Building a house is a very exciting time! But can be scary,
especially if you have not built a house before. To help you
understand what's in store you should be aware of certain terms
you and the builder will be bound to when you sign a Building
Contract. As a licensed Conveyancer I have reviewed hundreds of
Building Contract documents for my clients, throughout my
experience I have found the following list to be the Top 10 things
I get asked about. You might already have entered into a Building
Contract or about to sign on with a builder, either way you should
be aware of what's on this list;
When does my Building Contract start?When does
Your building period starts on the date that the builder starts
construction of your new home. The builder must commence
construction (usually) within 20 working days of obtaining the
When can I terminate my Building Contract?
It is difficult to get out of a building contract. Builders have
a period of time that they have under the building contract to
complete the construction. Remembering this only starts at the time
noted above. Further, despite the fixed term under the contract,
the builder is entitled to extensions under the building contract,
due to industry shut down periods, inclement weather, etc. there is
not a lot or rights to terminate a building contract and they are
very much limited to if the builder's licence is cancelled or
they suspend works with no just cause, going over the period of
time to build (this is practically difficult as you don't want
an unfinished house and contracts don't usually provide for a
penalty) or if its is agreed mutually (this would more than likely
be at a cost to you).
What happens to my Building Contract if my land is
The building contract does not commence until the construction
certificate is issued so the contract remains in place, however you
need to be aware that the building contract will probably have a
condition in it that enables the builder to increase their charges
if the registration process takes longer than anticipated. Always
check how long the cost is fixed for, especially when buying
How long is my Building Contract?
Building periods vary from builder to builder, there is no
standard time frame. This varies from builder to builder and is
contained in the terms of the contract.
Is my Building Contract price fixed?
It is very important to ensure that you obtain a fixed price
building contract. The price in the first few pages of your
contract is not necessarily a fixed price or only fixed for a
limited period of time. You need to be certain that you are not
going to be liable for site costs and many other hidden extras that
can be within a building contract.
Can the time under my Building Contract be
Yes, the builder can extend the contract due to inclement
weather, industry shut down period, variations requested by you,
delays in obtaining approvals just to name a few.
Can I vary my Building Contract after I have already
entered into it?
Yes, you can, however you leave yourself open to being charged
extra costs by the builder. It is best to ensure that everything
you are wanting in your building contract be negotiated before
entering into it, this includes making sure your plans are
Am I required to do anything once I have entered into a
Yes, there is a clause in a standard building contract that
requires you to give the builder certain evidence (such as proof of
ownership and proof of loan approval) within a time frame specified
by the builder. Under a standard contract, if no time frame is
stipulated then the time frame is 15 working days.
What happens when my house is finished?
Once your home is complete, the builder will issue you with a
certificate of practical completion and an invoice for the final
progress drawdown. It is important to note that most building
contracts do not require the builder to provide an occupation
certificate so you should ensure that your bank doesn't require
What documents form the Building Contract?
The building contract should contain your tender, building
specifications, home owners warranty, your house (building) plans,
engineering plans, special conditions and the building contract
itself. Without all of these documents you should not enter into
your building contract.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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