With new government grants encouraging buyers to build new homes with different incentives across each state, the legal process can be especially daunting for the first time owner or builder.
Most builders (especially the big ones) have contracts already prepared, but that doesn’t mean you can’t alter them for your requirements.
We have put together a checklist to get you started on ensuring your contract is in order with the builder and hopefully make the process a little smoother. Naturally you should seek your own legal advice before you enter into a contract and not rely solely on this checklist:
- Regardless of the size of the project, it is best to have a written contract with your builder but it is essential to have a “major domestic building contract” for any projects valued at more than $5000.
- You should not pay more than 10% deposit for work valued at $20k or less and not more than 5% for work valued at more than $20k.
- Make sure your builder is licensed and registered for the job you need. You can check this through www.vba.vic.gov.au or ring 1300 815 127
- Check the builder’s name and number in the contracts match their registration card.
- Under the Domestic Building Contracts Act 1995, you need to specify everything you need the builder to do, and that includes finishes materials and appliances. You also need to outline every variation you may have made to the project (for example changed tiles etc.)
- All variations to a building project should be outlined in writing in a “Variation Notice” and signed by both parties.
- All plans should be attached to the contract as they form part of the contract
- Contract should specify commencement, completion and number of days it will take, and should outline the process for delays, including compensation if necessary.
- Does it include all costs? This includes government fees and levies and lodgement costs, building fees, planning permits fees, asset protection and inspection fees.
- You should ensure there is a legal right to reasonable access the building site. Delete any clauses that restrict your access unduly.
- When the cost is over $12,000, it is the builder’s duty under the Domestic Building Act to have domestic building insurance to cover you if they go bankrupt, die or vanish, leaving you with an incomplete house.
- Check the legal requirements in your state for progress payments, how much and how frequently they need to be paid
Above all, seek your own legal advice with all contracts as a house is one of the biggest investments that you can ever make and you need to protect your rights.
This is a general guideline only and is not to be to be taken as legal advice or be relied upon in place of legal advice. As individual circumstances will vary, the legal requirements may change and we recommend that you obtain legal advice suitable to your individual circumstances.