How to complete handover and finalise the end of a domestic building project

What is this resource?

This resource is for homeowners in Victoria who have a major domestic building contract over $10,000 and want to know how to finalise their contract when the works are completed.

When building works finish, there are important steps you and your builder must take before the building project ends, according to your contract.

It is important to finalise the end of a domestic building projects according to your contract and the law. This process is known as handover.

This resource gives you legal information that may help avoid legal consequences.

Why is it important to finalise the end of a domestic building project correctly?

As part of your building project, you and your builder have rights and duties. These rights and duties are in your contract as well as in the law about domestic building contracts. If you or your builder do not finalise the end of your building project correctly this carries significant legal risk, including the risk of being sued.

If the end of your building project has been finalised correctly, it is important that you pay your builder their final payment. This resource will explain what to do if you think there are issues with the work to avoid a legal dispute.

What must happen at handover to finalise the end of a domestic building project?

A domestic building project finishes when your builder thinks works are completed according to your contract.

To finalise the end of the building project, your builder must give you:

• Written notice that works are finished, including the date completed;
• A copy of the occupancy permit (if you needed a building permit), otherwise a copy of the certificate of final inspection;
• A written request for final inspection, including the time and date; and
• A final payment invoice.

Before your builder gives you a final payment invoice, they must leave your property reasonably neat and tidy.

What if my builder hasn’t finished works by the completion date?

Your contract should include the number of days the project will take to complete. This is known as the building period. The building period will start on the day that the builder starts actually carrying out work on the building site. Once the number of days set out in the building period has passed, the contract will have reached the completion date.

In some cases, the completion date in your contract will change as the project is carried out. For example, if your builder gives you an extension of time notice or if you pay an invoice late.

If your builder doesn’t finish works by the completion date, you may have the right to receive compensation from your builder.

Compensation in this context is called liquidated damages. Your contract will say whether you have the right to receive liquidated damages and the rate at which they will accrue. The rate can be negotiated between you and the builder before the contract is signed. In some contracts the default rate may be $250. In other contracts, you may not have a right to liquidated damages if a rate is not included in your contract.

The period of time where liquidated damages accrue will start from the completion date and will end as soon as:

• The works are completed by the builder; or
• The contract is ended by you or the builder; or
• You move into the property or take possession of the property in another way before the works are finished.

What happens at a final inspection?

Once the building works are finished, your builder will invite you to a final inspection.

A final inspection is an important step in finalising the end of your domestic building project. You should attend a final inspection to check all works are completed according to your contract.

Typically, you and your builder will go around the property and check all the works listed in your contract. It can help to bring your plans and specifications, so you don’t miss anything. You may have an independent building inspector with you at the final inspection.

If you do not attend a final inspection, it may be assumed that you agree works are finished and there are no issues.

What if there are issues with the building works?

As you go around the property with your builder at the final inspection, you might notice issues with the works. Issues may include:

✔ Defects such as broken tiles or other building materials;

✔ Incomplete works such cabinets or screen doors that have not been installed yet; or

✔ Works that have not been built the way that you and the builder agreed to in your contract.

If you notice issues with the building works, the best time to identify them is at the final inspection. Identifying issues at the final inspection can help you avoid disputes with your builder down the track. Write down all the issues in a final inspection list.

If an issue exists because you didn’t do something you were meant to under your contract, like supplying or choosing building materials, this cannot be included in the list of defects or incomplete works at the final inspection.

However, this will not be your last chance to fix an issue with the works.

What if there are issues after handover?

You can raise issues with your builder after handover if you notice new defects, such as leaks, or something you noticed during final inspection is still not fixed. Your builder must fix defects, incomplete works, or works not to plans or specifications if you followed processes correctly.

After handover, you may be able to get your builder to fix issues through:

• A defects liability period, if it is in your contract; or
• Implied warranties under the law.

Defects liability period

A defects liability period is a timeframe in your building contract. Your builder is responsible for fixing certain issues with their building work within this timeframe.

Implied warranties

You are protected by implied warranties under the law that cover the quality and standard of domestic building work. These warranties may not be written in your contract but are implied into the document as they exist under the law.

Your builder cannot contract out of these rights. This means your builder is not allowed to include anything in contract that contradicts, changes, limits, or ignores implied warranties under the law. Even if your builder puts something in your contract that contradicts, changes, limits, or ignores implied warranties, you are still protected by them.

What are the implied warranties for the building works? 

The implied warranties on your building works are:

• the builder warrants that the work will be carried out in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract;
• the builder warrants 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;
• the builder warrants 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;
• the builder warrants that the work will be carried out with reasonable care and skill and will be completed by the date (or within the period) specified by the contract;
• the builder warrants 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 owner relies on the builder’s skill and judgement, the builder warrants that the work and any material used in carrying out the work will be reasonably fit for that purpose or will be of such a nature and quality that they might reasonably be expected to achieve that result.

How long am I covered by implied warranties under the law?

If your builder breached the implied warranties and you would like to make a claim against them at VCAT, you must make your claim within certain timeframes. These timeframes are known as limitation periods.

You are covered by implied warranties for up to 10 years from the date of the occupancy permit or certificate of final inspection.

If you do not have an occupancy permit or certificate of final inspection, you are covered for 6 years from the date the builder breached the warranties.

These timeframes mean that if you have a dispute with your builder about the quality and standard of work, you have to apply to VCAT before the limitation date ends. If you apply after the timeframe has ended, VCAT will not accept your application.

What if I think implied warranties were not met?

If you think your builder has not met implied warranties under the law, you need to show:

1. Your builder has not met implied warranties; and
2. The defective work or item was part of the building project covered by your contract.

It won’t always be obvious what caused defective work. You may need to obtain evidence to prove that the builder is responsible and confirm what work needs to be done to fix the defect. See our resource on ‘How to work with building experts to support a claim at VCAT’.

You can give your builder the report to show that your builder’s work didn’t meet the quality and standard of domestic building work covered under the law. Your builder should fix the issue or compensate you, so you can pay another builder to fix it.

What if my builder won’t fix the issue covered by implied warranties?

If your builder is unwilling or unable to fix the issue, and ongoing damage will continue to occur without fixing the issue, you may need to get another builder to fix the works. It’s important to seek legal advice before you undertake this step. You may be able to apply to VCAT to get compensation from your builder to cover the cost of getting the issue fixed.

If you go to VCAT, you will need to show that you did not let the issue get worse, and that you suffered financial loss because your builder did not meet the quality and standard of domestic building work covered under the law.

What if I bought a property that has issues?

If you purchased a property, you may also be covered by implied warranties under the law.

The same timeframes apply as if you were the original owner. For example, if you bought the property 1 year ago and an occupancy permit was issued 3 years ago, you are covered by implied warranties under the law for another 6 years.

For more information about purchasing a home with defect, you might find helpful our ‘I bought a house with building defect. Can I pursue the original builder?’ resource.

Key terms

Legal term	Meaning
Breach	An issue that may give you a legal right to end a contract.
Defect	Work that is not carried out with due care and skill, or work that does not comply with building laws and regulations.
Finalisation	The process and steps that need to be taken to end a contract.
Implied warranties	Assurance of quality and standard of domestic building work that may not be written in a contract but is implied into the document by law.
Incomplete work	Work that the builder was required to carry out under the plans or specifications that wasn’t finished.
Liability	Legal responsibility.
Warranty	An assurance of quality.

A list of building definitions can be found on the Consumer Affairs Victoria Building definitions website.