What does practical completion mean in a building contract?

What practical completion means in NSW

Most building contracts define practical completion in their own words. That definition is the one that binds you and your builder. The NSW Government's guide to building contracts explains that under the Home Building Act 1989 work is complete when it matches the requirements of the contract.

Where a contract is silent, the law fills the gap. The work is treated as complete when it can be used for its intended purpose and is free of major defects. The earliest of three events can then be used to fix the completion date. They are the day the builder handed the project over, the last day the builder worked on it other than fixing minor defects and the day an occupation certificate was issued.

That date matters because it starts the clock on statutory warranties and Home Building Compensation cover. Note it in writing with your builder when you reach it.

Is practical completion the same as the occupation certificate?

No. The occupation certificate is a compliance step issued by your certifier, while practical completion is a stage in your contract with the builder. The government's information sheet on certifiers points out that a house can be suitable for occupation while painting or landscaping is still being finished. It adds that the certificate does not confirm the builder has met your contract. The two are separate checks, so that question falls to you. Compare the finished house and its records with what you agreed, taking independent advice where you need it.

What to check at the practical completion inspection

The practical completion inspection is your chance to compare the finished house with what you agreed to buy. Bring the drawings, the specification, your selections schedule and every signed variation, then walk each room in daylight.

Building Commission NSW's Guide to Standards and Tolerances sets out how to judge finishes. For general surface finishes on walls, ceilings, floors and glass, it uses a normal viewing position at least 1.5 metres away in light that does not skim across the surface. Appliances and fixtures are viewed from 600 millimetres. The guide is advisory, so your contract, the law and the relevant Australian Standards take precedence wherever they set a different test.

Work through the house in order and test as you go:

• every door, window, lock and blind opens, closes and seals properly
• taps, showers and drains run freely with no leaks under sinks or vanities
• appliances, lights, power points and heating or cooling all work
• stone, tiles, joinery and paint match the selections and are free of chips or marks
• smoke alarms are installed and working, which NSW requires in every new house
• the outside is finished as drawn, including paths, drainage, fences and landscaping in the contract

List every item in writing, agree it with your builder and keep a copy.

What happens after practical completion

At handover you should receive the records Building Commission NSW recommends you keep for your new home. They include the contract and variations, proof of payments, the Home Building Compensation certificate, product warranties, care manuals and the termite protection certificate.

New home contracts also come with a defects liability period, which the same guidance says is usually 13 weeks. Statutory warranties run alongside it from completion, for six years for major defects and two years for other defects. Small cracks in brick, timber and plaster can appear in the first 12 months as new materials dry out. The guidance says these should not affect the structure.

How handover works at SHORE

Our finishing trades install, commission and test fixtures room by room before we call a single space complete. A guided handover then walks you through the house, its systems and its warranties.

We return at three, six and twelve months to attend to settlement and defects and we stay reachable in between. To see how handover fits into the whole project, read through our design and build process or explore our custom homes in Sydney.