Who is not a Subsequent Purchaser – Loss of Benefit of Statutory Warranty

18/08/2016

Watson & Watson receive many enquiries concerning claims by Owners of Property against a Builder or somebody who undertook the building work which work turns out to be defective or unsatisfactory.

Under the Home Building Act an Owner who enters into a Contract with a person who is a holder of a Contractor’s Licence or required to hold a Contractor’s Licence in relation to undertaking residential building work receives the benefit of the implied warranties under Section 18B of the Home Building Act.

Those implied warranties are in essence that the building work will be in a good and proper manner and other particular matters that are referred to in Section 18B of the Home Building Act.

Where a person is the immediate successor in title to an Owner Builder, or an Owner who has the benefit of the Statutory Warranties that immediate successor will also obtain the benefit of those Home Owners Warranties. 

A person can become the immediate successor entitled to such an Owner Builder, or Owner by way of purchase, transfer, inheritance or gift.  In the past few years Richard Watson, experienced building and construction Lawyer has received instructions from a person who claimed to be the immediate successor in title to an Owner Builder or Owner who has commenced their own proceedings claiming losses from a previous Owner Builder or Owner.  Those owners issued proceedings out of the NSW Civil and Administrative Tribunal (NCAT) themselves.  Those Owners have approached us for advice after proceedings had progressed and there was a need to respond to evidence or to provide evidence. 

The first question that we have to consider is whether the Claimant is in fact the immediate successor in title so as to obtain the benefit of a claim under the Home Building Act. 

Surprisingly in the past 2 years there have been a few persons who were not the immediate successor in title and accordingly had no claim against the Owner Builder.

In each of those cases we were able to negotiate a reasonable settlement and the claimants (who had no entitlement) received funds by way of settlement. 

This was possible because neither the Builder nor the Solicitor acting on behalf of the Builder had checked the records to establish whether the claimant was in fact the immediate successor in title.  It seems surprising to us that this error occurs.  These cases are more common than one would think.

In another case recently we received instructions from a Builder who was being pursued by a Claimant who claimed to be an immediate successor in title.  The Builder progressed the matter to a stage where the Builder had filed the application and some evidence however the Builder sought our assistance primarily in relation to evidence required from an expert building consultant to respond to a Building Consultant’s report on behalf of the Claimant. 

A check as to the Claimant’s claim that she was the immediate successor in title revealed that she was not the immediate successor in title but she had received the property in a family law settlement from her partner who was in fact the immediate successor in title.  We were able to resolve the matter on the basis of the Builder had a complete defence to the claim.  The claimant’s partner would have had a valid claim if it had been brought before the transfer of the property to the Claimant. 

It is important to check the facts of the matter whether you are claiming to be an immediate successor in title or there is a claim made by a person who asserts to be an immediate successor in title.  These facts as with all other facts should be verified. 

These errors occur in circumstances where the residential building is purchased in one or other partner or company and subsequently transferred by way of an internal transfer to another entity.

It is surprising how many cases are conducted on an assumption of fact which is incorrect.  You do not want to commence proceedings which are doomed to fail or be dragged through a proceedings which you have a complete defence for one reason or another.  Accordingly these important cases which may seem uncomplicated should not be undertaken without proper advice from our experienced construction lawyers. 

If you have a claim it is important that you obtain the proper advice.  If you find yourself in any such case being pursued or if you wish to bring a case, please contact Richard Watson experienced Building and Construction Lawyer to achieve the best outcome.