Handover, Practical Completion and the Defects Period Explained

The end of a build is not one event. It is three, and they happen in order.

Practical completion. Occupancy approval. Handover.

Then there is a fourth thing that runs long after you have moved in: the defects and warranty period. Most owners are hazy on all four, which is a shame, because this is the stage where knowing the rules is worth the most.

Practical completion

Practical completion is the point at which the home is finished in accordance with the contract, apart from minor items that do not prevent you from using it.

That definition matters. It is not "absolutely everything is perfect". It is "the house is complete and usable, and the remaining items are minor".

What counts as minor is the usual point of disagreement. A missing door handle is minor. A bathroom that has not been tiled is not. Your contract should define practical completion, and it is worth reading that clause before you get there.

At practical completion, you inspect the home with the builder and record anything that needs attention. That list is variously called the defects list, the punch list or the handover list.

How to run your final inspection properly

This is your best opportunity to have things fixed. Take it seriously.

Allocate real time. Two to three hours minimum for a family home. Not twenty minutes on your way somewhere.

Go in daylight, and bring a torch anyway. Daylight shows finish problems. A torch shows what daylight does not, particularly in cupboards, under benches and in the roof space access.

Bring a checklist and a phone. Photograph everything you raise. Notes plus photos are much more useful later than memory.

Bring someone else. A second set of eyes finds things you have stopped seeing. If you have looked at this house every week for six months, you are the worst person to spot what is wrong with it.

Work room by room, systematically. In each room:

• Open and close every door and window. Check they latch, seal and do not catch.

• Open every drawer and cupboard. Check runners, alignment and soft close.

• Turn on every tap. Check flow, temperature, drainage and that nothing leaks under the sink.

• Flick every switch. Confirm it does what you expect and that the right lights are on the right switches.

• Test every power point.

• Look along walls at a shallow angle, not straight on. That is how you see plaster and paint defects.

• Look at the ceiling and cornice junctions.

• Check tiling for lippage, grout consistency and silicone at junctions.

• Check skirtings and architraves at corners.

• Look at the floor finish under raking light.

Then do the whole house systems. Heating and cooling in every zone. Hot water. Exhaust fans. Smoke alarms. Garage door. Any smart or security systems.

Then go outside. Render and cladding finish. Roof and gutter lines from ground level. Downpipes connected and discharging to stormwater. Paving falls away from the house. Fencing and gates. Driveway finish. External taps and power points. Site cleaned.

Then go up. If there is a manhole, look into the roof space. Insulation should be even, not compressed, not pushed aside, and not blocking eave ventilation.

Raise everything you find. It is much easier to have items addressed before handover than after.

Occupancy permit or certificate of final inspection

Separately from your inspection with the builder, the relevant building surveyor carries out the final statutory inspection and, if the work complies, issues an occupancy permit or a certificate of final inspection.

This is the document that makes it lawful to occupy the home. It is not optional, it is not a formality, and you should receive a copy.

Note that this is a compliance document. It confirms the building meets the Building Act 1993, the Building Regulations 2018 and the National Construction Code. It says nothing about finish quality. Our guide to building permits in Victoria explains where this sits in the statutory process.

Handover

Handover is when you get the keys. It should also be when you get everything else.

Ask for:

• Keys, including all copies, and remotes

• The occupancy permit or certificate of final inspection

• Warranties for appliances, fixtures and installed systems

• Manuals and operating instructions

• The energy rating documentation

• Structural engineering documentation

• As built or amended drawings where the design changed

• Details of paint colours and product codes, so you can touch up later

• Contact details for the trades who did specialist work

• Details of any maintenance obligations that affect your warranties

That last point catches people. Some warranties require specific maintenance to remain valid. Find out at handover, not in three years.

A good builder will hand this over as a package without being asked. If you have to ask, ask.

The defects period

The project is not over when you move in.

Your builder's defects period. Most builders run a period after handover during which they return to fix items that emerge in normal use. We do a three month inspection as standard.

