Whether you are about to build a new home or renovate one, you will be presented with a contract by the builder for signing. It will normally be in the form of a standard building industry contract that is designed to favour the builder. It is essential you get legal advice before you sign to not only know what you are getting into but to seek to amend any terms that are contrary to your best interests. It is not necessarily a case of “take it or leave it”.
The first thing to realise is that before the building contract is entered into is when you have the most leverage. This is when you should raise points of concern. The builder wants to close the deal and if it values you business, will try to accommodate you and, if not, this could be a sign of trouble ahead.
The second important matter to be aware of is that the building contract governs everything to do with the construction or renovation work. Once signed, the builder will only have regard to the written contract and not anything that may have been discussed or assumed in conversations or e-mails beforehand. That is why you must get the contract to be in complete accordance with your expectations including ensuring the plans and specifications attached to the contract are absolutely correct as well as the desired inclusions.
Specific clauses in a building contract that should receive special attention include:
* Scope of Work – The precise details of the building work to be carried out, materials to be used and the design specifications must be clearly identified.
* Timeline – There should be a straightforward start date and completion date for the project (apart from delays allowed under the contract).
* Liquidated Damages – This represents a genuine pre-estimate of compensation to you for every day the builder is late in completing the project to cover things like renting alternate premises
and storage. Many builders try to leave this at zero! You must provide an incentive for the builder to finish on time.
* Variations – Either you or the builder might request a variation to the scope of works after the project has commenced. You must ensure you understand the process involved for approval to
avoid disputes later as variations can result in a significant increase to the overall cost.
* Payment terms – There will be a payment schedule for the project that sets out what progress payments will be due at different stages including completion. The amount payable should fairly
reflect the amount of work involved for each stage. Some builders may try to inflate payment amounts in the early stages.
* Dispute Resolution – This provision sets out the procedure to resolve issues with the builder during the project. Be aware of its terms as you might need it!
There is so much more that needs to be taken into account before signing that building contract and a lawyer will help to shed light on it all.
August 2025