Terminating a Building Contract in Queensland: Notice to Remedy, the Home Warranty Deadlines, and Recording the Site Before It Changes Hands

When a builder stops turning up, walks off the job or goes bust, ending the contract feels like the obvious next step. In Queensland, how and when it ends decides whether the home warranty will pay to finish the house. Terminating a building contract the wrong way can cost you that cover, and so can missing one of two deadlines.

This guide covers the notices most contracts require, when the Queensland Home Warranty Scheme pays for non-completion, the 2-year and 3-month deadlines, and why the site needs recording on the day the contract ends. It's general information, not legal advice. Get advice from a lawyer experienced in building disputes before you send any notice.

Before you terminate: the two notices

Most domestic building contracts need two separate written notices before an owner can end the contract for the builder's default:

1. Notice to remedy. Also called a notice of breach, it names each breach and calls on the builder to fix it within the time the contract allows, commonly 10 business days.
2. Termination notice. A second written notice, sent only after that time has passed without the breaches being fixed, and referring back to the first.

The QBCC recommends that termination letters are written, or at least checked, by a lawyer experienced in building disputes. Terminating wrongly can cause major financial and legal problems, and it can reduce or remove your home warranty cover for non-completion. In rare cases, such as the builder's bankruptcy or liquidation, a single notice may be enough.

If the problem is a disputed claim or variation rather than a builder who has stopped work, start with our guide to disputing a progress claim or variation.

When the home warranty pays for non-completion

The Queensland Home Warranty Scheme can cover the cost of finishing the work when a builder doesn't. To claim for non-completion:

• The contract must be fixed-price.
• It must have ended in one of these ways: you validly terminated it because of the builder's default, the builder died, the builder's company no longer exists, or the builder is insolvent and the QBCC has cancelled their licence. Mutual abandonment doesn't count as a valid termination.
• You must be eligible. Developers, people building three or more homes, licensed contractors building on their own land and construction management contracts can't claim.

If the builder has died, the company has been deregistered, or the builder is insolvent and their licence has been cancelled, you don't need to terminate the contract yourself before claiming.

The deadlines: 2 years and 3 months

Two time limits decide whether a non-completion claim can be made at all:

• 2 years. The contract must end within 2 years of the date works started, or of the contract date if no work has started.
• 3 months. The claim must be lodged with the QBCC within 3 months of the day the contract ends.

A notice to remedy, the remedy period and a termination notice all take time, so a stalled job close to the 2-year mark needs advice quickly. Enter your dates below to see where they fall.

What a non-completion claim pays

If no work has started, the scheme refunds the deposit you paid, up to the maximum deposit allowed by law. If work has started, it pays the difference between the funds you still hold, or should still hold, under the contract and the cost to complete the work, which the QBCC works out from quotes by licensed contractors on its panel.

• The cap. The most the scheme pays for non-completion is $200,000, and any payments for vandalism or theft come out of the same amount.
• What reduces it. The payout can be reduced if you paid more than the maximum deposit, paid for work ahead of the schedule in the contract, or the contract was underpriced by more than 30%.

Paying only for stages that are complete protects this cover as much as it protects your budget.

If your builder goes bust: the first steps

When a builder becomes insolvent, work usually stops without warning, and the trades and suppliers stop with it. Everything above still applies. In practice, the first days go like this:

1. Confirm what's happened. Check the builder's licence status on the QBCC's Licensee Register, and find out whether an administrator or liquidator has been appointed.
2. Stop payments. Tell your lender in writing not to pay any further claims to the builder.
3. Secure the site. Lock it up if you can, and don't bring in another contractor or start any work without the QBCC's approval.
4. Record the site as it was left. A dated 3D record captures every room on the day work stopped, before anything changes.
5. Lodge the claim in time. If the builder is insolvent and the QBCC has cancelled their licence, you may not need to terminate the contract yourself, but the claim must still be lodged within 3 months of the contract ending.
6. Get advice early. A lawyer experienced in building disputes can tell you whether a notice is still needed, especially if the job is close to the 2-year mark.

Record the site before it changes hands

Once the builder has stopped, the QBCC advises securing the site, telling your bank in writing not to make further payments to the builder, and not engaging another contractor or doing work on site without its approval, because that can affect your claim.

The QBCC's cost-to-complete assessment depends on the state of the work on the day the contract ends. Once a completing builder starts, that state is gone, and it gets hard to tell the first builder's defects from the second's. A dated 3D record of the site on termination day captures every room as it was left, without touching the work. The completing builder can then record their own stages, starting with a pre-plaster audit before the walls are lined. Our as-built guide explains what a frame-stage record shows.

Terminating a building contract: FAQs