What Construction Teams Need to Know About Warranties

By

Josh Krissansen

Last Updated Jan 22, 2026

By

Josh Krissansen

As legally binding promises, construction warranties ensure that completed work meets the required standards of quality and performance for a defined period — and that’s why they must begin the moment work starts, not after handover.

Strong warranty management safeguards margins, reduces risk exposure, and builds long-term client trust. When handled well, it turns a potential source of liability into a mark of professionalism and accountability. 

However, without clear processes in place to ensure that work actually meets the standards set by the warranties, minor defects can slip through documentation gaps, accumulate, and eventually escalate into costly disputes.

In this article, you’ll learn how to strengthen warranty processes, manage claims efficiently, and protect every completed project from unnecessary financial and reputational risk.

What Construction Warranties Cover

Construction warranties outline which elements of the building are protected against defects, failures, or non-conforming work, and establish the boundaries for what falls outside the contractor’s responsibility.

Coverage extends across three main categories: structural integrity, building systems, and workmanship and materials, with clear exclusions typically in place that are designed to limit liability.

Structural Integrity

This covers the core load-bearing elements of a building, including foundations, slabs, columns, beams, walls, and roof framing. Typical outcomes covered include settlement, excessive deflection, loss of bearing, structural cracking, and water ingress caused by structural movement.

Common triggers include incorrect reinforcement, inadequate connections, non-conforming concrete placement or curing, improper removal of temporary works, or non-compliant roof truss installation.

Facade support and anchorage systems are also covered when failure affects structural performance or safety.

Systems Defects

Systems coverage includes plumbing, electrical, HVAC, and fire protection systems where performance or safety is compromised. Common examples include:

• Plumbing and Drainage: Leaks at joints or penetrations, inadequate falls, backflow failures, or hot water systems not performing as specified.
• Electrical: Circuit faults, non-compliant terminations, protection coordination errors, or defective switchboards and life-safety wiring.
• HVAC and BMS: Airflow imbalance, improper commissioning, controls logic errors, refrigerant or insulation defects, and condensation from incorrect detailing.
• Fire Protection: Sprinkler or hydrant coverage gaps, valve or pump defects, detector placement errors, and inoperative alarms or egress hardware.

Workmanship and Materials Protection

Warranty coverage extends to non-conforming installation or poor craftsmanship across trades where work does not meet the contract, specifications, or relevant Australian Standards. 

It also applies to defective or incompatible materials that cause failure, deterioration, or ‘performance loss,’ which, in the construction industry, refers to instances where there’s an evident decline in the function, efficiency, or durability of a building element, system, or material after practical completion. 

This is notable because warranties covering performance loss extend beyond simple outright failure and encompass cases of performance shortfall, where a system works but not to the standard or specification promised.

Examples include all-too-common situations like: 

• Failed waterproofing terminations
• Incorrect falls to drains
• Out-of-tolerance finishes
• Hollow or drummy tiling 
• Premature corrosion due to unsuitable fasteners
• Sealant or glazing failures
• Concrete spalling from insufficient cover

Latent defects are covered when they appear within the warranty period and can be traced back to the construction methods or materials used.

Claims Not Typically Covered By Construction Warranties

Just as warranties are not indefinite, they do not extend to every imaginable issue with a building. In particular, they don’t cover factors outside the builder’s control.

Factors that are typically excluded from warranty coverage include:

• ---

  Maintenance Failures

  Defects from missed servicing, untested pumps, neglected sealant renewal, or filter changes.

• ---

  Owner or Tenant Modifications

  Damage from unapproved alterations, penetrations, or load changes after handover.

• ---

  Natural Disasters and External Events

  Storms, floods, earthquakes, subsidence, or vandalism unless expressly covered by contract.

• ---

  Normal Wear and Tolerances

  Cosmetic shrinkage cracking, surface abrasion, and performance decline within acceptable tolerances.

Construction Warranty Types and Where They Apply

Construction warranties fall into three main categories: statutory, contractual, and insurance-backed. Each operates under different frameworks and serves a distinct role in protecting completed work and defining responsibility.

