Building contract disputes: how to resolve them

Building disputes are among the most stressful and expensive disputes a person or a business can face, because the sums are large, the issues are technical, and both sides often feel wronged. The good news is there is a clear path to resolving them in NSW. This guide explains the causes, the process, and the time limits.

Common causes of building disputes

Most building disputes come down to a handful of recurring issues. Defective or incomplete work. Payment disputes, where the owner withholds payment or the builder claims more is owed. Delay, where the work runs well past the agreed time. Variations, where extra work was done but not properly agreed or documented. And scope disputes, where the parties disagree about what the contract actually required.

In our experience the single biggest driver is poor documentation, especially around variations. Work agreed on site with a handshake or a text, then disputed later, is hard for anyone to prove. Whichever side you are on, documenting the contract and every variation in writing is the cheapest insurance against a dispute. There is a separate article in this series on the Home Building Act contract requirements.

Start with the contract and the warranties

When a dispute arises, the starting point is always the contract and the statutory warranties. The written contract sets out what was agreed, and the Home Building Act 1989 (NSW) implies statutory warranties into every residential building contract, whether or not they are written in, covering due care and skill, compliance with plans and law, and fitness to live in.

Those warranties run for set periods from completion, 6 years for a major defect and 2 years for any other defect. These periods are critical, because they define the window to bring a claim. A homeowner who sits on a defect can lose the right to pursue it, so the periods should be front of mind from the moment a problem appears.

Step 1: Raise it directly and in writing

Many disputes can still be resolved directly, and the law expects you to try. Put the problem in writing, clearly, with the detail and any evidence, and give the other side a reasonable opportunity to respond or to fix defective work. A calm, documented approach often resolves the matter and, if it does not, it builds the record you will need later.

Step 2: NSW Fair Trading

If direct discussion does not work, the next step for a home building dispute is NSW Fair Trading, and this step is effectively mandatory before you go to the Tribunal. Fair Trading can investigate, inspect the work, and try to broker a resolution, and in some cases issue a rectification order to the builder. Many disputes are resolved at this stage, without the cost of a tribunal hearing.

The practical point is to engage Fair Trading early, not least because of the warranty time limits. You need the Fair Trading process to happen, and to be exhausted, before you file at NCAT, and you do not want the clock running out while that plays out.

Step 3: NCAT

If Fair Trading does not resolve it, a home building dispute goes to the NSW Civil and Administrative Tribunal. NCAT can hear residential building claims up to $500,000, covering rectification costs, consequential losses, and other damages. NCAT can order a builder to carry out rectification work, order the payment of money, or make other orders.

NCAT will generally expect to see that you went through Fair Trading first. Claims above the NCAT limit, and some commercial building disputes, go to the courts instead. Which forum applies, and how the claim is framed, affects both cost and outcome, so it is worth getting advice on strategy before you lodge.

Step 4: Court

Larger or more complex building disputes, and those outside NCAT's jurisdiction, are dealt with in the courts. These are more formal and more expensive, and expert evidence usually plays a central role. For most residential disputes within the limit, NCAT is the more proportionate forum, but some matters belong in court, and choosing correctly matters.

A word on experts

Building disputes usually turn on expert evidence about what is defective, why, and what it will cost to fix. A well-prepared expert report, from the right kind of expert, is often the difference between winning and losing. Getting the expert evidence right, early, is one of the most valuable things we do in these matters.

How we help

We act for homeowners and for builders in building disputes, from the first letter through Fair Trading and NCAT to court where needed. We assess the contract and the warranties, advise on the strongest path and forum, manage the expert evidence, and push for a resolution that is proportionate to what is at stake. Given the strict warranty time limits, the sooner we are involved, the more options there usually are.

Frequently asked questions

Where do I take a building dispute in NSW? Start by raising it directly and in writing, then NSW Fair Trading, then NCAT for claims up to $500,000. Larger or commercial disputes go to the courts.

Do I have to go to Fair Trading first? For a home building dispute, effectively yes. NCAT generally expects you to have been through the Fair Trading process before you lodge.

How long do I have to bring a building claim? The statutory warranty periods are 6 years for a major defect and 2 years for any other defect, from completion. Act well before these run out.

How much can NCAT award in a building dispute? Up to $500,000, including rectification costs and other losses. Claims above that go to the courts.

Keep reading

• Tradespeople
• Building contracts and licensing under the Home Building Act NSW
• Dispute resolution

This article contains general information only and is not legal advice. For advice about your situation, please contact us. Liability limited by a scheme approved under Professional Standards Legislation.