HOME owners — house and units — are facing the possibility of losing consumer protections.
Changes in the Home Building Amendment Act 2014 are due to take effect in mid-January.
David Bannerman, the principal of Bannermans Lawyers, says NSW Fair Trading Minister Matthew Mason-Cox indicated during a speech at the Strata Community Australia (NSW) Convention recently that compensating home owners for defective residential building work under the self-insurance scheme SICorp was costing the state government $1.5 million a week.
"One of the government's solutions to this problem is to reduce the rights of home owners to recover under insurance claims and as a consequence claims against builders, developers and sub-contractors," Mr Bannerman said
The six-year warranty for "structural" defects for insurance issued from July 1, 2002, will be replaced with a six-year warranty limited to "major defects".
These are defined in terms such as of "inability to inhabit", "destruction of the building" or "threat of collapse".
"This move will exclude the rectification costs of many external cracking and water ingress issues," Mr Bannerman said.
"Claims for such defects are only likely to succeed if they are made within two years of a building's completion."
"This is just one of a raft of amendments that will make it more difficult for claims by home owners to succeed.
"The relief to the government coffers should be immediate, because many of the amendments, including the change from 'structural' to 'major' defects, will be made retrospective."
Builders, developers and subcontractors stand to benefit in much the same way in respect of work performed under a contract entered into after February 1, 2012.
Home owners can avoid the retrospective loss of rights with respect to their home owner warranties by:
1) Starting legal proceedings against the builder or developer responsible for their home, where there is an available action for breach of the warranties (that is, building defects); or
2) Where the circumstances and policy terms allow, lodging a claim with the home owner's warranty insurer.
These actions should begin now.