Home warranty insurance is a legal requirement in many residential property transactions across Australia, particularly when recent building or renovation work has been carried out.
But when do you need home warranty insurance exactly? The answer depends on the type of work done, who did it, the value of the work, and how recently it was completed.
This type of insurance is designed to protect future owners if something goes wrong with the building work and the builder is no longer around to fix it—due to death, insolvency, or disappearance.
In most cases, home warranty insurance must be in place before selling a property that has undergone significant building work within the last 6–7 years.
In this article, we’ll break down everything you need to know: when builders and owner-builders must take out the insurance, when it’s legally required during the sale process, and the risks of not having it in place.
Whether you’re buying, selling, or building, this guide will help you understand your obligations and avoid common legal pitfalls.
Why Is Home Warranty Insurance Required In Residential Property Transactions?
Home warranty insurance is a special type of protection for people who buy a property that has had major building work done. It’s designed to cover the buyer if the builder disappears, dies, becomes insolvent, or goes bankrupt and can’t fix building problems.
In Australia, this insurance is not for general wear and tear. It’s specifically for structural faults or poor workmanship. These problems may not show up right away, but they can cause serious headaches and costs later on.
If you’re selling a home where building work was done in the past few years, especially if you’re an owner-builder or hired a builder, the law might require you to provide home warranty insurance to the buyer. This gives the buyer peace of mind—and it keeps you compliant with property laws.
Each state has its own rules, but the goal is the same: to protect people from being left with expensive repairs and no one to hold responsible.
When Does A Builder Or Owner-Builder Need To Take Out Home Warranty Insurance In Australia?
Builders and owner-builders need to take out home warranty insurance when the value of the building work reaches a certain amount. Rules can differ, so it’s best to check current local requirements or speak to a licensed conveyancer.
For owner-builders, the rules are usually stricter when selling. Even if the law didn’t require you to have home warranty insurance when you did the work, you may still need it before selling the property.
In short, if you build or renovate a home and the work meets the value threshold, you usually need to get home warranty insurance before you sell or even list the property for sale.
At What Stage Of The Sale Or Construction Process Must Home Warranty Insurance Be In Place?
Home warranty insurance must be in place before any contract of sale is signed. This is a legal requirement in most Australian states and territories. If you’re selling a home and the work was done recently, you must provide a certificate of home warranty insurance as part of the contract documents.
For builders, the insurance must also be arranged before work starts—especially if you’re being paid for the job. This ensures that homeowners are protected from the very beginning of the project.
If you are an owner-builder and you plan to sell your home within a certain number of years after completing major work (usually 6–7 years depending on the state), the law may require you to take out home warranty insurance at the point of sale, even if you didn’t need it when the work was done.
It’s important to remember that failing to provide this insurance at the correct stage can delay settlement, result in penalties, or even lead to the sale falling through.
Also Read: Your Guide to Home Insurance Before Settlement in QLD
Is Home Warranty Insurance Always Required Before Selling A Property With Recent Building Work?
Not always—but in most cases, yes.
Home warranty insurance is usually required when:
- The work was structural or major (not just cosmetic),
- The work was done in the past 6–7 years, and
- The value of the work exceeds your state’s legal threshold.
However, if the work was done more than 6–7 years ago (again, this depends on the state), home warranty insurance may no longer be required. The protection period would have ended, and legally you may not need to provide anything extra.
Also, if the work was purely cosmetic—like painting, tiling, or replacing cupboards—and didn’t affect the structure, you might not need home warranty insurance.
But this is where many sellers make mistakes. If you’re unsure, it’s always safest to speak with a conveyancer or legal expert. The last thing you want is to sign a contract and later discover you’ve breached disclosure laws.
What Are The Risks Of Not Having Home Warranty Insurance When Buying Or Selling A Property?
There are real legal and financial risks involved.
For sellers:
- You could face fines or legal action if you fail to provide required home warranty insurance.
- Buyers might withdraw from the sale if the insurance certificate is missing.
- You could be held responsible for future building problems, even years after the sale.
For buyers:
- If home warranty insurance wasn’t provided, and the builder disappears or becomes insolvent, you might have no protection.
- You could be left with thousands of dollars in repair costs.
It can be harder to claim compensation if something goes wrong with the structure of the home.
For both parties, not having proper insurance creates uncertainty and risk. It can even affect the approval of a home loan, since banks often check that all legal documents, including warranty insurance, are in place before lending money.
That’s why it’s so important to understand when do you need home warranty insurance and make sure it’s sorted early in the process.
Cover Your Bases With Confidence
Buying, selling, or building a home is a big decision, and the paperwork can get complicated fast—especially when it comes to home warranty insurance. But knowing the rules and getting expert help can make all the difference.
Whether you’re a homeowner, builder, or buyer, it pays to ask: When do you need home warranty insurance? If you’re dealing with recent construction, the answer is probably right now.
Need Expert Help With Home Warranty Insurance And Your Property Transaction?
Are you unsure if you need home warranty insurance before selling your home or completing a build? At CJC Law, our experienced conveyancers will make sure you’re fully protected and legally compliant. We work with homeowners, buyers, builders, and owner-builders across Australia to handle contracts, insurance documents, and property transfers with care and clarity. Reach out today for a free consultation and get peace of mind with your next property step.
