What is practical completion?
The Domestic Building Contracts Act 2000 (the DBC Act) defines this as the stage when the work has been completed in accordance with the contract and all relevant statutory requirements either without any omissions or defects, or with only minor omissions and / or minor defects and the home is reasonably suitable for habitation. Your contractor will usually advise you (roughly two to three weeks) in advance when the estimated hand over date will be.
It is important that you read the definition of the practical completion stage in the definition section of your contract (usually located towards the back of the general conditions part of the contract).
Pre-handover Inspection
It is recommended that you or your representative arrange an on-site inspection perhaps a week before the date nominated for handover. This gives you a final opportunity to raise any issues prior to handover.
On Handover Day
You should ensure that you receive copies of any outstanding documentation such as:
- certificates of inspection
- product warranties for appliances installed and
- reports, notices or other documentation issued by services providers (e.g. electricity, gas, telephone, water or sewerage).
It is important to store these documents in a safe place. If you encounter problems with appliances installed you should be able to contact the product supplier to have the problem addressed.
Under the DBC Act, before the builder can demand or receive the practical completion payment under the contract they must ensure that:
- all of the contracted work has been completed in accordance with all relevant laws and legal requirements and with the plans and specifications;
- all minor defects and minor omissions are recorded on an appropriate, signed, defects document;
- the house is reasonably suitable for habitation
In addition to these legislative requirements, some contracts (e.g. the BSA New Home Construction Contract Pack) require the builder to provide the home owner with all certificates of inspection (including, where appropriate, the 'Final' certificate) prior to receiving the final payment. Owners should check the practical completion requirements under the contract.
Most standard contracts will include a defects document as one of the associated forms. The defects document must:
- List the minor defects and minor omissions that both the contractor and home owner agree to;
- State when the contractor will attend to those matters;
- List minor defects or minor omissions that only the home owner believes exist; and
- Be signed by the home owner and the contractor (or the contractor has signed it and has made all reasonable efforts to have the owner sign it).
Fixing items listed on the defects document
The contractor is required to correct any minor defects or minor omissions which are discovered at handover or within six months after completion of the work. Any minor defects or minor omissions discovered after (but within six months of handover) should be referred to the contractor in writing to be rectified within a reasonable timeframe. You should make sure you sign and date all correspondence and retain a copy for your records.
Where the contractor fails to rectify those minor defects you may be able to access BSA's complaints process - click here to find out more.
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