Builders and consumers in Tasmania will be encouraged to resolve disputes through mediation under changes to domestic building contracts in that state.

Passed through the state’s Parliament recently, the Residential Building Work Contracts and Dispute Resolution Bill 2016 will see the creation of a new process for mediation through which builders and consumers will be encouraged to negotiate in respect of disputes and to settle on an arrangement.

Under the new process, either a builder or property owner will be able to lodge a dispute with the Director of Building Control, who will encourage the parties to negotiate and settle and who may appoint one or more people to a mediation panel to assist the parties in reaching an agreement.

The parties have six weeks in which to resolve the dispute through mediation, after which time they must turn to other avenues of dispute resolution, such as through a more formal process of adjudication.

The mediation process is to be free of charge and entirely voluntary, meaning that neither party will be forced into the process.

Consumers will also have a right to serve a new ‘work completion claim’ on the contractor which requires the builder to complete the works as specified in the contract, and will have the option to lodge an adjudication for application with the Director of Building Control where the builder does not complete the work within the required time frame.

The new legislation also:

  • Specifies minimum contractual clauses as mandatory requirements in all residential building contracts
  • Provides for mandatory consumer warranties as to the fitness and quality of building work (enforceable by an owner for up to six years after the completion of work)
  • Mandates that all variations to residential building contracts be agreed upon in writing
  • Introduces a ‘cooling off’ period (five business days) following the signing of the building contract in which time an owner may withdraw from the contract
  • Specifies that attempts to contract out of the Bill will be illegal
  • The passing of the legislation comes as further legislation known as the Building (Consequential Amendments) Bill 2016 remains before Parliament.

That bill involves much broader reforms, including an overhaul of processes for approving building, plumbing and demolition work; clarification of the role and function of building surveyors; movement of accreditation of building practitioners to the Occupational Licensing Act 2005; restriction of owner builders to two projects every ten years and an overhaul of processes for the granting of occupancy permits.

Housing Industry Association executive director Rick Sassin welcomed the passing of the legislation, saying the use of mediation will help to speed up dispute resolution.

Sassin said it was important now for other parts of the government’s broader reform package to be progressed and implemented.