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Defects rectification in the DLP: a builder's process

How to manage defects during the DLP after PCI: record the list, schedule fixes, push back on owner add-ons that aren't defects, get sign-off for the final retention.

By Dan Waring. Last updated 15 May 2026. Verified 15 May 2026.

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TL;DR

On a residential job, the defects rectification process is the chain that runs from the [practical completion inspection (PCI)](/practical/practical-completion-handover/) to the final retention release at the end of the defects liability period (DLP). On HIA-template contracts the DLP is commonly 13 weeks (longer on ABIC and bespoke). Get the defects list written and signed at PCI, schedule the fixes within the contract turnaround time (typically 28 days), push back in writing on any owner request that is a new item, not a defect, and book the end-of-DLP inspection in the diary the day handover happens. Done right, the final retention is released on time and the builder closes the job. Done loose, the owner holds retention until well past the contract DLP and the relationship sours.

When you do this

The DLP starts the day practical completion is reached and runs for the period set in the contract. HIA standard residential contracts commonly use 13 weeks; ABIC contracts often use 6 to 12 months; bespoke commercial-style residential contracts may use 12 months. Read the contract on day one of the job; the DLP length and retention percentage are usually in the Schedule.

The process applies to any item the contract defines as a “defect”: work that does not conform to the contract or the relevant Australian Standards. It does not apply to fair wear and tear, owner-induced damage, or new scope items raised after handover.

Who’s involved

RoleResponsibility in the DLP
BuilderReceives and triages defects items; schedules trades; rectifies within contract turnaround; documents each fix; books and attends end-of-DLP inspection
Owner / clientNotifies defects in writing; gives reasonable access for rectification; signs off at end-of-DLP inspection
TradesReturn as called by the builder to rectify defects in their scope; certify fix completion to the builder
Principal certifierOnly involved at handover (final OC); not part of DLP unless a defect crosses into a regulated issue (e.g. waterproofing failure invoking warranty)
Insurer (HBCF in NSW, equivalent in other states)Only involved if builder fails to rectify or becomes insolvent; the owner then claims under home warranty

Steps

1. Capture the defects list at PCI and have both parties sign

At practical completion inspection the owner walks the home and the builder records every item raised. Items break into three buckets:

  • Defects. Work that does not comply with the contract spec or AS standards. These go on the defects list.
  • Incomplete items. Things in scope but not yet finished (e.g. door stop not fitted, missing handover documentation). Builder completes before practical completion can be certified.
  • Owner change requests. Things the owner wants that were not in scope. These are NOT defects; they are new variations and require separate scope, price and time agreement.

The defects list is signed by both parties at PCI. That signed list is the contractually-binding scope of DLP rectification. Anything raised after this point falls under the “add-ons mid-DLP” handling in Step 4.

2. Triage, schedule, communicate the timeline

Within 7 days of PCI:

  • Categorise each defect by trade (carpenter, painter, plumber, etc.).
  • Get a fix date from each relevant trade.
  • Send the owner a written rectification schedule with target completion dates.
  • Note any item that requires a return visit by a specialised sub (e.g. waterproofing membrane repair) and flag the longer turnaround.

Most contracts require rectification within a “reasonable period” or a specified number of days (HIA NSW Clause 33 commonly references 28 days subject to access). Beat the contract limit by a margin so a delay on one item does not put the whole list overdue.

3. Rectify, document, get owner acknowledgement per item

For each fix:

  • Trade attends, completes the rectification, takes a photograph at completion.
  • Builder logs the date complete and the photograph against the line on the defects list.
  • Owner acknowledges the item is closed by initialling the list (in person) or by email response (remote acknowledgement is accepted under most contract terms if the contract allows electronic notice).

Keep one master defects list, not multiple copies. Where the owner cannot be reached for acknowledgement, document the completion and the attempt to contact in writing, then proceed; a failure-to-respond clause typically applies after a stated period (often 7 to 14 days).

4. Push back on mid-DLP additions that are not defects

The most common dispute in DLP: the owner adds items that were either in plain sight at PCI (and therefore should have been raised then) or are not defects at all (changed preferences, wear and tear, occupation damage). The builder is not obliged to rectify these for free.

The response template:

Thanks for the additional items. The PCI defects list signed on [date] is the agreed DLP scope. Items A, B and C in your email are not defects under the contract because [reason: not in original scope / cosmetic preference / occupation damage / fair wear and tear]. I am happy to quote for items A and B as a variation; item C is excluded.

Do this in writing. The signed PCI list and the contractual definition of “defect” are the two anchors. Verbal capitulation creates expectation creep for the next jobs in the same suburb.

5. Book the end-of-DLP inspection on day one

On the day handover happens, put the end-of-DLP inspection in the diary for one to two weeks before the DLP expiry. Forgetting this is the single most common reason for retention being held past the contract DLP: the owner does not initiate, and the builder does not chase, so the date passes without a closing inspection and the retention sits.

At the end-of-DLP inspection:

  • Both parties walk the home.
  • Outstanding defects list items are confirmed closed or noted as still open.
  • A final sign-off is recorded.

Where items remain open at end-of-DLP, they remain rectification obligations, but the retention release schedule must still proceed unless the contract permits retention extension (read the clause; most don’t).

6. Release retention and close the job in writing

On the final sign-off, issue a retention release request to the owner. On HIA New Home Construction contracts, retention is the final tranche of contract sum held during DLP; release is by progress claim with supporting closure documentation. Once the funds clear:

  • Send a written “job complete” letter to the owner.
  • Confirm the home warranty insurance certificate (HBCF in NSW, equivalent in other states) remains in force for the statutory warranty period.
  • Archive the project file (defects list, photographs, sign-offs, owner correspondence) per your business records policy. Most builders keep these for at least the statutory warranty limitation period (commonly 6 to 10 years post-completion).

Documents needed

  • Signed PCI defects list (the binding scope).
  • Trade rectification records (date, photograph, person who attended).
  • Owner acknowledgement chain (email or signed list).
  • End-of-DLP inspection record.
  • Final retention release approval.
  • Home warranty insurance certificate.

Common holds

  • No signed PCI list. Owner adds items continually; no anchor to push back. Fix: never accept a PCI walk-through without a signed list, even if rough.
  • Owner inaccessible for return visits. Rectification cannot proceed until the trade can attend. Document each attempt; the contract’s reasonable access clause is the basis for time extensions.
  • Item disputed as defect vs preference. The contract spec, the AS standard, or the HIA Guide to Materials and Workmanship (verified 2026-05-15) is the reference. Where the dispute does not resolve, the contract dispute resolution clause (usually mediation then adjudication) applies.
  • End-of-DLP inspection missed. Retention sits and the owner gets harder to reach the longer the gap. Fix: diary entry on handover day.
  • Insurer threatens to call retention warranty. Where the builder cannot or will not rectify, the owner claims under the home warranty insurance. The insurer rectifies and pursues the builder for cost; the builder’s licence comes under scrutiny.

References

See also

Last updated: 2026-05-15. Verified: 2026-05-15. Quarterly review for currency.

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