Domestic Building Warranty Claims by Owners Corporations
We have extensive experience against builders at VCAT prosecuting domestic building warranty claims by Owners Corporations affecting common property. Owners Corporations legal matters are unique.
Engaging a lawyer that is an expert in Owners Corporations law can make all the difference. When a building has defective building work on the common property, suing the Builder is not straight forward. We have extensive experience in making claims against a builder in respect to defective building works affecting common property at VCAT.
Tisher Liner FC Law advise Owners Corporations for residential and commercial buildings across Victoria, and have successfully represented Owners Corporations in complex VCAT owners corporations disputes involving builders, architects, building surveyors and plumbers in domestic building warranty claims affecting common property.
Legal Ownership and Boundaries
In subdivided buildings, different parts of the building structures are owned by different people/entities. The Plan of Subdivision determines which building structures are common property (legally owned by the relevant unlimited Owners Corporation) and which building structures are private lot property (legally owners by each private lot owner).
Private lot owners are responsible under section 129 of the Owners Corporations Act 2006 to properly maintain in a state of good and serviceable repair, and part of their lot property that affects the outward appearance of the lot or the use and enjoyment of other lots of the common property and to maintain any service (for example utility service, gas, electricity etc) that services that lot exclusively. This duty exists regardless of whether the lot owner is able to bring a successful building action for defective domestic building work.
The Owners Corporation does not have the legal right to bring a building action for the cost of fixing any originating defect that is located in a private lot property being structure. Such a building action to recover the cost of rectifying defective domestic building work that is part of private lot property would need to be commenced in the name of the affected lot owner.
The Owners Corporation does not have an automatic right under the Owners Corporations Act 2006 to use its members’ funds to pay for private lot property repairs and maintenance or for the cost of prosecuting legal proceedings for defects in private lot property – although it may be possible for the Owners Corporation, subject to agreed terms and conditions, to authorise itself by special resolution to provide such services under section 12 of the Owners Corporations Act 2006.
Determining the legal ownership of the different parts of the building structure helps determine which person is liable under the Owners Corporations Act 2006 to fix the defective building structure, or, who has the legal right to sue others for compensation for loss and damage arising from defective building work (if any).
Pre-condition to Commencing VCAT Building Dispute: DBDRV Certificate of Conciliation Required
Under the DBC Act a building owner cannot commence a domestic Building Dispute in VCAT unless you have first obtained a “Certificate of Conciliation” from a relatively newly created body called the “Domestic Building Dispute Resolution Victoria” (“DBDRV”).
Participating in the DBDRV process does not extend the Limitation Date, and based on experience can take longer that six (6) months to complete.
You should be aware that if you fail to include a particular category of originating defects in the DBDRV application, then you may not be authorised to bring a building action in VCAT for that defect.
Therefore, it is important to identify as far as possible, all of the likely defects affecting the common property prior to making such an application.
Table of likely applicable limitation periods in Victoria
|Type of Legal or Insurance Action||Limitation Period / Expiry Date|
|Commencing a Domestic Building Dispute in VCAT against a Building Practitioner||
Not more than 10 years after the date of the relevant Occupancy Permit or Certificate of Final Inspection.
Important note: Filing an conciliation application though the DBDRV conciliation process does not equate to commencing a domestic building dispute.
Further note: This limitation period does not apply for works were a Occupancy Permit or Certificate of Final Inspection
Commencing a Domestic Building Dispute in VCAT against a Plumber
Not more than 10 years after the date of the relevant Plumbing Compliance Certificate.
|Domestic Building Insurance (sometimes called “home warranty insurance”)||
Notification to be made to the building warranty insurer (if any) of all non-structural defects within two (2) years from the completion date of the building works.
Notification to be made the building warranty insurer (if any) of all structural defects within six (6) years from the completion date of the building works.
|Domestic Plumber’s Insurance||
Notification to be made to the licensed plumber or the plumber’s insurer within six (6) years after the date that the licensed plumber issued a compliance certificate in relation to that domestic plumbing work.
