Qualities to Look for in a Building Inspector
As a homeowner building or renovating a residential property, you may have come across the term “latent conditions” in your construction contract. Latent conditions are physical conditions that could not have been reasonably anticipated by a contractor at the time of tendering. These conditions can include anything from contaminated soil to hidden building services, and can lead to additional costs and delays in construction. As a solicitor and construction lawyer with over 10 years of experience, I have advised homeowners, builders, and contractors regarding latent conditions and their legal rights and obligations.
In this guide, we will explore what latent conditions are, who is responsible for them, and what options homeowners have when faced with them.
We will also examine common latent conditions found in new builds versus renovations, and what steps homeowners can take to protect themselves from potential cost blowouts. By the end of this guide, you will have a better understanding of latent conditions in construction and be equipped to navigate any challenges that may arise during your residential construction project.
Latent Conditions in New Builds
New builds, also known as greenfield sites, typically refer to properties constructed on undeveloped land that has not previously been used for construction purposes. While it may seem that building on a new site would be relatively straightforward, latent conditions can still arise.
Some examples of latent conditions in new builds include:
- Unforeseen soil issues, such as unstable or unsuitable ground conditions that require additional foundation work.
- Hidden underground services, such as gas, electricity, or water lines that were not identified in the initial site survey.
- Unforeseen contamination, such as soil or groundwater contamination from previous land use.
- Changes in local government regulations or zoning laws that may impact the project.
It is important to note that in new builds, the contractor is usually responsible for identifying and addressing any latent conditions that arise during the construction process. However, it is essential for homeowners to work closely with their contractor and monitor the construction progress to ensure that any issues are identified and addressed as quickly as possible.
Latent Conditions in Renovations
Renovating an existing home can present unique challenges when it comes to latent conditions. While some latent conditions may be apparent from the outset, such as existing structural issues, others may not become apparent until work has commenced. For example:
- Structural issues: Existing structural issues, such as cracks in the walls, uneven floors, or sagging rooflines, may not become apparent until walls are removed or other work begins. These issues can often lead to additional work being required and increased costs.
- Asbestos: Asbestos was commonly used in building materials until the 1980s, so it is not uncommon to find asbestos-containing materials in older homes. Asbestos in soil can also be found in renovations, especially if the house is on a slope or was built on fill. Removing asbestos can be expensive and requires specialised contractors.
- Plumbing and electrical issues: Older homes may have outdated plumbing and electrical systems that are not up to code or may be in need of repair. This can lead to unexpected costs and delays during the renovation process.
- Other issues: Other latent conditions that may be found during a renovation include termite damage, mould, and rotting wood. These issues can impact the timeline and budget for the renovation project.
It is important for homeowners to work with a qualified builder who is experienced in renovations and who can help identify potential latent conditions before work begins.
Shifting or Sharing the Risk of Latent Conditions
When it comes to latent conditions, there is often a process of shifting or sharing the risk. In the past, homeowners often shouldered the risk of latent conditions because they had more knowledge of the site. However, in recent years, there has been a shift to transfer the risk to the contractor, and with this shift comes increased expectations of the contractor’s expertise.
When decisions are made about the allocation of risk for latent conditions at the site, parties can consider the physical conditions of the site, existing information about the site, whether there are any existing investigations into the site (including the brief to the entity who investigated the site and the outcome of the investigations), and the level of expertise of the person who carried out the investigation.
It is important for homeowners to understand their contractual rights and obligations regarding latent conditions. The contract should contain provisions that clearly allocate the risk of latent conditions, including the scope of work, potential additional costs, and any time extensions that may be necessary. Homeowners should ensure that they carefully review and understand the terms of their contract before signing, and seek legal advice if necessary.
Legal Rights of Homeowners Regarding Latent Conditions
When a homeowner encounters latent conditions, it is important to know their legal rights. The applicable law in NSW is the Home Building Act 1989 (the Act), which provides a framework for the regulation of residential building work, including the resolution of disputes.
Under the Act, builders have an obligation to ensure that the work they undertake is carried out in a proper and workmanlike manner, using appropriate materials and in compliance with any applicable laws and regulations. If a homeowner discovers a latent condition during the construction process, the builder may be in breach of their obligations under the Act.
If a dispute arises between a homeowner and a builder regarding latent conditions, there are several avenues available for resolution. The homeowner can engage a construction solicitor to assist with resolving the dispute. Alternatively, they can lodge a complaint with the Office of Fair Trading, which may investigate and mediate the dispute. If the dispute remains unresolved, the parties can take the matter to the NSW Civil and Administrative Tribunal (NCAT) for a determination.
In summary, homeowners have legal rights when it comes to latent conditions in their residential building work. If a latent condition is discovered, homeowners should seek legal advice and consider engaging the services of the Office of Fair Trading or the NCAT to help resolve the dispute.
Conclusion
As a homeowner, receiving a variation claim for latent conditions during a building project can be stressful and overwhelming. It is essential to understand the nature of latent conditions and the legal rights you have as a homeowner to address them.
Latent conditions are those that could not be reasonably anticipated at the time of tendering and are not visible during a site inspection. They can occur in both new builds and renovations and can include hazardous materials, contaminated soil, hidden building services, and more.
When dealing with latent conditions, the risk is usually shared or shifted between the homeowner and contractor. It is crucial to have a well-drafted contract that addresses latent conditions to avoid disputes later on.
As a homeowner, you have legal rights under the Home Building Act 1989 (NSW). If you receive a variation claim for latent conditions, you can seek advice from a construction solicitor, the Office of Fair Trading, or the NCAT to resolve any disputes.
As a construction lawyer with over 10 years of experience, I understand the challenges that homeowners and builders face when dealing with latent conditions. I can advise you on your contractual and legal rights, negotiate and amend contracts to reflect your intentions, and represent you in all courts of competent jurisdiction in NSW, Australia.
Don’t let latent conditions derail your dream home project. Contact a construction lawyer to ensure your legal rights are protected and your project proceeds as smoothly as possible.
