If you are a domestic builder in Victoria, 1 July 2026 marked a significant change to the way building work, homeowner protection and insurance operate.

Victoria has moved from the previous last-resort Domestic Building Insurance (DBI) model to a First Resort Home Warranty Scheme (FRHWS) for contracts entered into after that date.

For builders, this is more than a change in terminology. It changes the risk landscape and makes it increasingly important to have the right contracts, insurance, documentation, permits, and processes in place from the outset.

What has changed?

Under the previous DBI regime, the builder had to be insolvent, dead, or disappeared before accessing they could make a claim on insurance.

Under the new FRHWS scheme, eligible homeowners may be able to access home warranty protection when work is incomplete, defective, or non-compliant and the builder has failed or refused to rectify or complete the work.

For contracts entered into from 1 July 2026, the scheme provides up to $400,000 per home, subject to the applicable limits, conditions, and exclusions.

This means that builders need to think differently about managing building projects and potential defects.

What should builders be doing now?

 We recommend that builders review their current processes to ensure that:

 1. Your contracts are up to date

 Domestic building contracts should be reviewed to ensure they reflect the current legislative requirements and properly deal with matters such as variations, payments, delays and extensions of time.

 2. Your insurance is in place

 Where domestic building works insurance is required, make sure itis obtained at the appropriate time and that the required certificate is provided to the homeowner.

 3. Variations are properly documented

 A conversation on site is not necessarily enough.

Make sure variations, additional work, and changes to the scope are properly documented and approved in accordance with the contract and legislation.

 4. You keep good project records

 Keep records of contracts, plans, variations, instructions, progress claims, extensions of time, correspondence, complaints, rectification work and photographs.

If a dispute arises later, these records can be critical in  establishing your position.

 5. You respond quickly when something goes wrong

 Under the new first-resort environment, dealing properly with complaints, alleged defects and rectification issues is more important than ever.

Ignoring an issue or allowing correspondence to go unanswered can make a difficult situation significantly worse.

Don't wait until you have a dispute

We understand that builders are busy running their businesses.  Your focus is on winning work, managing trades, keeping projects moving and getting jobs completed.

Legal issues are often the last thing on your mind.

But a relatively small investment in getting your contract and processes right at the beginning of a project can potentially save thousands of dollars in legal costs, lost time and disputed payments later.

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Mahons can help

 Mahons works with builders and construction businesses across a range of legal issues.

 We can assist with:

• Special conditions – drafting conditions tailored to your business and the particular risks  of your projects;
• Payment disputes  – assisting with unpaid progress claims and other payment issues;
• Defective work  – advising when a homeowner alleges defects;
• Rectification matters – assisting with responding to claims and regulatory requirements;
• Extensions of time and delays – protecting your contractual position; and
• Building disputes – negotiating and, where necessary, representing you in VCAT proceedings.

‍Conclusion‍

The changes introduced on 1 July 2026 make it more important than ever for builders to be proactive about protecting their businesses. Getting your contract, insurance and project processes right at the beginning of a project can help prevent a legal issue from becoming a costly dispute.

If you would like discuss or require assistance  please contact the Andrew Minahan, Senior Solicitor – Litigation & Dispute Resolution

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