In recent months you may have heard the news about Tasmanian Constructions (Hotondo Homes franchise in Hobart) going into liquidation.

Tasmania does not have a requirement (since about 2008) requiring Home Warranty Insurance. However, in NSW there is a requirement for home building compensation fund (Home Warranty Insurance) cover to be taken out by the builder for work that is over $20,000.

It is important for all Owners (and Builders at the same time) to ensure that at the time of entering into a building contract and prior to any work commencing, the Builder has taken out a Home Building Compensation Fund cover.

The Home Building Act 1989 (NSW) expressly requires such insurance to be obtained. This would provide some cover and work as a protection for people for incomplete work and defects if a Builder enters into liquidation or disappears/ goes missing or has licence suspended/cancelled. The insurance cover is also there to protect just in case the Builder is unable to pay any Court Orders (or NCAT Orders) made against them. Coverage by the Home Building Compensation Fund in NSW is limited, and current policies give an aggregate amount of $340,000.00 maximum per policy.

Once you receive your Home Building Compensation Fund Certificate, it is also important to check that all the details are correct, including the fact that the person or company named in the certificate that will carry out the building work is the same one that is named in the building contract that you signed. There have been cases where policy coverage is under the director’s personal name as opposed to a company name which is listed on the Contract.

Need to obtain legal advice on the building contract? Contact Atul Singh today.

Written by Atul Singh.

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