When a delay occurs in the home building project, builders generally can submit an extension of time (EOT) claim under the home building contract to adjust the completion date. However, it does not mean that the homeowners are required to automatically accept such EOT claims, especially when the homeowners reasonably believe the delays are unjustified or improperly claimed. 

If a homeowner disagrees with an EOT claim, they must act swiftly and in accordance with the contract to formally dispute the claim. This article explains the homeowner’s rights and responsibilities when contesting an EOT claim, common grounds for dispute, and the procedures that follow.

Common Grounds for Disputing EOT 

Homeowners may dispute an EOT for a variety of reasons, particularly when they suspect the delay is not legitimate or is not adequately supported. Common objections include the following:

  • Late Notification: The builder did not notify the homeowner of the delay within the required time period.
  • Concurrent Delays: The builder is seeking multiple extensions for delays that occurred simultaneously (also called “double-dipping”).
  • Insufficient Evidence: The builder has not provided adequate documentation or reasons to support the claimed delay.
  • Non-Qualifying Delays: The delay does not fall under the contractual valid grounds for extension (e.g. delays caused by the builder’s own conduct).

When raising any of these points, homeowners should clearly outline the basis for the objection in their notice and, where possible, refer to contractual terms and supporting evidence.

The Importance of Proper Notice

When a builder submits an EOT, the homeowner typically has 2 to 5 business days (depending on the contract) to approve or to issue a written notice of dispute. The notice of dispute must be provided in writing, include details of the reasons for the dispute, address each of the specific item in the builder’s EOT, and issue to the builder within the contractually specified time frame. 

Failure to respond within the designated timeframe may result in the EOT being deemed accepted by default, leaving the homeowner unable or difficult to challenge it later.

What Happens After a Dispute Is Raised?

Dispute Resolution Process

Most standard home building contract shall include a dispute resolution process for which the parties could follow and rely upon when dispute arises. If the homeowner disputes the EOT claim, the matter may be referred to an independent third party, such as an adjudicator, mediator, or expert, depending on the dispute resolution clause in the contract.

In some cases and subject to the contract clauses, homeowners may reserve their rights to claim damages for losses caused by delay, such as lost rental income or additional living expenses, while the dispute is being resolved.

Legal Proceedings

Where informal dispute resolution fails, the dispute may proceed to a Tribunal or Court, such as those operating under the Home Building Act 1989 (NSW) or equivalent legislation in that jurisdiction. The Tribunal and Court will often assess the following factors before any decision was made:

  • whether the builder’s claim complies with contract terms;
  • whether the homeowner’s dispute was valid and timely; and
  • the overall fairness and reasonableness of the claim.

Key Considerations for Homeowners

  1. Time Sensitivity

Disputing an EOT claim is time sensitive. Homeowners must respond quickly within the specified contractual time frame. Failure to respond may lead to automatic approval of the builder’s request or consequent issues. 

  1. Documentation

Maintain detailed records of all communications and documents related to the EOT claim, and make sure that the notice is in writing, dated, signed, and served in accordance with the contracts. These written records can be essential evidence when the matter escalates to legal proceedings.

  1. Practical Implications

Disputing an EOT may affect project timelines and working relationships. It is important to weigh the impact of dispute resolution processes on the project completion status, costs of potential delays, and contractual obligations.

Timely and informed action is crucial when responding to an EOT claim. Homeowners who understand their contractual rights and respond properly can protect their interests, avoid unnecessary extensions, and preserve their ability to claim damages.

Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our social media accounts.

DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.