Although the builder is contractually obliged to return to the residence within a minimum 120 days to rectify any defects observed after (or during) Practical Completion, your builder is also responsible to rectify defects and incomplete work for 6 years from the date of practical completion. If your builder dies or becomes insolvent the building work is insured under a home owner warranty or building warranty and your insurer will take over.

WHat is building handover?

Legislation provides for a minimum 120 days defects liability so that your builder may complete the home building work. The 120 days begins on the same date as practical completion. (Practical Completion is the date which the building work is ready for use - ie with reference to homes this is the day that you can move in.) In short this means that although your house may not be finished the builder has 120 days to finish the work, so long as that work does not stop the building being lived in, or otherwise used for the intended purpose.

We are often asked what is the purpose of Pracical Completion. It is a commonly misunderstood and extemely important date. Generally people assume that the date of PCI is also the date which the building should be finished. This is only partially correct. The legislated prupose of PCI and some common misconceptions are outlined below:

Practical Completion (also known as PCI) is an extemely important date in the life of your new home and also an extremely important date within your building contract. This is the date on which the builders minimum defect liabilty period begins. In accordance with legislation your builder has a minimum of 120 days - taken from the date of practical completion - to perform the home building work in a proper and workmanlike manner and to ensure that all building materials are of a merchantable quality and reasonably fit for purpose. Technically this means that even on the day of practical completion your builder has 120 days to finish the building work- with some exceptions (see below)

In addition to being the start date of the 120 day defects liability period, Practical Completion is also the date  - in accordance with legislation - where the home building work must be completed (except for any omissions or defects which do not prevent the home building work from being reasonably capable of being used for its intended purpose.) This means that although the builder has a minimum 120 days to finish off the building work, the home must be reasonably able to be used (ie lived in) from the handover date. If there are any structural defects, or other defects which do not permit the residence to be inhabited or used - then Practical Completion has not been reached.

Secondary to the above legislative purpose of PCI the builder usually requests final payment at PCI. Often people think, do I have to pay the final amount if the house is not finished? Mostly the answer is yes, as long as Practical Completion has been reached.

A new home is a big investment and SHS building report will save you money and time by identifying incomplete or defective work before your builder hands the property (and any problems - including time delays or non-acceptance for defect liability rectification) over to you. We can advise if Practical Completion has been reached and we will include all building components which are considered defective in accordance with legislation so that your builder can rectify the items prior to PCI, handover or prior to the defects libility period running out.

Why do buildings crack and what can be done. Is my builder is responsible?