What a defects liability period actually asks of you

A DLP is a contractual promise to return and rectify defects in your works for a fixed period after completion. Three things follow: you carry the cost of your defective work, you need access to fix it, and your last money is held until it closes.

1. When does the clock start?

Find the event that triggers the period. It is usually practical completion of your subcontract works, but some subcontracts start it at practical completion of the head contract, months later. The trigger matters more than the number: a period that starts when the main contractor finishes the whole job keeps you on the hook long after your last day on site. Ask for the notice that fixes the date and diarise it — one of the clauses that shift risk that costs nothing to check before you sign.

2. How long does it run?

Read the number in your executed subcontract, not what is standard. The Australian Standard forms are paywalled documents you have to buy, and the version handed to you may have been amended, so nobody can tell you your period without reading your contract and its special conditions annexure — usually where the number gets changed.

3. What counts as a defect you have to fix?

Check how your contract defines a defect and what is carved out. The distinction that costs subbies real money is between work that does not comply with your scope, and damage caused later by another trade, fair wear and tear, or a design you were handed. If the clause makes you responsible regardless of cause, you are pricing another trade's damage.

4. Does rectifying a defect restart the clock?

Look for a clause that gives rectified work a fresh defects period. Some subcontracts run a new period on the repaired part, pushing your final release date out every time you go back. That is manageable if you diarise each new end date, and an expensive surprise if you assumed one fixed finish.

5. How are defects notified, and who is allowed to fix them?

Check how a defect is notified to you, how long you get to attend, and what happens if you do not. Rectification clauses commonly let the head contractor engage someone else and charge you if you miss the stated time, so confirm the notification path — site email, a portal, the superintendent — early. Keep every notice and response with dates: if a cost is set off against your money, that correspondence is the argument.

6. What actually releases the balance of your retention?

Trace the release trigger, because the end of your defects liability period and the release of your retention are not always the same event. Release is often tied to something under the head contract — its defects period, or a certificate issued to the main contractor. In New South Wales, section 12(1) of the Building and Construction Industry Security of Payment Act 1999 (NSW) provides that a pay-when-paid provision has no effect, and section 12(2) extends that to a provision making payment contingent or dependent on the operation of another contract. Victoria's equivalent is section 13 of the Building and Construction Industry Security of Payment Act 2002 (Vic). In Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5, decided under the South Australian Act, a retention regime tied to a certificate under the head contract was treated as a pay-when-paid provision — persuasive on the near-identical NSW and Victorian wording, not binding. How it applies to your clause is a question for your adviser; see why pay-when-paid has no effect for the detail, and your retention under a subcontract for the release dates to diarise.

Does the period ending mean you are off the hook?

No — a DLP is a contractual right to have defects fixed, not a cap on how long you can be sued. Limitation periods sit in separate statutes and run much longer. In Victoria, section 134(1) of the Building Act 1993 (Vic) provides that a building action — defined in section 129 as an action, including a counter-claim, for damages arising out of or concerning defective building work — cannot be brought more than 10 years after the occupancy permit issues, or, if none issues, the date of the certificate of final inspection under Part 4. In Queensland, section 10(1)(a) of the Limitation of Actions Act 1974 (Qld) gives six years from the date the cause of action arose for an action founded on simple contract. Two states as examples, not a national rule — check the position where your work is, and keep your records long after the period closes.

What to keep while the period runs

Five records, each answering a question you will be asked:

  • Handover photos and dates — they show the condition of your work on the day you left, which is how you separate your defect from another trade's damage.
  • Every defect notice you receive — the date it arrived starts your time to respond, and a notice you cannot produce is one you cannot argue about.
  • Your response and attendance record — what you did and when, so a claim that you failed to rectify has an answer.
  • The cost of going back — labour, plant and travel per return visit, in case the work is not your defect and becomes a variation.
  • The written close-out — the certificate, notice or email confirming the period has ended — usually what unlocks your last payment.

A dated phone photo beats a memory. DelaySolve's free tools for subbies are a starting point for keeping records you can hand over later.

A quick defects liability checklist

Before you sign, and again at completion: the trigger event and its date; the length, and anything in the annexure that changes it; what counts as a defect; whether rectified work restarts the clock; the notice path and your time to attend; what releases your retention; and the close-out document. On an Australian Standard subcontract, read it alongside AS 4901: what to check before signing.