Statutory Warranties

What they are…

Statutory warranties are legally mandated protections that apply automatically under state and territory legislation for residential construction above specified thresholds. 

How they’re used…

They establish minimum obligations for builders to ensure that:

• Work is performed in a proper and workmanlike manner
• The completed work is fit for its intended purpose
• Suitable and compliant materials are used
• The project complies with the National Construction Code and all relevant standards

These obligations cannot be excluded, limited, or overridden by contract clauses and extend to subsequent owners during the statutory warranty period. While duration and detail vary between jurisdictions, the underlying principles are consistent across Australia.

In action…

For example, in New South Wales, statutory warranties dictate that major defects are covered for a period of six years. A builder cannot include a contract clause that limits liability for structural defects to two years, and even if they do, the statutory warranty overrides any contradictory term in the agreement.

Contractual Warranties

What they are…

Contractual warranties are agreed protections written directly into the construction contract and negotiated to suit the project’s scale, risk profile, and complexity. 

How they’re used…

They are commonly used to extend or clarify obligations beyond statutory minimums.

Typical categories include:

• Time-Based Warranties: Define the duration for which specific components must remain defect-free, such as façade waterproofing for five years or flooring systems for three years.
• Performance Warranties: Guarantee that systems or assemblies achieve specific performance levels, such as HVAC efficiency, energy targets, or acoustic isolation.
• Back-to-Back Warranties: Ensure that head contractors secure equivalent warranty commitments from subcontractors and suppliers to align downstream liability.

This approach offers flexibility for large or technically complex commercial projects that require tailored risk allocation and protection.

In action…

For instance, a design-and-construct contract might include a warranty that façade glazing will remain watertight for seven years, exceeding the standard two-year systems warranty. The head contractor in this case would likely secure a matching seven-year warranty from the façade subcontractor to maintain back-to-back protection.

Insurance-Backed Warranties

What they are…

Insurance-backed warranties are third-party products that guarantee rectification or compensation when a builder cannot meet warranty obligations.

How they’re used…

They are mandatory for residential projects above state-specific contract thresholds and increasingly used in large commercial or mixed-use developments.

These policies cover the cost of repairs or completion if the builder becomes insolvent, disappears, or fails to rectify confirmed defects. They operate independently of professional indemnity or public liability insurance, providing additional assurance for owners and financiers that warranty enforcement remains viable regardless of builder solvency.

In action…

Say a residential builder enters liquidation eighteen months after practical completion, leaving unresolved waterproofing defects. The homeowner can claim under the mandatory home warranty insurance, which funds rectification by another licensed contractor. Without this coverage, the owner would bear the full cost of repairs.

How Long Construction Warranties Last and Defects Liability Periods

Warranties and defects liability periods operate on separate timelines, and confusing the two can lead to missed opportunities for valid claims.

The Defects Liability Period (DLP) is a contractual phase, typically twelve months after practical completion, during which the builder must rectify identified defects at no cost to the owner. Once the DLP ends, the contractual relationship for rectifying routine defects also concludes.

The warranty period extends beyond the DLP and defines the period within which an owner can make claims for defects that appear later. Some jurisdictions also extend claim periods when a defect becomes apparent near the expiration of the statutory timeframe.

These timeframes are strictly enforced.

In the case of Opal Tower, where major structural cracking was discovered just four months after completion, the claim was covered by both the DLP and the statutory warranty period. In contrast, the Mascot Towers case shows the opposite outcome, where the owners of a ten-year-old building were required to bear the repair costs because the statutory warranty period had expired.

Standard Durations

Warranty coverage periods vary depending on the type of defect, its severity, and the state or territory in which the warranty applies. Typical durations include:

• Workmanship and Materials: One year
• Building Systems: Two years
• Structural Elements: Six to ten years, depending on jurisdiction and how the defect is classified

The distinction between major and minor defects is critical. Major defects typically involve structural failure, loss of waterproofing, or non-compliance with fire safety requirements.

