Victorian Consolidated Legislation

House Contracts Guarantee Act 1987 - SECT 7

Nature of guarantees

7. Nature of guarantees



(1) A guarantee given under this Act by the approved guarantor in relation to
domestic building work performed or to be performed by an approved builder
under a domestic building work contract is a guarantee to the building owner
and the owner's successors in title of the performance of the builder's
obligations under the domestic building work contract.

(1A) A guarantee given under this Act by the approved guarantor in relation to
the work by an approved supervisor under a supervision contract is a guarantee
to the building owner and the building owner's successors in title of the
performance of the obligations of the supervisor under the supervision
contract.

(1B) A guarantee given under this Act by the approved guarantor in relation to
domestic building work performed or to be performed by a person or persons
under the management or supervision of an approved supervisor under a
supervision contract is a guarantee to the building owner and the building
owner's successors in title of the workmanship of the person or persons in
relation to the domestic building work.

(2) Subject to section 9, a guarantee given under this Act by the approved
guarantor in relation to a dwelling-house constructed by an approved builder
or by an owner builder and sold by the builder or the owner builder under a
contract for sale entered into during the guarantee period or after the issue
of a conditional certificate of guarantee under section 6(3) is a guarantee to
the purchaser of the dwelling-house and the purchaser's successors in title of
the workmanship of the builder or the owner builder in relation to the
construction of the dwelling-house.

(3) The liability of the approved guarantor under a guarantee referred to in
subsection (1), (1A), (1B) or (2) is the liability to make good loss or damage
suffered by the building owner or purchaser or a successor in title of the
building owner or purchaser on account of-

   (a)  in the case of a guarantee referred to in subsection (1), the failure
        of the builder to fulfil the builder's obligations under the contract;
        or

   (aa) in the case of a guarantee referred to in subsection (1A), the failure
        of the supervisor to fulfil the supervisor's obligations under the
        supervision contract; or

   (b)  in any case, a defect caused by bad workmanship that appears in the
        building during the guarantee period.

(4) The maximum liability of the approved guarantor under a guarantee is $40
000 or any larger amount that is prescribed for the purposes of this
subsection.

(5) The approved guarantor is not liable under a guarantee for loss or damage
of $100 (or any larger amount that is prescribed for the purposes of this
subsection) or less arising out of a single defect unless-

   (a)  the claim is for loss or damage arising out of the work of
        constructing a dwelling-house and the defect is notified in accordance
        with section 14(2) within three months of the dwelling-house first
        being occupied; or

   (b)  the claim is for loss or damage arising out of the work of improving a
        building and the defect is notified in accordance with section 14(2)
        within three months of the work being completed.

(6) The approved guarantor is not liable under a guarantee for loss or damage
of more than $100 (or any larger amount that is prescribed for the purposes of
subsection (5)) but less than $500 (or any larger amount that is prescribed
for the purposes of this subsection) arising out of a single defect unless-

   (a)  the claim is for loss or damage arising out of the work of
        constructing a dwelling-house and the defect appears within one year
        of the dwelling-house first being occupied; or

   (b)  the claim is for loss or damage arising out of the work of improving a
        building and the defect appears within one year of the work being
        completed.

(7) A guarantee given by the approved guarantor under this Act has effect
subject to any terms and conditions that are prescribed.

(7A) If an approved builder enters into a domestic building work contract
under which the builder agrees to-

   (a)  construct two or more dwelling-houses for a person then, despite
        anything to the contrary in this section but subject to subsection
        (8), a separate guarantee is in force in relation to each
        dwelling-house; or

   (b)  improve two or more dwelling-houses for a person then, despite
        anything to the contrary in this section, a separate guarantee is in
        force in relation to each dwelling-house if the work in respect of
        that dwelling-house, if performed under a separate contract, would be
        a domestic building work contract.



(8) Despite anything to the contrary in this section if-

   (a)  an approved builder enters into a domestic building work contract
        under which the builder agrees to construct; or

   (b)  an approved supervisor enters into a supervision contract under which
        the supervisor agrees to manage or supervise the construction of-

three or more dwelling-houses for a person (other than the Director of Housing
incorporated under the Housing Act 1983), the approved guarantor does not, for
the purposes of this Act, guarantee to that person the performance of the
builder's obligations under the domestic building work contract or the
supervisor's obligations under the supervision contract, as the case may be.

(9) Despite anything to the contrary in this section if-





   (a)  an approved builder that is a body corporate enters into a domestic
        building work contract for; or



   (b)  an approved supervisor that is a body corporate enters into a
        supervision contract to manage or supervise-



the construction of a dwelling-house with a body corporate to which the
approved builder or the approved supervisor (as the case may be) is related
within the meaning of section 50 of the Corporations Act, the approved
guarantor does not, for the purposes of this Act, guarantee to that body
corporate the performance of the builder's obligations under the domestic
building work contract or the supervisor's obligations under the supervision
contract, as the case may be.

(10) Nothing in subsection (8) or (9) affects the guarantee to the successors
in title of a person referred to in those subsections of the performance of
the builder's obligations under the domestic building work contract or the
supervisor's obligations under the supervision contract, as the case may be.

(11) Despite anything to the contrary in this Act, this Act does not provide
for a guarantee to be given in respect of materials supplied under a domestic
building work contract if that contract does not also provide for their
installation.