Domestic building contract reviews
Should you have your domestic building contract reviewed?
Whether you are renovating an existing home or building from scratch, most domestic building contracts involve considerable sums of money. In fact, entering into a building contract may be one of the most significant financial transactions you undertake.
Despite the excitement of getting a new project off the ground, it is important to have your building contract reviewed by someone like Brendan Bathersby who knows how the building and construction industry operates … so you understand what you are signing.
Building contracts are complex, containing various technical and legal terms as well as incidental documents such as plans, specifications and schedules. The contract should be complete, balanced and contain adequate protection for both the homeowner and the builder. The legal rights and responsibilities of the parties should be clearly stipulated and provisions included to deal with unexpected events, with processes to resolve disputes.
Ensuring these matters are properly dealt with before entering the contract will help give peace of mind and minimise loss should things go wrong. Some of the reasons why we recommend a domestic building contract be reviewed include:-
It’s just a standard contract, right?
Many builders use ‘standard’ building contracts prepared by industry bodies such as Master Builders Queensland. These contracts are generally drafted to create a fair balance between builder and owner and contain essential terms and conditions pursuant to the relevant legislation within each jurisdiction.
However, a contract containing an MBQ logo may give a homeowner a false sense of security. If the contract is prepared by the builder you need to ensure that the industry standard hasn’t been amended to the detriment of the owner.
Protecting your rights and interests
Builders should be appropriately licenced and insured to carry out domestic building work and the building contract should contain provisions consistent with the relevant legislation.
We can carry out appropriate checks to ensure that your builder is authorised to undertake the work scheduled and that any relevant insurance is in place to protect you should the builder become insolvent, die or disappear.
Having a contract reviewed will enlighten you as to your statutory and consumer rights and ensure provisions in the contract do not breach these rights.
The parties should be properly described. If the builder is a company, searches should be undertaken to ensure that the person with whom you are dealing is authorised to act on the company’s behalf.
Understanding the allocation of responsibilities and risk
As with all contracts, a domestic building contract should set out each parties’ respective rights, responsibilities and obligations. The contract should reflect exactly what has been negotiated and agreed between the builder and homeowner.
We can explain to you who is responsible for what and ensure important provisions are not overlooked.
Not everything goes according to plan
There is almost always an element of uncertainty when undertaking a building project. Unforeseen events such as inclement weather or, material and labour supply shortages can cause significant delays and impact adversely on the project. A building contract should deal with all such contingencies, protect the rights of the builder and the owner and set out reasonable processes in the event of the unexpected.
The better the understanding of each parties’ rights and obligations should the unforeseen arise, the better equipped you will be to protect your position, minimise delay and mitigate loss.
Uncovering hidden costs
A building contract should, as far as possible, include accurate costings for the entire project and be transparent regarding potential variations in pricing. Fixtures and fittings (prime cost items) should be set out in a schedule, specified by make and model (or equivalent) in a manner that avoids unexpected additional cost.
Homeowners may be unaware that, in some circumstances, the display home they visited and fell in love with may be the ‘deluxe’ design and not the standard model. Care needs to be taken to ensure that the plans and specifications are the same as your expectations.
The contract should include clear provisions regarding variations which should be in writing and signed off by both parties.
Conclusion
Construction disputes can be emotionally and financially draining for both the builder and the owner.
Understanding the building contract is essential to help avoid pitfalls, disappointment and loss. While most contracts are prepared in good faith, some fall short of meeting the requirements under building legislation and may not strike a fair balance between the homeowner and builder.
Obtaining legal advice before signing your building contract will help protect your interests during and after your project.
