What is the Queensland Home Warranty Scheme?
The Queensland Home Warranty Scheme is a statutory insurance scheme that provides insurance cover for certain residential construction work valued over $3,300. Its purpose is to provide protection for consumers for non-completion, defective construction and subsidence.
The scheme is administered by the Queensland Building and Construction Commission.
What works are covered?
The Queensland Home Warranty Scheme covers ‘residential construction work’ as outlined in the Queensland Building and Construction Commission Act 1991 and the Queensland Building and Construction Commission Regulation 2003. The scheme usually covers construction of and repairs to the singe detached dwellings, residential units and townhouses of three storeys or less.
When are premiums payable?
A policy of insurance for residential construction work must be taken out, by either the licensed contractor or the construction manager, as soon as practicable after a contract for the works has been entered into.
The premium is calculated on the value of the contract. A certificate of insurance is issued with respect to the residential construction work once the correct premium is paid and accepted. The certificate of insurance constitutes evidence that the contracted works are covered by insurance.
When does the policy of insurance come into force?
The policy of insurance comes into force on the earliest of the following events:
- When a licensed contractor pays the appropriate insurance premium for the work.
- On the date a contract between a building contractor and a consumer is entered into for the work.
- When a building contractor commences the work.
How do I make a claim?
A homeowner can make a claim on the insurance scheme by lodging a Complaint Form with the Queensland Building and Construction Commission. Complaints can be made with respect to:
- Defective building work, including defects arising during construction;
- Incomplete work due to abandonment of site, loss of building licence, bankruptcy, liquidation or death
- Damage to your property caused by building work carried out on a neighbouring property
- A pre-purchase or pest inspection report that didn’t identify the existing defects
- Building design prepared by a building professional
- Unlicensed building work or suspected illegal or inappropriate conduct by the builder
- The professional conduct of a building certifier
What if I am served with a direction to rectify?
The QBCC may direct the building contractor or any other person who carried out or was to carry out the relevant works to rectify or complete the building work within the period stated in the direction.
If you receive a direction to rectify, it is imperative that you comply with the direction or apply for a review within 28 days. If you have received a direction to rectify and you were not the person who carried out the building work in question, you can challenge the validity of the direction notice.
Given the limited timeframe imposed by the QBCC in attending to a direction to rectify, it is important that you attend any scheduled site inspections, so that you can discuss the defects identified with the QBCC’s building inspector and/or the homeowner.
What if the defective work was the fault of a subcontractor?
You should immediately alert the QBCC if the defective work was the fault of a subcontractor, so that they can also pursue the subcontractor. A direction to rectify may be given to more than one person with respect to the same building work.
Please note that notification to the QBCC will not absolve you of the obligations as set out in the direction to rectify.
I did work for a developer. Does it matter if a subsequent purchaser makes a complaint about my work?
No, it does not matter if a subsequent purchaser of residential construction work makes a complaint about your work. The subsequent owners of residential construction work, which was covered by the insurance scheme, may claim indemnity under the statutory insurance subject to certain limitations.
What if I am served with a scope of work?
In the event that you fail to resolve the direction to rectify or complete within the prescribed time period (usually 28 days from issue), the homeowner’s complaint may progress from dispute resolution stage to insurance assessment. The QBCC will then assess the complaint as an insurance claim and may subsequently issue a scope of work for completion or rectification of building work. You will have 28 days from the date of issue of the scope of work to apply for a review of the QBCC’s decision. If you do not take any action, the claim may progress to payout and you may become liable for repayment of the claim amount to the QBCC.
Payment on a claim under the Queensland Home Warranty Scheme
If you do not comply with a direction to rectify and rectification or completion of the building work is required, the QBCC will upon issuing of the appropriate scope of work, seek tenders from licensed contractors to carry out the scope. The QBCC may then pay any amount assessed under the insurance policy to the rectifying builder or the homeowner, subject to certain limitations.
If the QBCC pays out any amount on a claim made under the Queensland Home Warranty Scheme, it may proceed to recover those amounts as debt from a contractor who carried out or was to carry out the subject building work, or from any other persons through whose fault the claim arose. The QBCC may also seek recovery against directors if the relevant debtor is a company. A person may become liable if he or she was a director of the company when the building work, the subject of the claim was, or was to have been, carried out and/or an individual who was a director of the company when the payments were made by the QBCC under the Queensland Home Warranty Scheme.
What can I do if I did not respond to the direction to rectify and/or the scope of work
It is essential for the building licence holders to monitor any correspondence from the QBCC. However, if you miss a direction to rectify or a scope of work notification, you may be able to apply for an internal review of the QBCC’s decision to issue those notices. Any such applications must be made within 28 days of the issue of notices unless an extension of time is allowed by the QBCC.
You may also be eligible to lodge an external review application with the Queensland Civil and Administrative Tribunal (QCAT), if you are not satisfied with the QBCC’s internal review.
However, if you fail to apply for a review, you may be later prevented from raising any matters with respect to the QBCC’s assessment of the claim under the Queensland Home Warranty Insurance in the recovery proceedings with respect to the claim. There is court authority with respect to the various matters which are not justiciable outside of the QCAT’s review proceedings.
Why is it important to keep your contact details up to date with the QBCC?
It is the responsibility of the building licence holder to update their contact details with the QBCC. Any notices or important correspondence are usually subject to the strict compliance deadlines. It is not sufficient to assert that you did not receive a notice due to an incorrect address supplied to the QBCC and you may not be able to secure time extensions for responding to the QBCC’s directions or requests.
For further information fill out the form to the right to make an online enquiry or otherwise contact us on 07 3009 8444.