Most homeowners with a building problem start in the same place. Something is wrong, the builder says it is not their responsibility, and nobody has explained what would actually settle the argument. The word "defect" does a lot of work in those conversations, usually without either side being clear on what it means legally.
NSW law answers the question in two steps. First, does the problem amount to a breach of one of the statutory warranties, or of the statutory duty of care? That decides whether there is a claim at all. Second, is it a major defect? That decides how long you have to bring it, which in practice is what most claims turn on.
The Home Building Act 1989 sets out no general list of defects. Section 18B instead implies six warranties into every contract to do residential building work, given by the holder of a contractor licence or by a person required to hold one. A defect, for legal purposes, is a departure from one of those promises:
Framing the problem this way changes the conversation. "The tiles look wrong" is an opinion. "The waterproofing membrane was not installed in accordance with the specification, and the work does not comply with the National Construction Code" identifies a breach of a specific warranty, which is something a tribunal can rule on.
The warranties are implied by statute, so they apply whether or not the contract mentions them, and the same warranties run between a head contractor and a subcontractor. Under section 18D a successor in title has the same rights as their predecessor, so buying a recently built or renovated home usually carries the benefit of the warranties with it, and section 18C extends them to the immediate successor in title of an owner-builder or of a developer who did the work.
Section 18E sets the limitation rule. Proceedings for breach of a statutory warranty must be commenced within six years for a breach resulting in a major defect, and two years in any other case. The period runs from completion of the work the warranty relates to, not from the day the problem appeared. If the work was never completed, it runs from termination of the contract, the date work ceased, or the date of the contract, depending on how the job ended.
"Major defect" is defined in section 18E(4), and the definition has three paragraphs. Paragraph (a) is the one most claims turn on, and it has two limbs that must both be satisfied. The defect must be in a major element of the building and attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code, or some combination of those. It must also cause, or be likely to cause, one of three things: the inability to inhabit or use the building or part of it for its intended purpose, its destruction, or a threat of collapse.
A "major element" means an internal or external load-bearing component essential to the stability of the building or any part of it, including foundations and footings, floors, walls, roofs, columns and beams. It also includes a fire safety system, and waterproofing. That last inclusion is the single most useful thing for a homeowner to know, because water ingress is the most common serious residential defect and it is routinely described by builders as a maintenance issue rather than a defect in a major element.
The other two paragraphs are easy to miss, and neither requires the two-limb test to be satisfied. Paragraph (b) covers any defect prescribed by the regulations as a major defect. The prescribed category that matters most is external cladding: under clause 69A of the Home Building Regulation 2014, the failure of a building's external cladding to comply with the National Construction Code's performance requirements for fire resistance and fire safety is itself a major defect. That clause applies to buildings with a rise in storeys of more than two, and to breaches where the warranty period started on or after 20 April 2018, or started before that date and had not already expired by then. Paragraph (c) covers the use of a building product in contravention of the Building Products (Safety) Act 2017. For an owner in an apartment building with a cladding problem, this is the difference between arguing about threat of collapse and simply establishing that the cladding fails the Code.
One relief valve is worth knowing. If a breach becomes apparent within the last six months of the warranty period, proceedings may be commenced within a further six months after the period ends. A breach becomes apparent when a person entitled to the benefit of the warranty first becomes aware of it, or ought reasonably to have become aware of it. That second limb matters: a homeowner cannot extend the clock by not looking.
Has your builder told you that what you are looking at is not a defect?
Whether it is a defect, and whether it counts as major, decides both what you can claim and how long you have to claim it. Our Building and Construction team can assess the classification and the evidence behind it before a deadline settles the question for you.
Free consultationStatutory warranties are not the only path. Section 37 of the Design and Building Practitioners Act 2020 imposes a duty on any person who carries out construction work to exercise reasonable care to avoid economic loss caused by defects in or related to the building and arising from that work. The duty is owed to each owner of the land and to each subsequent owner, whether or not the work was carried out under a contract with that owner, and a person to whom it is owed is entitled to damages as if the duty were established at common law.
Construction work is defined broadly in section 36. It covers building work, the preparation of designs for building work, the manufacture or supply of a building product used for building work, and supervising, coordinating, project managing or otherwise having substantive control over any of that work. In practice the duty can reach a project manager, a designer or a director who directed the work, not only the builder who signed the contract.