In circumstances where a plumbing compliance certificate has not been issued, notification to be made to the licensed plumber or the plumber’s insurer with six (6) years after the date the plumber stopped carrying out the work.
Important Note: “Notification” of defects given to the licensed plumber within the six year period, is deemed to be notice also provided to the plumber’s Insurer.
Applicable Legislative Framework
VCAT Domestic Building Disputes / Building Actions
The Victoria Civil & Administrative Tribunal (“VCAT”) is the Tribunal in Victoria that has the power to make orders that it considers fair to resolve a “domestic building dispute”. VCAT has the power to make orders for the payment of money or damages or an order for rectification of defective building work (VCAT more commonly awards monetary damages and less commonly orders for rectification).
What is a Domestic Building Dispute?
A “domestic building dispute” has a legal definition under section 54 of the Domestic Building Contracts Act 1995, (“the DBC Act”) and relevantly includes:
A dispute or claim (for example a claim based on breach of Builder’s Warranty, breach of building contract generally or negligence) arising between a building owner and a builder, building practitioner, sub-contractor or architect in relation to a domestic building contract for the carrying out of domestic building work.
Domestic building work does not include building work to construct premises which are solely used for commercial or industrial purposes.
Is the Owners Corporation a ‘Building Owner’?
Yes, the relevant Unlimited Owners Corporation is the subsequent legal owner of all the common property in the Plan, and is considered under the DBC Act to be a subsequent ‘building owner’ who is entitled to apply to VCAT to resolve a domestic building dispute in respect of any originating defects in any common property domestic building work performed by the builder (section 9 of the DBC Act).
The Builder’s Statutory Warranties for Domestic Building Work
Builders in Victoria must give the following warranties for domestic building work carried out under a domestic building contract (section 8 of the DBC Act) :-
- That the work will be carried out in a proper and workmanlike manned and in accordance with the plans and specifications set out in the contract;
- That all materials to be supplied by the builder for use in the work will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new;
- That the work will be carried out in accordance with, and will comply with, all laws and legal requirements including, without limiting the generality of this warranty, the Building Act 1993 and the regulations made under that Act;
- That the work will be carried out with reasonable care and skill and will be completed by the date (or within the period) specified in the contract;
- That if the work consists of the erection or construction of a home, or is work intended to renovate, alter, extend, improve or repair a home to a stage suitable for occupation, the home will be suitable for occupation at the time the work is completed;
- If the contract states the particular purpose for which the work is required, or the result which the building owner wishes the work to achieve, so as to show that the building owners relies on the builder’s skill and judgment, the builder warrants that the work and any material used in carrying out the work will be reasonable for that purpose or will be of such a nature and quality that they might reasonably be expected to achieve that result.
When will domestic building work be regarded as “defective”?
“Defective” domestic building work has a legal definition. It includes domestic building work that has been carried out:-
- In breach of a Builder’s Statutory Warranty under section 8 of the DBC Act; or
- Which fails to maintain a standard of quality of building work specified in the domestic building contract .
Special Resolution required to commence legal proceedings
Do you have a domestic building warranty claims by owners corporations? In the event it becomes necessary to sue the builder (or other liable party) by commencing a VCAT building dispute before the expiry of the Limitation then an Owners Corporation must pass a special resolution of all its members to authorise that VCAT proceeding (section 18 of the Owners Corporations Act 2006).
A special resolution requires 75% of all lot owners to be in favour of commencing the VCAT proceeding against the builder (or an interim special resolution under s.97 of the Owners Corporations Act 2006).
Please note that the above is intended to be a brief outline of the necessary pre-litigation steps and considerations to the applicable legal process for defective domestic building work in Victoria only. It is recommended that Owners Corporations seek legal advice which applies to each Owners Corporation’s different and individual circumstances.
Check out our flyer which sets out the outline of key pre-litigation steps prior to commencing a defective domestic building action here: TLFC- Building Defects in Victoria.
For advice or assistance with domestic building disputes for Owners Corporations please contact Phillip Leaman by email at firstname.lastname@example.org or by phone 03 8600 9314. For details of the other services we can provide Owners Corporations check out our Owners Corporations expertise page here.