Top 10 Things to know about a Building Contract

Building a house is a very exciting time! But can be scary, especially if you have not built a house before. To help you understand what's in store you should be aware of certain terms you and the builder will be bound to when you sign a Building Contract. As a Licensed Conveyancer I have reviewed hundreds of Building Contract documents for my clients, throughout my experience I have found the following list to be the top 10 things I get asked about. You might already have entered into a Building Contract or about to sign on with a builder, either way you should be aware of what's on this list. 

  • When does my Building Contract start?

Your building period starts on the date that the builder starts construction of your new home.  The builder must commence construction (usually) within 20 working days of obtaining the construction certificate.

  • When can I terminate my Building Contract?

It is difficult to get out of a building contract.  Builders have a period of time that they have under the building contract to complete the construction. Remembering this only starts at the time noted above. Further, despite the fixed term under the contract, the builder is entitled to extensions under the building contract, due to industry shut down periods, inclement weather, etc. there is not a lot or rights to terminate a building contract and they are very much limited to if the builder’s licence is cancelled or they suspend works with no just cause, going over the period of time to build (this is practically difficult as you don’t want an unfinished house and contracts don’t usually provide for a penalty) or if its is agreed mutually (this would more than likely be at a cost to you).

  • What happens to my Building Contract if my land is unregistered?

The building contract does not commence until the construction certificate is issued so the contract remains in place, however you need to be aware that the building contract will probably have a condition in it that enables the builder to increase their charges if the registration process takes longer than anticipated.  Always check how long the cost is fixed for, especially when buying unregistered.

  • How long is my Building Contract?

Building periods vary from builder to builder, there is no standard time frame.  This varies from builder to builder and is contained in the terms of the contract.  

  • Is my Building Contract price fixed?

It is very important to ensure that you obtain a fixed price building contract.  The price in the first few pages of your contract is not necessarily a fixed price or only fixed for a limited period of time.  You need to be certain that you are not going to be liable for site costs and many other hidden extras that can be within a building contract.

  • Can the time under my Building Contract be extended?

Yes, the builder can extend the contract due to inclement weather, industry shut down period, variations requested by you, delays in obtaining approvals just to name a few.

  • Can I vary my Building Contract after I have already entered into it?

Yes, you can, however you leave yourself open to being charged extra costs by the builder.  It is best to ensure that everything you are wanting in your building contract be negotiated before entering into it, this includes making sure your plans are correct.

  • Am I required to do anything once I have entered into a Building Contract?

Yes, there is a clause in a standard building contract that requires you to give the builder certain evidence (such as proof of ownership and proof of loan approval) within a time frame specified by the builder.  Under a standard contract, if no time frame is stipulated then the time frame is 15 working days.

  • What happens when my house is finished?

Once your home is complete, the builder will issue you with a certificate of practical completion and an invoice for the final progress drawdown.  It is important to note that most building contracts do not require the builder to provide an occupation certificate so you should ensure that your bank doesn’t require one.

  • What documents form the Building Contract?

The building contract should contain your tender, building specifications, home owners warranty, your house (building) plans, engineering plans, special conditions and the building contract itself. Without all of these documents you should not enter into your building contract.