Before you sign that building contract

Please note that the information in this article was based on trends from 2013 and may now be outdated. 

It’s easy to be complacent when signing a building contract, but taking a meticulous approach can help to reassure you your building project is finished on schedule and within the agreed budget. Be wary of incomplete building contracts because you may have little lawful recourse if problems arise during the building project. Here are five useful reminders to help you avoid this situation.

Take note of the basics

All building contracts are required to provide basic information such as the contractor’s business name, licence number, a description of the job, and the date it has to be completed. It should also include an agreed fee or fixed price. For complicated jobs that can’t have a fixed price, the contract should note the reasons behind it.

Be very comprehensive

Before you sign a contract, either for the construction of a new home or for a major extension of your home, you must make sure that a copy of your building plans is included in the contract or a statement in the contract that confirms the project will comply with those plans. It is essential that any variations on the price or inclusions are clearly written and signed off by yourself and the contractor.

Check for insurance

This is a crucial aspect of any building contract. It should state that the builder will meet any obligations included. This means the builder’s liability and any other insurance that clears you of any responsibility if an accident occurs while the building process takes place. In Australia, there are laws intended to protect home builders if a contractor they hired dies or disappears before the job is completed. State laws may also have an effect. For example, New South Wales laws require Home Warranty Insurance for projects that cost over $20,000.

Make sure everything complies with building regulations

It’s easy to assume that because you’ve engaged a licensed builder their work will comply with all building regulations. However, it should still be stated in writing that your builder’s work will include any relevant statutory warranties (performance warranties) and comply with the Building Code of Australia (BCA).

Take time to study the building contract

Any builder with a good reputation will give you enough time to go through the contract thoroughly and seek necessary legal advice. If you already signed a contract but have doubts about it, you are entitled to change your mind as long as it is within the “cooling off” period. This period is five business days in states like Victoria or NSW, but other states like WA don’t require it. If you change your mind, do this in writing and make sure you keep a copy of your letter of cancellation.

A final note: suspect any pressure to fast-track or leave out details

If your builder pressures you to “fast track” signing a contract or suggests it is OK not to worry about any details that are not included in the contract, you need to be suspicious. These could lead to major expenses or problems later in the project.

Remember to get quotes from multiple building contractors. Having plenty of options gives you better chances of coming across a builder who can give you the best contract.