What to Know Before Signing a Building Contract
If you are planning to build or renovate in Australia, you will require a written building contract. This essential document sets out the details of the building work, including when it is supposed to be completed, and how and when payment must be made. As a successful building project relies on good communication between yourself and your builder, it is important to ensure you receive a clear and fair contract that covers all the details of your project.
When Do I Need a Building Contract?
By law, both you and your builder must use a ‘major domestic building contract’ if the total cost of your project is more than $10,000. This contract covers many types of building work, such as work associated with renovations, alterations, extensions, repairs, and any other improvements. It also includes work related to the preparation of plans by the builder, all the way up to the actual construction of a home and its landscaping.
It is important to note that if the contract is more than $10,000, your builder must be currently registered with the Victorian Building Authority and licensed to undertake domestic work. Before signing any contract, you as the consumer should be provided with a copy of CAV’s Domestic Building Consumer Guide, which contains valuable information and advice about domestic building contracts. When your and your builder have both signed the contract, the builder must give you a copy to keep.
What Does a Contract Involve?
One of the reasons building contracts are so crucial is because they help to protect your rights as a consumer. Most standard building contracts include a number of statutories based on consumer protection provisions such as deposit limits, clarification of insurance obligations and requirements for practitioner registration. They also set out payment terms, time extension procedures and compensation for damages. It also covers what happens in the event of late completion. Having this information written out before construction officially begins can help your project progress with less risk for major disputes or disagreements.
In this current market, where many builders have had to fold their business due to increasing materials costs, delays and labour shortages, it is more important than ever that you have clearly-written terms in your contract to protect you if the building company you’re working with suddenly closes down. You can insist on insolvency clauses in the contract, for instance, that will provide security you can draw on if the builder is unable to meet their financial obligations.
It is also recommended that your contract includes relevant and specific details about your project. Depending on the exact nature of the work, this might involve listing the selections related to your fixtures and fittings, as well as stating who is responsible for supplying goods such as tiles or ovens. You might also consider using a written building contract for all building works, including those under $10,000.
Benefits of Hiring an Architect
Building contracts can be complicated, and even people who undertake building projects regularly can find it difficult to tell the difference between a fair contract and a poorly written one. If an architect is involved in your project, they can help to ensure your building contract is fair and thorough.
An architect is able to source an appropriate contract, ensure that all requirements are covered, and even arrange for both yourself and your builder to sign it. This is because architect administered standard contracts include the architect as an independent assessor and certifier. This can help to prevent you from receiving an unfair building contract that does not properly cover all of the necessary sections and may even be worded in a way that disadvantages you as the consumer.
To minimise risk, it’s important that homeowners only ever pay for completed work and delivered materials that arrive on-site, shielding you from a large potential loss if the contract is unexpectedly terminated. An architect is able to help here too, certifying payments against the work as it is carried out to ensure that you’re never left exposed.
If you do not already have an architect involved in your project, you should seek advice from an architect or a lawyer with construction industry experience.
Trusted Professional Architects
If you are ready to start your next construction project and require advice from professional architects, the friendly team at JDA Lammin Architects can help. We are experts in building contracts and can guide you through the process to ensure you receive fair terms and are happy with your completed project. To find out more, chat with us today on 0439 991 887 or get in touch through our online contact form.