Statutory warranty periods extend to successors in title, ensuring subsequent owners receive the same protection as the original party.

For instance, in Wang v Moutidis [2025] VCC 1156, the builder was found in breach of implied warranties because the home did not perform as required. The court held that these warranties are absolute obligations and apply to later owners as if they were party to the original contract.

How To Make a Construction Warranty Claim and Resolve Defects

Warranty disputes often arise from inadequate documentation and missed notice deadlines, resulting in prolonged and expensive resolution processes. On average, construction warranty disputes take over 16 months to resolve. Effective construction documentation and strict adherence to processes are essential for achieving faster and lower-cost outcomes.

Proper management of the claim process protects both builders and owners from unnecessary litigation. The case of Drummond v Gordian Runoff Limited illustrates the risk of non-compliance: the homeowner’s claim was unsuccessful because notice to the insurer was lodged after the policy deadline, despite the defect being valid.

Step-by-Step Guide to Making a Construction Warranty Claim

1. Identify and Document the Defect

   Start by recording the defect as soon as it is discovered. Note the date, location, and nature of the issue, and capture timestamped photos that show both close-up details and the broader context. 
   
   Annotate drawings or plans to identify affected areas and describe how the defect impacts performance, safety, or compliance. A clear and complete record at this stage provides the foundation for a defensible claim.

2. Notify the Responsible Party in Writing

   Once the defect is documented, issue a written notice to the builder or head contractor within the required timeframe. Reference the specific clause or warranty provision being relied on and attach supporting evidence.
   
   All correspondence should be dated and stored securely. Timely notice is critical. Missing a notification deadline can render an otherwise valid claim invalid.

3. Allow Reasonable Access for Inspection

   Builders and subcontractors must be given the opportunity to inspect and verify the defect. Site access should be arranged promptly, and inspection findings should be documented in writing, accompanied by photos or test results where applicable.
   
   Agreements reached during inspections, such as the scope of work and next steps, should also be documented to avoid disputes later on.

4. Negotiate Rectification or Compensation

   Under most contracts, the builder has the first right to repair the defect.
   Engage in open, written communication to agree on the method, scope, and timeframe for rectification.
   
   Where product or system warranties apply, coordinate directly with manufacturers to confirm coverage and avoid duplicate claims. If rectification is impractical, compensation or reimbursement may be negotiated based on contract terms or insurance provisions.

5. Escalate if Unresolved

   If the builder fails to act within a reasonable period, escalate the matter through the dispute resolution process outlined in the contract or under the relevant state legislation. This may include formal adjudication or recovery under the Security of Payment framework.
   
   Maintaining a detailed audit trail of communication, evidence, and timelines strengthens the position of the party that has complied with its obligations.

Documentation Checklist for Warranty Claims

Weak documentation is one of the most common reasons warranty claims are delayed or rejected. Comprehensive, well-structured records create a clear timeline of responsibility, significantly reducing dispute time and cost.

Evidence should be collected systematically from the moment a defect is discovered through to its final rectification.

Visual Evidence

Capture detailed photographic evidence from multiple angles to demonstrate the nature and extent of the defect clearly. Include both close-up images showing specific damage and wider shots that place it in context.

Each image should be timestamped to verify when the defect was identified and, where relevant, to show its progression over time. Annotate or mark up images and drawings to clearly highlight affected areas.

Example: A close-up image of a cracked tile, a mid-range photo showing the crack pattern across the wall, and a wide shot capturing the entire wet area.

Descriptive Records

Written records should clearly and factually document the defect.

Note the date, time, and method of discovery, followed by a concise description of the issue, its suspected cause, and its impact on performance or safety. Include any relevant environmental or operational conditions present at the time of discovery, such as heavy rain, structural movement, or increased occupancy.

Example: “Vertical crack in 600×600 porcelain floor tile, wet area Zone 1, discovered during routine inspection; no recent impact or load events.”

Contract References

Reference the relevant clauses, drawings, or specifications that define expected standards of quality or performance. Link these to subcontractor warranties or supplier documents to confirm accountability.

