Updated 4 June 2020
If you bought a house with building defects, in some circumstances, you can make a claim against the builder contracted by the previous owner, even if you were never part of the original building contract.
This resource explains:
All domestic building contracts have implied warranties that ‘run with the property’. That means that whoever is the owner of the property can make a claim against the builder if the builder breached one of the implied warranties of the original building contract – for example, if the builder did not follow plans and specifications, or did not carry out the works with reasonable care and skill. The relevant law is set out in sections 8 and 9 of the Domestic Building Contracts Act 1995 (Vic).
To make a claim against a builder contracted by a previous property owner:
Depending on the nature of your claim, the limitation period to file a claim in VCAT is usually 10 years from the date your occupancy permit or certificate of final inspection was issued. However, in some situations, a 6 year limitation period applies from the date the contract was breached instead.
It is your responsibility to make sure you file your application at VCAT within your relevant limitation period. You should seek legal advice as soon as possible if you are not sure if the limitation period has expired, or if you think it’s close to expiring.
You can ask the person who sold you the property to confirm who built your home. If the seller contracted the builder, they can likely tell you who the builder is and give you a copy of relevant documents.
You should confirm the correct identity of the builder by obtaining and reviewing the following documents that will likely list the name of the builder:
These documents may be included in the bundle of documents you received when you purchased your home, as part of the “section 32 vendors statement” attached to the contract of sale.
Below are some examples of common scenarios illustrating when a subsequent purchase can make a claim against the builder of their property. Every situation is different, and these scenarios are intended as guidance only. You should always obtain legal advice before commencing legal proceedings.
In 2015, Bob bought a house from Susan. Bob inspected the house before he signed the contract and did not find any issues. Seeing that the house only received an occupancy permit in 2013, Bob happily purchased his first home.
In 2018, Bob noticed cracks appearing on the house. Bob asked a building expert to take a look at it, and the expert told Bob that the entire foundation of the house was compromised because the builder used bad materials.
Bob went through his Contract of Sale documents and found a building permit listing the name of the builder. After seeking legal advice, Bob tried to resolve the dispute with the builder both directly and through DBDRV, but the builder refused to respond. Bob commenced proceedings at VCAT against the builder for breaching section 8 warranties before the limitation period expired.
In 2015, John bought a house from Amy. John discovered that the house was initially built in 2004, but Amy engaged the same builder to build a 1 room extension at the back of the house in 2014.
In 2016, John noticed defects in both the old and new part of the house.
After seeking legal advice, John found out that he could not make a claim against the builder for defects in the part of the house built in 2004. That part of the claim was time-barred. However, John could still make a claim against the builder for defects he found in the 1 room extension built in 2014.
In 2015, Sally entered into a contract of sale with Coffee Homes Pty Ltd to buy a house and land package. Coffee Homes told Sally that the house would be completed in January 2016.
In January 2016, Sally happily moved into her new house. Six months later, water started leaking from her upstairs bathroom into the ceiling on the ground floor. After consulting a building expert, Sally found out that no waterproofing was installed in the upstairs bathroom at all.
Sally spoke to Coffee Homes about the issue, and they told Sally that they had contracted Tea Constructions Pty ltd to build Sally’s house. Coffee Homes gave Sally a copy of the building contract and building permit.
After obtaining legal advice, Sally tried to resolve the issue with Tea Constructions, both directly and via DBDRV. Tea Constructions refused to accept any liability, so Sally commenced proceedings at VCAT against Tea Constructions.