Have you engaged a builder to construct your new home?
If the value of your building works will exceed, $10,000, a domestic building contract must be drawn up.
This legally binding document provides protection for all parties and should be read and understood thoroughly before signing.
Find out more about building contracts at the VBA.
Want to know if your builder is legit? You can confirm your builder’s registration status on the VBA’s Find a Practitioner page.
What Information Should a Building Contract Include?
A building contract must include the following essential information:
- the contractor’s business name and ABN
- their building registration license number
- the date of the contract
- a detailed description of the work to be carried out
If the value of the works exceeds $16,000, then your contract should also include details of the builder’s domestic building insurance.
A domestic building contract must be in clear English and must give clear advice about the five-day cooling-off period.
You have five business days after receiving a signed copy of your major domestic building contract to withdraw without penalty.
You are not liable for any of the builder’s financial losses, but you are liable for any incidental expenses that the contractor has incurred up to this point.
If your contract does not advise of a five-day cooling-off period, you may withdraw from the contract within seven days of becoming aware of its omission.
The following should be considered when looking at your contract:
Fixed vs. Provisional Sums
Ideally, your contract will contain mainly fixed costs, with as few provisional costs as possible.
Provisional sums are estimates for work where costs can’t be estimated accurately beforehand.
Prime costs are items such as fittings included in the contract but which have not been selected at the time of the contract signing, or where the price is not known when the contract is signed.
Timelines and Payment Stages
Although it’s impossible to anticipate exactly how your build will progress, you builder should be able to put together a timeline for you on when each stage of your build will be completed. Never sign a contract that does not set out a timeline.
Sign and Counter-Sign
Read each page thoroughly and ask for clarification on anything you don’t understand. Have the contract witnessed properly and initial every single page and document relevant to the project. Make sure to counter-sign the contract so that you and your builder have a clear understanding of what is being agreed upon.
Feeling overwhelmed by your contract?
It pays to get the advice of an independent professional such as a builder or building inspector to look at your contract and review it professionally.
A professional can explain the language and terms used, clarify any unfamiliar concepts, and ensure that the contract is a professional document, with no hidden pitfalls for the consumer.
If you want the professional reassurance of a contract review for your new home, give us a call.
Our qualified inspector will thoroughly review your contract and give you a professional opinion based on decades of experience.
We can also assist you throughout your new home build with an independent new home construction inspection at each stage – base, frame, lock-up/pre-plaster, fixing and handover (PCI).
The Home Inspection Hub also arranges maintenance inspections which occur with the warranty period of your new home.
If you find yourself in dispute with your builder and need a VCAT report or expert witness, The Hub can also help.
Ready to book?
Our booking office is open from 9am to 5pm, Monday to Friday. Call us on 1300 071 283, email info@thehomeinspectionhub.com.au or ask us for a free quote.