Verify that as-built drawings and O&M manuals accurately reflect installed conditions, as this alignment simplifies verification and reduces disputes over scope.

Example: Refer to the approved tile specification, waterproofing detail drawing, and installer’s workmanship warranty.

Communication Trail

Maintain a chronological record of all communication and actions taken from first notice to resolution. Include dated copies of written notices, inspection reports, responses, quotes, and completion certificates. Store all records in a centralised digital platform so that both parties can access a transparent audit trail at any time.

Example: Initial notice is sent within three days of discovery; inspection is scheduled within ten days; rectification quote is received within three weeks.

Compliance and Statutory Warranties in Australia

Statutory warranties form the foundation of construction compliance in Australia. They apply automatically under state and territory legislation and cannot be excluded, limited, or reduced by contract.

These obligations make warranty compliance a mandatory element of every residential and mixed-use project.

Builders and developers operating across multiple jurisdictions must understand the differences in statutory frameworks to prevent inadvertent breaches and maintain consistent compliance across all projects.

State-Based Frameworks

Each jurisdiction sets distinct warranty durations, obligations, and notification requirements. Compliance systems should be tailored to reflect these local rules.

• New South Wales

  The Home Building Act 1989 (NSW) mandates six years of coverage for major defects and two years for minor defects. Warranty protection automatically extends to subsequent owners.

• Victoria

  The Domestic Building Contracts Act 1995 (Vic) imposes implied warranties requiring work to be completed properly, using suitable materials, and fit for its intended purpose. These obligations are absolute and remain in effect for up to ten years.

• Queensland

  The Building Industry Fairness (Security of Payment) Act 2017 (Qld) and the QBCC Home Warranty Scheme provide up to six years and six months of coverage for structural defects and three months for non-structural defects.

• South Australia

  The Building Work Contractors Act 1995 (SA) provides five years of coverage from completion for breaches of statutory warranty obligations.

• Western Australia

  The Building Services framework requires builders to rectify defective work within six years of completion.

• Tasmania

  The Residential Building Work Quality (Warranties and Disputes) Act 2012 (Tas) sets six years for structural defects and two years for non-structural defects.

• Australian Capital Territory

  The Building Act 2004 (ACT) provides a six-year period for structural defects and two years for non-structural defects.

• Northern Territory

  The fidelity certificate and home building insurance system provides six years for structural defects and one year for non-structural defects.

Common Statutory Obligations

Across all jurisdictions, statutory warranties generally require that builders:

• Complete all work in a proper and workmanlike manner consistent with professional standards
• Use materials that are suitable, durable, and compliant with Australian Standards and the National Construction Code
• Deliver a building that is fit for its intended purpose and capable of lawful occupation
• Complete works within a reasonable timeframe and in accordance with approved plans and specifications
• Maintain all licensing, registration, and insurance requirements set by the relevant regulatory authority

Builder Defences

While statutory warranties impose strict obligations, certain defences may apply:

• Owner Instructions: Builders are not liable for defects resulting directly from owner-specified materials or methods, provided written advice was given about associated risks.
• Independent Professional Specifications: Reliance on certified design, engineering, or architectural documentation can serve as a defence when the builder followed professional direction in good faith.
• Force Majeure or External Events: Damage or defects caused by unforeseeable events such as natural disasters, vandalism, or third-party interference may limit liability.

Understanding and meeting these overlapping statutory obligations ensures builders remain compliant while protecting against costly enforcement actions, insurance disputes, and litigation.

Owner and Builder Responsibilities

Warranty enforcement relies on both parties fulfilling their respective obligations. Owners and builders share reciprocal duties that preserve or limit rights under the contract and statutory law. 

When either side fails to meet these responsibilities, it can result in lost protection, financial penalties, or extended disputes.

