issue the following advice.
From the 2 April 2002 the Department of Fair Trading has made a number of changes to the Home Building Warranty Insurance. We have prepared a summary of the changes in the following Table.
Issue Prior to 2.2.2002 After 2.2.2002 Contract value above which home building warranty insurance is compulsory. $5,000 $12,000
Certificate of Insurance must be attached to the contractWarranty period for non-structural work eg plumbing, painting, electrical. 7 years
from completion of the work2 years
from completion of the workRequirements for Class 2 buildings (units) over 3 storeys high. Insurance required No insurance required We also remind all practitioners that for the contract between a consumer and contractor to be enforceable,* the contract must:
- be in writing and describe the extent of the work;
- state contract price and completion date;
- include contractor’s current DFT licence number and be executed in name of the licensee;
- list all statutory warranties required by the Home Building Act.
Fortunately, with careful advice about risk management and quality assurance, your clients, both contractors and consumers, will rarely, if ever, need to rely on this type of insurance.
* The Director of the Department of Fair Trading can vary these rules upon application.
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