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HOME BUILDING REGULATION 2014 - REG 62L
Losses indemnified under construction period fidelity fund contracts
(1) A construction period fidelity fund contract must indemnify beneficiaries
under the contract for loss or damage in respect of residential building work
covered by the construction period fidelity fund contract resulting from
non-completion of the work because of-- (a) the insolvency, death or
disappearance of the contractor, or
(b) the suspension of a contractor
licence pursuant to section 42A of the Act.
(2) A
construction period fidelity fund contract must indemnify beneficiaries under
the contract for loss or damage in respect of the non-completion of
residential building work covered by the
construction period fidelity fund contract arising from a breach of a
statutory warranty, being loss or damage in respect of which the beneficiaries
cannot recover compensation from the contractor or have the contractor rectify
because of-- (a) the insolvency, death or disappearance of the contractor, or
(b) the suspension of a contractor licence pursuant to section 42A of the Act.
(3) Without limiting subclauses (1) and (2), a
construction period fidelity fund contract must indemnify a beneficiary for
the following loss or damage in respect of the non-completion of residential
building work, being loss or damage in respect of which a beneficiary cannot
recover compensation from the contractor concerned, or have the contractor
rectify, because of the insolvency, death or disappearance of the contractor
or the suspension of a contractor licence pursuant to section 42A of the Act--
(a) loss or damage resulting from faulty design, where the design was provided
by the contractor,
(b) loss or damage resulting from non-completion of the
work because of early termination of the contract for the work because of the
contractor's wrongful failure or refusal to complete the work,
(c) the cost
of alternative accommodation, removal and storage costs reasonably and
necessarily incurred as a result of the non-completion,
(d) loss of deposit
or progress payment due to the non-completion,
(e) any legal or other
reasonable costs incurred by a beneficiary in seeking to recover compensation
from the contractor for the loss or damage or in taking action to rectify the
loss or damage.
(4) The construction period fidelity fund contract must state
that the risks indemnified include the acts and omissions of all persons
contracted by the contractor or other person to perform the work resulting in
loss or damage of a kind referred to in this clause.
(5) For the purposes of
this clause, if residential building work has not commenced, the
construction period fidelity fund contract may limit the loss or damage
indemnified against to the loss of any deposit paid, but is not required to
limit the loss or damage to that amount.
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