What Is a Residential Building Dispute?
A residential building dispute arises when a homeowner or builder cannot resolve a disagreement about domestic building work. The most common types of residential building disputes in Victoria involve:
- Building defects — structural problems, waterproofing failures, substandard workmanship
- Construction delays — builder failing to complete work within the agreed timeframe
- Variations disputes — disagreements over unauthorised extras, price increases, or scope changes
- Incomplete works — builder abandoning a project or failing to finish
- Builder insolvency — builder entering administration or becoming insolvent mid-project
- Domestic Building Insurance (DBI) claims — enforcing your insurance policy where a builder has failed
- Contract disputes — disagreements about the contract terms, payment stages, or entitlements
Your Rights as a Victorian Homeowner
Victoria's domestic building framework is governed primarily by the Domestic Building Contracts Act 1995 (Vic) (DBCA) and the Building Act 1993 (Vic). These Acts provide homeowners with powerful statutory rights, including:
- Statutory implied warranties that apply to all domestic building work, regardless of what the contract says (s8 DBCA)
- Mandatory insurance (Domestic Building Insurance) on contracts over $20,000 for buildings of 3 storeys and under
- The right to take disputes to the BPC (for DBDRV conciliation) and then to VCAT at no application cost for most matters
- A 10-year period in which to bring building defect claims under the Building Act 1993
- New termination rights (from December 2026) if the contract price rises by more than 15% or the build time exceeds 150% of the agreed period
The Residential Dispute Pathway — Step by Step
Step 1: Direct Negotiation
Before applying to the BPC, Victorian law requires parties to have first attempted to resolve the dispute themselves. This typically involves a formal written notice to the builder specifying the defects or issues and requesting rectification. Legal advice at this stage can crystallise your claims and set the tone for the dispute.
Step 2: DBDRV/BPC Conciliation (Free)
If direct negotiation fails, homeowners can apply to the Building and Plumbing Commission (BPC) for free conciliation through the DBDRV service. The BPC will appoint a Dispute Resolution Officer (DRO) to assess the dispute and organise an independent building assessment if required. See our DBDRV & VCAT guide for a complete step-by-step walkthrough.
Step 3: Binding Dispute Resolution Orders
Following conciliation, the BPC may issue binding Dispute Resolution Orders (DROs). Under the new first-resort DBI scheme (fully operational by July 2026), if a builder fails to comply with a DRO, the homeowner can access Domestic Building Insurance — without needing to wait for the builder to become insolvent.
Step 4: VCAT — Building and Property List
If BPC conciliation fails to resolve the dispute, the BPC issues a Certificate of Conciliation. This certificate allows the homeowner (or builder) to apply to the Victorian Civil and Administrative Tribunal (VCAT) Building and Property List. VCAT can award significant sums and make orders for rectification, compensation, and costs.
Step 5: Supreme or County Court
Complex disputes — particularly those involving Australian Consumer Law claims, large sums, multiple parties, or novel points of law — may need to be heard by the County Court or Supreme Court of Victoria rather than VCAT. Following Plunkett v Portier Pacific [2024] VCAT 205, VCAT's capacity and resources are now relevant considerations in deciding whether to transfer a matter to a court.
Builder Insolvency and Incomplete Builds
Builder insolvency is one of the most distressing situations a homeowner can face. The collapse of Porter Davis Homes in 2023 left more than 1,500 Victorian families with unfinished homes. Under Victoria's reformed DBI framework (fully effective by 1 July 2026):
- DBI covers buildings of 3 storeys and under on contracts over $20,000
- Coverage extends to incomplete works and defective works — not just insolvency
- Claims can be made when a builder fails to comply with a BPC rectification order (no need to wait for insolvency)
Common Questions — Residential Building Disputes
You are not required to have legal representation at DBDRV/BPC conciliation. However, legal advice before and during the process can significantly improve your prospects. An experienced building disputes lawyer can help you: prepare a comprehensive evidence bundle, understand what the statutory warranties require, and advise whether any proposed settlement is reasonable. Many matters proceed through DBDRV without resolution — early legal involvement means you are prepared for VCAT if necessary.
The duration of a VCAT building dispute varies considerably. Simple matters may be resolved at a compulsory conference within 6–12 months of filing. Complex matters involving expert evidence and multiple hearing days can take 18–36 months. The VCAT Building and Property List handled over 2,000 building defect applications in 2024–25. Delays have been a significant issue, and complex matters may increasingly be transferred to the County or Supreme Court under the principles in Plunkett v Portier Pacific [2024] VCAT 205.
Under the Building Act 1993 (Vic), homeowners generally have 10 years from the date of the occupancy permit or certificate of final inspection to bring a claim for building defects (ss134–134A). The Buyer Protections Act 2025 also gives the BPC power to issue rectification orders against builders and developers for up to 10 years post-occupancy. Note: different limitation periods may apply to contract claims under the Limitation of Actions Act 1958 (Vic) — typically 6 years. Seek legal advice as soon as defects are discovered.
Yes, in certain circumstances. Under the current Domestic Building Contracts Act 1995 (Vic), owners can terminate in limited circumstances — including where a builder has substantially breached the contract or is unable or unwilling to complete. From 1 December 2026, the Domestic Building Contracts Amendment Act 2025 will give homeowners a new right to end a major domestic building contract if: the contract price increases by more than 15%; or the completion time extends past 150% of the agreed contract period. Termination must be exercised carefully and with legal advice to avoid exposing yourself to claims by the builder.
Under Victorian law, builders are generally required to obtain written approval before carrying out variations to a domestic building contract. Following the High Court decision in Mann v Paterson Constructions Pty Ltd [2019] HCA 32, builders are no longer entitled to claim quantum meruit (fair payment) for unwritten residential variations. Recovery is limited to what is permitted under s38 of the Domestic Building Contracts Act 1995 (Vic). Unapproved variations are a common source of dispute — keep all communications in writing.
Domestic Building Insurance (DBI) — formerly called Home Building Contracts Insurance — is mandatory for residential building contracts in Victoria over $20,000 for buildings of 3 storeys and under. Under Victoria's reformed DBI framework (fully effective by 1 July 2026), DBI has changed from a "last resort" to a "first resort" scheme. This means homeowners can now make a DBI claim when a builder fails to comply with a BPC rectification order — without needing to wait for the builder to become insolvent, die, or disappear. The DBI scheme is now administered by the BPC (not VMIA). Insurers may require the builder to rectify or complete works rather than paying compensation.
Yes. Builders can and do initiate proceedings at VCAT against homeowners — typically for unpaid progress payments, disputed variations, or contract termination. VCAT's Building and Property List handles disputes for both owners and builders. If you have received a VCAT application, or a formal demand from a builder, seek legal advice promptly. Limitation periods and default procedures can result in judgments being entered against you without a hearing if you do not respond in time.
For BPC/DBDRV conciliation, you should prepare: (1) signed building contract and all annexures; (2) building permit and plans; (3) all variations approvals (written); (4) all correspondence with the builder (email, letters, texts); (5) progress payment invoices and receipts; (6) photographs of defects or incomplete work; (7) any reports from building consultants or inspectors; (8) the occupancy permit or certificate of final inspection (if issued). The BPC may also appoint an independent building assessor to inspect the work.
General information only. This information is general in nature and does not constitute legal advice. Building dispute law is complex and fact-specific. Please contact Matrix Legal for advice about your particular circumstances.