Practical Completion, Handover & Defect Liability Periods
Practical Completion is an exciting stage of your renovation, however, it can come with some confusion for home owners.
What Does Practical Completion Mean?
Practical Completion is a term that is misunderstood by many home owners.
A building contract defines practical completion being when all works are completed, except for any defects or omissions which do not prevent the home from being used for its intended purpose.
In other words, if the unfinished items prevent the home from. being “lived in” then practical completion could be deemed not. to have occurred. Builders will not hand over a house that is not habitable.
Why There Is Common Confusion?
Confusion over payment at this stage is common because at the point of practical completion the payment for the final progress invoice is due.
Some home owners misunderstand that the minor defects detected at this stage will be amended and withhold some or all of the the final payment until they are completed. However, such practice is a contrast breach.
What Is The Handover Stage?
Handover stage, occurs after practical completion and involves returning the keys to the owner to commence occupancy in the house.
Before handover, there will be a practical completion inspection and the building supervisor and client will agree on a list of items/defects that need to be attended to.
What Is The Defect Liability Period?
Practical Completion is an important stage of the building process, but home owners must understand that not every detail will necessarily be completed at that time.
The builder has a contractual obligation to repair these minor defects, but this does not necessarily happen before handover, although most builders would attempt to do so.
The defect liability period commenced after handover and can be no longer than 12 months. This period should be specified in your contractual agreement.