Owner Obligations

Owners must take proactive steps to maintain their rights under warranty protection:

• Provide written notice of defects as soon as they are discovered, typically within six months of awareness or within the active warranty period.
• Allow reasonable access for inspection, investigation, and rectification works.
• Maintain the property to prevent deterioration or secondary damage. Failure to perform routine maintenance may void warranty claims.
• Mitigate loss where practicable by containing damage, such as isolating leaks or limiting use of affected areas until repair occurs.
• Maintain detailed records of maintenance and communication to support future claims.

Builder Obligations

Builders must manage warranty claims transparently and in compliance with statutory requirements:

• Acknowledge and assess defect notices within a reasonable timeframe following receipt.
• Inspect the reported issue, determine the responsible party, and coordinate rectification promptly if the defect falls within the warranty scope.
• Carry out repairs or replacements at their own cost when liability is confirmed.
• Maintain active insurance, licensing, and registration throughout the warranty period to ensure claims remain valid.
• Keep transparent communication and documentation for all rectification activities.

Consequences of Non-Compliance

Owners who delay notification, deny access, or fail to maintain the property risk forfeiting warranty coverage. Builders who ignore notices, dispute responsibility without cause, or refuse rectification may face tribunal proceedings, insurance claims, or disciplinary action from state regulators.

Consistent compliance by both parties supports timely resolution, limits escalation, and protects the contractual and statutory rights that warranties are designed to uphold.

Managing Warranty Risk Across Project Delivery

Effective warranty management begins well before construction starts and continues long after handover. Waiting until defects emerge leads to reactive and expensive responses, rather than proactive risk control.

Research from the NSW Building Commission found that 53% of surveyed strata buildings had serious defects, highlighting the need for stronger prevention measures and more rigorous warranty governance.

• Preconstruction Risk Identification

  Warranty risk mitigation starts at the design and planning stage.
  Each specification, methodology, and material choice should be reviewed for potential warranty exposure.
  
  Subcontractor selection also plays a crucial role, with capability, defect history, and insurance coverage serving as key evaluation criteria.
  
  Warranty responsibilities and documentation requirements should be clearly embedded in subcontract agreements and procurement packages. Establishing a central warranty register at project commencement ensures visibility of the coverage scope, supplier contacts, and expiry dates throughout the delivery process.

• Construction Phase Quality Control

  During construction, structured inspection and testing processes aligned with contract specifications, QC requirements, and Australian Standards are essential.
  
  Installation data, testing results, and commissioning certificates should be recorded in a digital platform to maintain traceability.
  
  Supervision must focus on trades with the highest defect risk, such as waterproofing, façade systems, and services integration. Periodic internal audits verify that inspection processes, workmanship quality, and warranty documentation remain compliant with both contractual and statutory obligations.

• Closeout Procedures

  As the project nears completion, a thorough defect survey should be conducted to identify and address any outstanding issues. Before handover, all subcontractor and supplier warranties, inspection certificates, and manuals must be submitted and verified.
  
  Creating a consolidated warranty register summarising coverage types, responsible parties, expiry dates, and claim procedures ensures accountability and simplifies future defect management.
  
  Handover documentation provided to the client should also include warranty details and clear maintenance responsibilities to prevent misunderstandings after completion.

• Post Completion Tracking

  After handover, warranty management continues through systematic monitoring and review. Key components and systems should be inspected periodically to identify early signs of deterioration while warranty protection remains active.
  
  Subcontractors and suppliers should be contacted before warranty expiry to confirm their rectification responsibilities. Maintaining financial provisions for post-completion defects and insurance deductibles ensures adequate coverage for any future liabilities.
  
  Treating warranty management as a continuous quality and risk process rather than a post-completion obligation reduces disputes, protects project margins, and builds long-term client confidence.

Strong warranty management protects quality, compliance, and long-term project value

Warranty management gives project teams the structure needed to track obligations, manage defects, and maintain clear accountability. A consistent approach from design through post-completion reduces disputes, controls risk, and supports predictable commercial outcomes.

Written by

Josh Krissansen

50 articles

Josh Krissansen is a freelance writer with two years of experience contributing to Procore's educational library. He specialises in transforming complex construction concepts into clear, actionable insights for professionals in the industry.

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