Two features make it valuable where a warranty claim has run out of time. It operates retrospectively: Schedule 1, clause 5 extends Part 4 to construction work carried out before section 37 commenced, provided the loss first became apparent within the ten years immediately before commencement, or afterwards. And in Pafburn Pty Limited v The Owners - Strata Plan No 84674 [2024] HCA 49 the High Court dismissed an appeal by a developer and head contractor, confirming the duty is non-delegable, so a party cannot cut down its liability by pointing to the subcontractors who did the work.
There is still an outer limit. Section 6.20 of the Environmental Planning and Assessment Act 1979 prevents a civil action for loss arising out of defective building work being brought more than ten years after completion of the work. Completion is fixed by the date the occupation certificate issued, or where none was required the compliance certificate, and failing those by the date of a required final inspection or of first occupation. Section 6.20 does not extend any period under the Home Building Act, so the shorter warranty periods still bite first where they apply.
A defect claim is won on documents and expert evidence, not on how bad the problem looks. Five categories do most of the work.
The contract, plans and specifications. Two of the six warranties are measured directly against them. Without the specification, an argument that the work departed from what was agreed has nothing to be measured against. Retrieve the signed contract, the approved plans, the specification and every variation document before anything else.
An independent expert report. This is the centre of the claim. A useful report does four things: it identifies each defect specifically and by location, states the standard the work failed to meet, whether that is the contract documents, the National Construction Code or an Australian Standard, explains the cause, and sets out a scope of rectification works with a costing. A report that describes symptoms without identifying a breached standard rarely carries a claim, and one that omits costings leaves a tribunal with no basis on which to award anything.
Dated photographs and records. Photographs taken as the problem developed, with reliable dates, go to the two questions that decide most limitation arguments: when the defect appeared, and when you became aware of it. Site diaries, inspection reports and progress payment records fill in the rest.
The written notice trail. Every email and letter to the builder identifying the problem and asking for rectification. This is what later demonstrates the section 18BA notice duty was met, and it dates your awareness.
Records of access offered. Keep the correspondence in which you offered the builder access to inspect or rectify, and note any occasion on which the builder declined to attend.
Section 18BA imposes obligations on the person with the benefit of the warranty, and they are easy to breach without realising. When a breach becomes apparent, you must make reasonable efforts to ensure that a person against whom the warranty can be enforced is given written notice of the breach within six months. You must also not unreasonably refuse that person the access to the work they reasonably require in order to rectify it.
If a failure to comply with either duty is established, a court or tribunal may take it into account. Where the failure is a refusal of reasonable access, the court or tribunal must take it into account. Breach of a statutory warranty is also a breach of contract, so the ordinary duty to mitigate loss applies, although the onus of establishing a failure to mitigate sits on the party alleging it. A homeowner convinced the builder will only make things worse, who refuses to let them back on site, needs a reason they can explain later. Refusing access without one is among the few reliable ways to have a strong claim discounted.
NCAT hears building claims where the amount claimed does not exceed $500,000, under section 48K of the Home Building Act. Above that figure the claim belongs in a court. The Tribunal also has no jurisdiction over a statutory warranty claim lodged after the section 18E period has ended, so the classification question decides the forum as well as the timing.
The classification test and the time limits are identical everywhere in NSW. What differs by region is the kind of work producing the disputes, and therefore the kind of evidence that tends to decide them.
The area's built form is dominated by heritage terraces, established apartment blocks and increasingly ambitious renovations and rebuilds on tightly held blocks. Claims here more often concern alteration and addition work than new builds, which puts unusual weight on the contract documents: where the scope of a renovation was agreed loosely, there is less to measure the work against. Older strata schemes undergoing upgrade works produce the other recurring pattern, waterproofing failures traced to remedial work rather than to original construction. We advise Eastern Suburbs owners and owners corporations.
