When should you sign a building contract? Residential building...



When should you sign a building contract?

Residential building contracts regarding work worth more than $20,000 requires a full home building contract. As well as all of the requirements of the ‘small jobs’ contract, it must include other comprehensive information such as the details of the statutory warranties the builder must provide, the cost of any applicable HBC cover and the contract price or warning that the contract price is not known. The contract must also include a checklist prescribed by Fair Trading. Find a complete list of contract requirements on the fair trading websiwebsite.
All contracts over $20,000 in value must have a progress payment schedule. Progress payments must match the work carried out and, for cost plus contracts, be supported by receipts or other verifying documents.
Any change you need to make to a contract is a 'variation’. Variations must be in writing and be signed by both parties to the contract. Almost all will impact the contract price.
The maximum deposit you can be asked to pay before work starts is 10%.
Common traps and tricks
Beware of:
● an extremely low quote compared with others. This may indicate the job’s quality is being compromised, or that the builder may not fully understand what is required
● `sales pitches ́ putting pressure on you to sign a contract quickly to avoid a price increase
● a builder who recommends you get an owner-builder permit while they organise all the building work. The builder may be trying to avoid responsibility and may
not have the right kind of licence or HBC cover.
When things go wrong Statutory warranties
Builders and tradespeople must guarantee that their work is fit-for-purpose, performed diligently and delivered in a reasonable timeframe, in line with the contract. Unless otherwise specified, materials should be new and appropriately used. These warranties are time-limited: legal proceedings to enforce them must be
commenced within 6 years for major defects and 2 years
for all other defects. There is another 6 months for both warranty periods if the defect only became apparent after 18 months or 5 and a half years. Find out more about these warranties on the Fair Trading website.


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