An important step in building your home is selecting the builder. Once this decision is made, it is critical that you review and understand the building contract. Property Lawyer Crystal Roman explains.
Building your own property is an exciting time for most owners. However, there can be a lot uncertainty and confusion when looking over a Building Contract and understanding its terms and conditions.
Whilst all Building Contracts are different and vary from project to project, we recommend that you carefully consider these particular items when considering to enter into a Building Contract
1. Special Conditions & Schedules
Unlike the general conditions which are standard across all Major Domestic Building Contracts, your builder will have a particular set of special conditions and schedules unique to your project which generally will favour the Builder. These special conditions and schedules can override the general conditions and impose further restrictions on you as the owner, which is why it’s extremely important to carefully review each clause. Some examples of clauses that require particular attention include:
- Defects liability period – the standard defects liability period under the general conditions is three (3) months. Does the defects liability period inthe special conditions change this the standard period?
- Penalty Interest – make sure the penalty interest level is not exorbitant and in line with the current standard interest rates.
- Completion date – if you have certain expectations about the completion date, ensure that the timelines you have been advised of and agreed to are incorporated into the Contract.
- Exclusions listed – note if there are any exclusions in the Contract relating to work that the builder will not do and therefore you are expected to do yourself. These may be things such as fencing, demolition, window coverings, and any bonds or fees for the Council or Water Authority.
- Price escalation rights – there are usual price escalation rights incorporated into a Contract which allow the builder to increase their costs where their supplies, materials or other expenses have increased in price.
2. Has the builder included all fixtures and fittings?
If the builder has promised you that they will include all of the fixtures, fittings and specifications you have requested, make sure that these are included into your Contract to your satisfaction.
Verbal representations and/or emails made by the builder are not legally binding and you will not be entitled to make a claim against the builder in relation to the absence of this once the works are complete. Additionally, if your fixtures, fittings and specifications aren’t recorded in the Contract, you will have to request a variation, which the builder is not obligated to perform, but may agree to do so at their discretion and at your own extra cost. Therefore, it is important that you are satisfied and sure of the fixtures and fittings recorded in the Contract before signing.
3. Cooling-off period
All Major Domestic Building Contracts in Victoria provide for a five-day cooling off period in the event that you change your mind. This cooling off period starts from the day you receive a fully signed contract from the builder.
Before signing the Contract, make sure that a cooling-off notice is attached to it, in the event that you change your mind. If you decide to end the Contract during the cooling-off period, make sure you complete the notice to withdraw correctly.
Where you end the Contract during the cooling-off period, you are entitled to your deposit, less $100.00 and any out-of-pocket expenses and pre cooling-off costs incurred, such as any building work done or any materials supplied.
It is important to note that you cannot withdraw from the Contract under the cooling-off period if you have previously entered into a Major Domestic Building Contract under similar or same terms for works related to the same home or land, or if you received legal advice from a solicitor before entering into the Contract.
Entering into a Building Contract is big decision, so we recommend that all owners seek proper and thorough legal advice before signing the contract to ensure satisfaction and certainty about the terms you agree to.
How Sharrock Pitman Legal can help?
As Accredited Specialists in Property Law, our lawyers can provide advice on what to look out for in your Building Contract, what clauses should be included, your obligations and what provisions could be disadvantageous to you in the event that the project runs into trouble.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
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