Six Years for Major Defects, Two Years for Other Losses: What Those Periods Really Mean

The general periods

For completed residential building work, current NSW HBCF guidance states a six-year period for major defects and two years for other losses. These periods run from completion of the work, subject to the applicable law, policy and limited extensions.

They are outer limits, not recommended times to begin investigating. Defects should be reported to the builder and notified to icare HBCF as soon as they are suspected.

Major does not mean costly

A major defect generally involves a major element of the building or a fire-safety or waterproofing system and must satisfy statutory consequences concerning use, destruction or collapse. Foundations, footings, floors, walls, roofs, columns and beams can be major elements, but not every problem affecting them meets the legal test.

A $40,000 cosmetic repair may remain an other loss, while a less visible defect affecting the structural load path or waterproofing system may be major. Technical evidence should address cause, affected element and consequence rather than rely on labels.

Completion must be proved

Completion may be identified under the building contract and legislation. Practical Completion, final inspection, occupation certificate, handover, last invoice and the date of occupation can differ. A takeover project involving two builders may contain more than one relevant contract and sequence of work.

Retain the completion notice, practical completion certificate, occupation certificate, final progress claim, defects list and evidence of when the contracted work became complete. Seek advice where the date is disputed.

Notification still matters

Even a defect discovered inside the six-year period can face difficulty if it was not notified appropriately. Send written notice when symptoms first arise, then update the insurer as testing confirms the cause and scope. Do not wait until the engineering report is perfect.

The claim should also distinguish defects of the first builder from work of the replacement builder and from ordinary maintenance or later damage. The time period alone does not establish responsibility.

Two practical timing complications

On a builder-recovery project, Practical Completion, the occupation certificate, final inspection, handover and the date the replacement builder finishes may not establish the same completion date for every insured item. Where two builders and two contracts are involved, the relevant date should be reconstructed from the contracts, certificates, project records and policy position rather than assumed from the day the owner moved in.

The Home Building Regulation also uses a six-month notification benchmark. Where the insurer is notified no later than six months after the homeowner first became aware, or reasonably ought to have become aware, of the relevant fact or circumstance, the insurer may not reduce its liability merely because notification was delayed. A policy may allow an extension or waiver in other circumstances, but an owner should not plan on receiving one.

Practical takeaway: Establish the completion date and the legal character of the defect. Avoid treating six years as a universal warranty for every building issue.

How ARK Houses can help

ARK Houses records completion milestones and separates first-builder work from our own completion and rectification work. This helps the owner and advisers identify the relevant dates and prevents a later defect from being assigned automatically to the wrong builder or contract.

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