In brief – Choose your contractor carefully and look out
for the warning signs
Having a good contract, carefully choosing your contractor,
having home warranty insurance and keeping good records can all
help you avoid a renovation disaster.
Good preparation is vital for any renovation project
You've finally decided to renovate your home or office
space. No doubt you've heard some disaster stories about
renovations. Here are some pointers to help you avoid a renovation
The most important thing is good preparation. Do your homework
before you jump into anything. It's time consuming but worth it
in the end.
Having a good contract is crucial
A crucial aspect of preparation is your contract. This is a
vital component of any project. Don't be scared to have a
lawyer look at it for you. You might be tempted to avoid the cost
of a lawyer, but remember that litigation is extremely costly. If
something goes wrong down the track and lawyers need to get
involved, a good contract could save you a huge amount.
Do not sign anything unless you know exactly what you're
signing, even if your contractor tells you "it just says
exactly what we've discussed".
Warning signs when choosing a contractor
Don't put down too much money up front. Under the NSW
Home Building Act, for example, if the contract price of a
residential construction project is $20,000 or less, the contractor
can't ask for more than a 10% deposit. If the contract price is
more than $20,000, you cannot be asked for more than a 5% deposit.
You most definitely want your contractor to be solvent, so if they
need money upfront to buy basic materials, steer clear.
If your contractor says that there's no need for a written
agreement, demand it. A written agreement safeguards your position
far more than any verbal agreement.
Does your contractor have proof of liability insurance and
workers compensation insurance? If not, find someone else.
Your contractor should be willing to give you references. If
they refuse, run for the hills.
This might seem very basic, but make sure your contractor has a
business card with all the contact details on it. Simple, but
Be wary of slow progress and falling behind schedule.
Research how litigious your contractor has been in the past. If
they have been involved in a lot of litigation, consider choosing
Home warranty insurance is vital
Home warranty insurance insures the owner against non-completion
of the building due to death, disappearance or insolvency of the
builder, or failure of the builder to correct faults which are
deemed to be the builder's responsibility. The legal
requirement is that insurance is obtained where the contract price
is over $20,000.
Make sure the insurance is effective before any work commences
or any money is paid. It is illegal for the contractor to request a
deposit unless home warranty insurance has been taken out (when the
contract price is over the $20,000 threshold).
Does your contractor have a licence?
In NSW, to operate as a tradesperson you must hold the correct
licence as determined by the Office of Fair Trading. All
individuals or companies in NSW that want to carry out work over
$1000 in value must have one. It's worth checking that your
contractor holds the appropriate licence.
By law, a contractor's licence number must be shown on all
advertising, stationery and signage. Keep an eye out for it.
Variations to the planned construction work
Variations to construction work are almost inevitable, because
things can happen along the way that weren't planned, or are
outside the scope of the contract.
Good communication with your contractor is key so that you know
about any variations as early as possible. Make sure you approve in
writing any changes that involve additional costs and/or delays in
Keep good records of your renovations
Be organised and keep any and all documentation regarding your
renovations. It's prudent to keep a record of all meeting
minutes, notes of conversations and constant photographic evidence.
Make sure all photographs have a date stamp.
Consider engaging a construction consultant for any quality
issues. They can pick up things that you might not.
Things to ask your contractor before they start
Ask about their experience in similar types of construction. If
possible, it might even be a good idea to go and visit other
similar projects they have completed.
Ask for references of companies they have worked for and call
Many retail leases include a covenant to trade, requiring the tenant to open the premises for trade during certain hours.
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