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The Queensland Building Services Authority Act 1991 (“the Act”) provides that the BSA is to establish a statutory insurance scheme to protect consumers of residential construction work from, amongst other things, defective building works undertaken by BSA licensed builders.
“Residential construction work” is defined extensively in the Queensland Building Services Authority Regulation 2003 (“the Regulations”) but most relevantly is the requirement for the value of the work to exceed $3,300.00. There are several specific exceptions, the most relevant perhaps being that a multiple dwelling of more than 3 storeys is not residential building work.
There are time limitations for claims made under the Queensland Building Services Authority’s (“BSA”) Queensland Home Warranty Scheme (“BSA Insurance”) for defective construction. The time for a consumer to make a claim depends upon, firstly, the type of defect (i.e. category 1 or category 2) claimed in the building works, and secondly, when the insurance premium and building contract where entered into.
Category 1 Defect
A category 1 defect is defined as: “…building work that is faulty or unsatisfactory because it either:
(a) adversely affects the structural performance of a building;
(b) adversely affects the health or safety of persons residing in or occupying a building;
(c) adversely affects the functional use of the building; or
(d) allows water penetration into a building.
Category 1 defects could generally be described as defects of a more serious nature including, for example:
- structural defects;
- a leaking roof;
- a serious health and/or safety issue effecting the property.
The BSA is only liable for loss for a category 1 defect for the period of 6 years and 6 months from the earlier of the date the insurance premium was paid, or the date the building contract was entered into (“Relevant Date”). If neither the premium was paid nor a written contract entered into, the Relevant Date is the date of commencement of construction.
Importantly, the consumer is not entitled to bring a claim under the BSA Insurance Policy for a category 1 defect unless the claim is brought within 3 months of the defect first becoming evident (in the opinion of the BSA).
However, if the residential construction work has not reached practical completion within 6 months from the Relevant Date, the period of insurance cover is extended for the period that it takes to reach practical completion. For example, if practical completion takes 12 months, the claim may be brought within 7 years from the Relevant Date.
Category 2 Defect
A category 2 defect is defined as:
“…building work that is faulty or unsatisfactory, other than a category 1 defect, because:
(a) it does not meet reasonable standards of construction or finish; or
(b) it has caused a “settling in period” defect in a new building.
Category 2 defects could generally be described as defects of a less serious nature relating to fit and finish including, for example, sticking doors or windows or the cracking of plasterboard.
The BSA is only liable for loss for a category 2 defect for where the defect first became evident within 6 months after the date of practical completion of the residential construction work.
The consumer is not entitled to bring a claim under the BSA Insurance Policy for a category 2 defect unless the claim is brought within 7 months of the date of practical completion.
Further Information
The BSA has the discretion to allow a claim to be brought outside these time limits, however the prudent course is to follow these strict timeframes.
It should be noted that there are different versions of the BSA Insurance Policy and that this advice is relevant only to the most recent version and consideration should be given to the particular terms of the relevant policy. You should seek legal advice urgently if a defect in your property becomes evident.
