Glossary
Defects liability period
The defects liability period is the time after practical completion during which the builder must return to fix defects in the work. Its length is set by the building contract, and a portion of the contract sum is often retained until it ends.
An example
After handover, buyers report minor defects in several apartments. The builder returns to fix them under the defects liability provisions, and the retention is released once the period ends.
Why it matters
Defects affect saleability and settlement, and retentions affect cash flow. Lenders may want to see how retentions and defects are handled in the building contract.
Points to check
Check the length of the defects liability period in your building contract and how retention or security is held during it. Lenders sometimes require part of the retention to remain in place until the period ends. Inspect the work and lodge defect notices in writing within the period. Statutory warranties under state building laws may run for longer than the contractual period, so ask a lawyer how the two interact.