There’s a loophole in the Home Building Contracts Act that sees some people waiting years for their home to be completed only to find that they have no legal recourse against the builder for the delay.

This loophole applies where the delay occurs before the building works have commenced rather than during the course of the build. Basically, the loophole works like this:
(a) Paragraph 9(1)(a) of the Home Building Contracts Act says that every home building contract is conditional upon a building licence being issued in respect of the home building work included in the contract within 45 working days from the date of the contract.
(b) Subsection 9(4), read with Schedule 1 of the same Act, effectively says that you cannot terminate the contract if this process is delayed, even if the delay is caused by the builder, unless the builder tries to increase the contract price on account of rising labour and supply costs.

During boom times in the home building market, some builders have been known sign up for a lot more building contracts than they could ever hope to get licences for within the prescribed 45-working-day period. In extreme cases, the building licence application may then be delayed for a period of months or years. These builders then invoke the provisions of the Home Building Contracts Act whilst consumers are forced to go over budget on unforeseen rental payments, mortgage repayments, storage and removal costs etc. Is there really no remedy for such consumers?

Maybe not…

If you are in this situation, you may be able to rely on the State and Federal laws which protect victims of misleading and deceptive conduct. The protection afforded by these laws may be available to you if:
(a) you entered into a lease or structured your financial affairs in a certain way in reliance on the belief that the builder would do his best to obtain a building licence with 45 working days of the date of the contract;
(b) the builder doesn’t say or do anything to indicate that there may be a delay in applying for a building licence;
(c) the builder in fact has no intention to apply for a building licence within this timeframe;
(d) you either would not have signed up with that builder or you would have structured your affairs differently had you not been misled by the builder’s conduct, words, or silence, into expecting him to try and obtain a licence within 45 working days; and
(e) as a result of the delayed licence application, you in fact suffer a loss.

If this describes your situation, why not come in for a free 20-minute discussion of your legal issue with our building and construction lawyer?

Related Havilah Legal service(s): Building & Construction Law