Statutory warranties. Under the Domestic Building Contracts Act 1995, a builder gives implied warranties about workmanship, materials, compliance with the law and fitness for purpose. These run to you and they are not something a contract can remove.

Domestic building insurance. For work over $16,000, the policy responds to structural defects for six years and non structural defects for two years from completion or termination of the contract. This cover exists for the situation where the builder has died, disappeared or become insolvent.

Our own guarantee. We carry a ten year structural guarantee alongside the statutory protections.

Between these, most of what can go wrong is covered. The important thing is knowing which period applies to which type of problem, and raising things while the relevant period is running.

What is normal in a new home, and what is not

Some movement in the first year is expected. Timber shrinks as it dries. The site settles into its moisture regime. Reactive clay sites, which are common across Melbourne, move seasonally.

Normal:

• Hairline cracks at plaster joints, particularly at cornice and around openings

• Doors needing adjustment as timber moves

• Small gaps opening at skirting and architrave joints

• Some settlement cracking in external render at control joints

Not normal:

• Cracks that are wide, that step diagonally through masonry, or that keep growing

• Doors or windows that will not close at all

• Floors that are visibly out of level

• Any water where water should not be

• Drummy or lifting tiles

A useful habit: keep a running list rather than calling about each item as it appears. Batch the small things and raise them together at your defects inspection. Raise anything that looks structural or involves water immediately.

The most common regret

Owners who look back on handover almost always say the same thing. They were so pleased to be finished that they signed off on a list that was shorter than it should have been.

You are allowed to take your time. You are allowed to raise items that seem small. Nothing about being thorough at this stage is unreasonable, and a builder who does good work expects it.

Living with it

One last practical note. The first few weeks in a new home are when you learn how it actually works. Which way the sun comes in, which door catches, where the noise is.

Keep notes during that period. By your three month inspection you will have a list that is far more useful than anything you could have compiled on handover day.

How we handle handover

We keep the same team on your project from the first meeting to handover, which means the person walking through with you at the end is not meeting your house for the first time.

We do a three month inspection after handover, and we carry a ten year structural guarantee.

Have a look at our completed projects, including Cambridge, Boronia and Wheelers Hill. Read about our services and our team, or get in touch.

You can also read our guide to the custom home building process in Melbourne for how handover fits into the whole sequence, and our guide to custom home building contracts for what your contract should say about completion.

Frequently asked questions

What is the difference between practical completion and handover?

Practical completion is the contractual point at which the home is finished apart from minor items. Handover is the physical event of receiving keys and documentation. They usually occur close together but they are not the same thing.

Can I refuse to accept practical completion?

If the work does not meet the contractual definition, yes, and your contract should set out the process for disputing it. Refusing over genuinely minor items that do not prevent occupation is generally not a strong position.

How long is the defects liability period?

Builders set their own defects periods contractually. Separately, domestic building insurance responds to structural defects for six years and non structural defects for two years from completion, and the statutory implied warranties under the Domestic Building Contracts Act 1995 apply regardless.

Do I need an occupancy permit before I move in?

You need either an occupancy permit or a certificate of final inspection, depending on the work. It is unlawful to occupy without the appropriate document.

Should I hire an independent inspector for handover?

Many owners do, and it is a reasonable step on a purchase this size. An experienced inspector will find things you will not. A builder confident in their work will not object.

What if a defect appears after the builder's defects period ends?

The statutory warranties and the domestic building insurance periods run independently of any contractual defects period. Raise it with the builder first, and if that does not resolve it, Consumer Affairs Victoria and VCAT are the next steps.

When does the six year insurance period start?

From completion of the work or termination of the building contract, whichever applies.

Sources

• Consumer Affairs Victoria, Domestic building contracts

• Building and Plumbing Commission, What is domestic building insurance

• Victorian Legislation, Domestic Building Contracts Act 1995

• Building and Plumbing Commission, At the end of your building project

• Victorian Legislation, Building Act 1993