If you have engaged a builder to renovate or build a new home, chances are you have paid for the Home Warranty Insurance. Did you know that policy may cover you for up to $200,000 if the builder fails to finish the contract?
What should you look out for?
There are strict rules and exclusions regarding the policy. But be cautious, one of those strict rules is time limits. A delay to your project may let this policy lapse.
If your build is delayed, you should speak to a building and construction lawyer urgently.
Material Law specialises in residential construction law. We can help you understand the ins and outs of the Home Warranty Insurance and your building contract. Did you know we offer 30-minute free consults? Contact us to book yours.
Why you should care about the Home Warranty Insurance?
It’s becoming a norm that builders seem rock solid one day and absent the next. The depressing fact is you will likely never really know how financially stable your builder is until work on your project grinds to a halt or subcontractors start taking materials off your property.
Fortunately, the Home Warranty Insurance Scheme has been around for a while and can be a lifeline for homeowners who are left with a half-finished house or renovation. The policy does not apply to all contracts and projects, and we recommend you speak to a residential building and construction lawyer before you sign the contract.
The bad news is that as the number of unfinished homes are on the rise and the number of claims increase, the Queensland Building and Construction Commission, who administer the insurance scheme, are strictly enforcing the terms and conditions.
You may unknowingly be precluding yourself from the protection of the insurance policy which you have no doubt paid for.
Case study: Your project is running late… really late
Let’s say you signed a lump sum contract with a builder. This could be a HIA QC1 New Home Construction Contract, HIA QC3 Alteration, Addition and Renovation Contract or even a Master Builders Residential Building Contract – Level 2.
The project is supposed to take one year, and you were responsible for obtaining the required building approvals.
The builder issues you with a commencement notice (have a look at our common mistakes guide for homeowners for more information).
Work progresses quickly, and you have happily paid the base stage and framing stage invoices. Perhaps cladding has been delayed because of material shortages, but otherwise the work appears to be moving forward.
After a while the progress slows down. Things are taking longer to complete and there seems to be new trades on site and original subcontractors seem to be absent.
After a while, even though you are reluctant to say anything, there have been long absences from the site and no work is underway.
The builder has been providing you with plausible reasons, but you are becoming more and more sceptical.
The one-year deadline has long since passed and your house is only 75% complete You are getting desperate and frustrated at the lack of progress. Decisions need to be made regarding what to do.
Importantly, if you allow the project to continue, you may be letting the insurance policy lapse.
Assuming that the work is residential construction and it’s a fixed price contract (these are discussed in some of our other homeowner guides), you would only qualify for assistance if the building contract ends within 2 years after the day work starts.
In this scenario, to potentially qualify for a non-completion claim under the Home Warranty Insurance, the building contract must be at an end before the 2 year time limit.
You are now in a very difficult position. There are likely strict procedures under the building contract which you need to follow. But if you don’t do something, your rights to obtain assistance under the Home Warranty Insurance will lapse.
It gets more complicated when you consider defective building work, non-compliance with drawings, specifications, extensions of time and delay costs. These factors are considered in our other guides for homeowners.
What to do!
Our suggestion, speak to a building and construction lawyer who specialises in residential building.
Material Law can provide you with help to consider your options.
We can’t make decisions for you, but we can help lay out strategies so you can feel comfortable with the pathway you choose. This is because we understand the stress involved in a build and not just the financial problems.
Give us a call. There are no obligations. We offer you a 30-minute free consultation so you can understand what to do next.