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25 November 2011

The amendments to the Home Building Act 1989 have wide ranging implications to home owners and builders. The amendments also commence at different times. The most important changes to the Act are set out below.

These amendments commence on 25 October 2011

  1. Minimum home warranty insurance requirements have been increased from $200,000 to $340,000.1
  2. Any insurance claim must be made during the period of insurance and must now be made in writing.2
  3. A loss that becomes apparent in the last 6 months of the insurance period has an extended claim period and is extended for a further 6 months from the date the loss became apparent. This does not apply to incomplete work.3
  4. Where the loss becomes apparent during the period of insurance but an insured event has not occurred, a claim may be made after the period of insurance but only if the insurer has been "properly notified" during the period of insurance and the builder was diligently pursued.4
  5. A loss is "properly notified" to an insurer only if the insurer has been given notice in writing of the loss and the notice provides such information as may be reasonably necessary to put the insurer on notice as to the nature and circumstances of the loss. The regulations can make provision for or with respect to the form and content of such a notice.5
  6. A contract of home warranty insurance entered into before 1 July 2010 does not in any circumstances provide insurance cover in respect of loss unless a claim in respect of the loss is made to the insurer within 10 years after the work insured was completed.6

These amendments commence on 1 February 2012

  1. The statutory period of warranty has been reduced from 7 years to 6 years for structural defects and increased from 1 year to 2 years for all other defects.7
  2. The threshold for mandatory home warranty insurance has been increased from $12,000 to $20,000 and is known as the prescribed amount. The prescribed amount of $20,000 is inclusive of GST and where works equal or exceed this amount insurance must be obtained.8
  3. Maximum excess to be paid when making a claim has been reduced from $500 to $250.9
  4. By far the most cogent change to the Act is the reduction of the statutory warranty for structural defects from 7 years to 6 years bringing the Act in line with contractual causes of action as set out in the Limitations Act 1969.10

Home Building Regualtion 2004 (NSW) cl 60.
Home Building Act 1989 (NSW) s 103BB(1).
Ibid s 103BB(2) .
Ibid s 103BB(3).
Ibid s 103BB(7).
Ibid s 103BC.
Ibid s 18.
8 Home Building Regualtion 2004 (NSW) cl 60.
Ibid cl 70.
10 Ibid cl 18 .