The defects liability period
Twelve months in which things that only show up in use get fixed, and the retention that makes it happen.
The short answer
A fitout looks finished on handover day. It’s not tested until a practice has been running in it for a winter and a summer, and that’s exactly what this period exists for.
Key points
- Usually twelve months from practical completion, sometimes six.
- The builder returns to rectify defects that appear during it.
- Retention or security is normally held until it ends. That is the leverage.
- It is not a warranty and it is not a maintenance agreement.
- Inspect properly before it expires, not after.
A fitout looks finished on handover day. It’s not tested until a practice has been running in it for a winter and a summer, and that’s exactly what this period exists for.
What a defects liability period is
The defects liability period is a defined stretch after practical completion, commonly twelve months and sometimes six, during which the contractor is obliged to return and rectify defects in their work.
It usually runs alongside retention: a percentage of the contract sum, or a bank guarantee, held by you until the period ends. That retention is the reason the obligation has teeth. A builder with nothing outstanding has considerably less reason to come back.
What counts, and what doesn’t
Defects are work that was not carried out in accordance with the contract: joinery that has moved, a door that has dropped, cracking at a junction, a tap that leaks, paint that has failed, a mechanical unit not performing as designed.
Not defects:
- Fair wear and tear. A year of patients through a waiting room leaves marks.
- Damage you caused. Including by equipment installed after handover.
- Design issues, where the work was built correctly to a design that turned out not to suit. That’s a different conversation with a different party.
- Maintenance. Filters, seals and servicing are yours from day one.
- Things you decided you wanted differently. That is a variation.
The design boundary is the one that produces most disputes on clinical fitouts, and it is worth being clear-eyed about which side of it a problem sits before raising it.
Why clinical fitouts test differently
Ordinary commercial fitouts reveal defects slowly. Clinical ones are used harder and cleaned more aggressively, so problems surface faster and in specific places:
- Junctions and coving, where daily disinfection finds every gap
- Joinery in wet areas, particularly around sterilisation benching
- Door seals and hardware on rooms that open a hundred times a day
- Mechanical performance across a full summer and winter, which nobody can test in the week of handover
- Acoustic performance, which only reveals itself once real conversations are happening in adjacent rooms
That last one is worth flagging early rather than at month eleven, because remedying it’s disruptive and you’ll want it done while the obligation is live.
How to use the period properly
Keep a running list from day one. Not a mental note. A document, with dates and photographs. Small items accumulate and memory does not.
Report defects as they appear, in writing, rather than saving them up. Some contracts require prompt notice, and a defect reported early is easier to attribute.
Inspect deliberately at around month ten or eleven. Walk it properly, with the original defects list and your running list, before the period expires. This is the single most valuable hour in the whole twelve months and almost nobody books it.
Do not release the final retention until the list is closed out. Once it is released, you’re relying on goodwill and on whatever statutory warranties apply.
After it ends
The obligation to return doesn’t continue indefinitely, but it’s not the end of all recourse. Manufacturer warranties on equipment, plant and finishes run on their own terms, and statutory rights under the Australian Consumer Law and state building legislation sit behind the contract.
Those are slower and harder to enforce than a retention you are still holding, which is the argument for using the twelve months while you have them.
Sources and further reading
Defects periods, retention and notice requirements are contract terms and vary. Have your building contract reviewed before signing.
The National Construction Code: building classification, fire separation, egress, sanitary provisions and access.
Source for AS/NZS 4815 and 4187 reprocessing, AS 1428.1 access and AS 1668.2 ventilation. The standards themselves are purchased, not free.
Questions
What is a defects liability period?
A defined period after practical completion, commonly twelve months and sometimes six, during which the contractor must return and rectify defects in their work. It usually runs alongside retention held from the contract sum, which is what gives the obligation practical force.
How long is a defects liability period in Australia?
Twelve months is the most common for a commercial fitout, though six months appears in some contracts. The length and the retention arrangements are contract terms, so check yours rather than assuming.
What counts as a defect?
Work not carried out in accordance with the contract: joinery that has moved, dropped doors, cracking at junctions, leaking tapware, failed paint, mechanical plant not performing as designed. Fair wear and tear, damage you caused, maintenance and design issues aren’t defects.
What if a problem is a design issue instead of a defect?
Then it sits outside the defects liability period, because the work was built correctly to the design it was given. That’s a different conversation with a different party, and it produces most of the disputes on clinical fitouts.
When should I inspect before the period ends?
Around month ten or eleven, deliberately, with the original defects list and your own running list in hand. It is the most valuable hour of the twelve months and almost nobody books it. Do not release the final retention until the list is closed out.
Send us the floor plan
A site assessment tells you what the tenancy can take and what it will cost to get there, ideally before you have signed for it.