What is Practical Completion and how does it happen?

Practical completion is achieved when the works are complete except for minor omissions and/or defects which do not prevent the works from being reasonably fit for occupation or use by the owner.  It is important to note that practical completion does exclude items that do not affect the internal amenity of the hour, such as letter boxes, driveways, etc.[1]

You should, however, check your contract to determine what it says regarding practical completion as some contracts may vary.

The builder is required to serve you with a notice of Practical Completion. Your building contract will set out the timeframes for what you need to do once you receive this notice, but you usually have 5-7 days from receiving this notice to respond advising what you consider still needs to be done (if anything) in order for Practical Completion to be met.

Do I have to pay the builder before they hand over the keys?

Usually, yes, although this depends on the terms of the contract.

What is a defect?

A defect refers to materials and/or workmanship that requires rectification works as it does not comply with the minimum requirements set out in the National Construction Code (NCC) and/or relevant Australian Standards.

It is important to note that builders will always try to ensure that all works are compliant with these standards and that sometimes clients often misunderstand what the standard/tolerance is for certain types of works and/or the installation of a material/product.

Where works are deemed to be defective, the builder has an obligation under the Building Act 2004 (ACT) to rectify.  This might be in the Maintenance Services Period (also known as the Defects Liability Period) or might come later – maximum of 2 years for non-structural defects or 6 years for structural defects.

Guides such as the NSW Fair Trading Guide to Standards and Tolerances (2017) sets out further explanation about the measurement of tolerances, minimum viewing positions as well as information about a builder’s responsibility to rectify.

[1] ACT Home Building Contract, Clause 25(a).