Much of the North Shore's medium and high-density stock, clustered around Chatswood, St Leonards and the Lane Cove corridor, has been built within the last decade, so a large number of schemes are inside or approaching the end of their statutory warranty periods. For those owners the six year and two year distinction is not academic. The same corridor extends through Macquarie Park and Ryde, one of Sydney's densest apartment markets. Where a defect affects common property rather than a single lot, the claim usually belongs to the owners corporation and not the individual owner, and the practical first step is persuading the scheme to commission the expert report. We act for North Shore and Macquarie Park owners and schemes, and for schemes across the Sutherland Shire, where an established strata base keeps the same common property questions in circulation.
Blacktown carries one of the largest new-dwelling approval pipelines in the state, and The Hills sits at the centre of the North West Growth Area. New estates and newly registered schemes across both, and across the Macarthur corridor, are now reaching the age at which defects surface. Volume housing brings a distinctive evidentiary advantage: the same defect often appears across many dwellings built to the same detail, which strengthens the argument that the cause is design or workmanship rather than maintenance. We advise owners in Blacktown, The Hills and Campbelltown.
The Central Coast carries a substantial strata base alongside continuing growth-corridor construction, and Wollongong has sustained medium-density and infill construction. Both are served by comparatively few practices doing this work locally, which in practice means owners often obtain an expert report later than they should, and sometimes after the shorter two year period has closed on defects that were never going to qualify as major. We advise Central Coast and Wollongong and Illawarra clients.
Sustained migration of Sydney buyers to the Southern Highlands has driven residential construction, renovation and subdivision across Bowral, Mittagong and the surrounding villages, in a market that has grown faster than its access to specialist advice. Renovation and heritage-related work carries the same evidentiary difficulty there as in the Eastern Suburbs: the looser the original scope, the more the claim rests on the expert. The deadlines do not adjust for distance from a construction lawyer. We advise Bowral and Southern Highlands clients remotely.
If a builder has told you that what you are looking at is not a defect, the useful next step is not to argue about it but to work out which warranty it engages and whether it is major, because those two answers set everything else. Our Building and Construction team advises homeowners and apartment owners and owners corporations on defect claims from first notice through expert reports to rectification or compensation, and our Litigation and Dispute Resolution team runs the NCAT and court side where a matter does not resolve. Get in touch for a free consultation.
This publication is intended as general information only and does not constitute legal advice. Please seek independent legal advice before acting on anything contained in it.
Liability limited by a scheme approved under Professional Standards Legislation.
There is no statutory list of defects. A defect is work that breaches one of the six statutory warranties implied by section 18B of the Home Building Act, such as work not done with due care and skill, not in accordance with the plans and specifications, or not compliant with the law.
A major defect is usually a defect in a major element of the building, caused by defective design, workmanship or materials or a failure to meet the National Construction Code's structural performance requirements, that makes the building uninhabitable or unusable, destroys it, or threatens collapse. Two further categories count without that test being satisfied: a defect prescribed by the regulations, which currently covers external cladding that fails the Code's fire resistance and fire safety requirements, and the use of a building product in contravention of the Building Products (Safety) Act 2017. The classification matters because a major defect gives you six years rather than two.
Often, yes. Waterproofing is expressly listed as a major element in section 18E, so a waterproofing failure can qualify if it also causes, or is likely to cause, the inability to use that part of the building for its intended purpose. Builders frequently describe such failures as maintenance instead.
Six years from completion of the work for a major defect, and two years for anything else. If the breach becomes apparent in the last six months of that period, you get a further six months. Separately, no civil action for defective building work can be brought more than ten years after completion.
The contract, approved plans, specification and variations, an independent expert report identifying each defect, the standard it fails and a costed scope of rectification works, dated photographs, and the written correspondence in which you notified the builder and offered access. The expert report is the part that usually decides the outcome.
Usually yes. Under section 18D a successor in title has the same rights in respect of a statutory warranty as their predecessor. The statutory duty of care under section 37 of the Design and Building Practitioners Act is also owed to each subsequent owner. The time limits still run from completion of the original work.
Section 18BA requires you not to unreasonably refuse the access a builder reasonably requires to rectify a breach. If a court or tribunal finds you did refuse unreasonably, it must take that into account, which can reduce what you recover. If you have a genuine reason to refuse, record it in writing at the time.
The statutory warranty route may be closed, but the duty of care under section 37 of the Design and Building Practitioners Act can still be available, including for work done before that section commenced. It is subject to the ten year limit in section 6.20 of the Environmental Planning and Assessment Act.
