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Contract Specifications
There some important things to check and look out for when contemplating entering a building contract.

The contract

If you commission a builder or tradesperson to do building or renovation work costing more than a certain amount you must have a written contract. 

That amount is $1000 in NSW, $5000 in Victoria and $3300 in Queensland, for builders contract requirements in your State check you own local fair trading or consumer authority. The following information is based on NSW practice where the building contract must contain:

  • The exact name on the contractor's licence card and the licence number (State Governments provide online licence checks for you to make sure the details are correct before you sign).
  • A description of the work to be carried out with attached plans and specifications.
  • The relevant warranties required by State law.
  • The contract price, which must be prominently displayed on the first page. If the price is not known or is subject to change, this must be prominently disclosed with an explanation.

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  • A clear statement setting out that you may cancel the contract during the cooling-off period of five clear business days.
  • A caution about signing the contract if you cannot answer yes to all items in the checklist (see below).
  • A note about your entitlement to a copy of the signed contract within five days of signing.
  • A note that the contractor must give you a home warranty insurance the contract is valued over $12,000.
  • A statement of acknowledgment by you that you have:

     - read and understood the consumer building guide; and
     - completed the checklist and answered yes to all items on it.

A clear statement setting out that you may cancel the contract during the cooling-off period of five clear business days.


  • A clause that states that all plans and specifications to be done under the contract (including variations) are taken to form part of the contract.
  • A clause that states that any agreement to vary the contract or any plans and  specifications must be in writing and signed by you and your contractor.
  • A clause that states that the work will comply with relevant building codes and
    standards and any conditions of the relevant development consent.
  • A clause that limits the liability of the contractor in the event that a failure to
    comply is due to your designs or specifications.

A clause that states that all plans and specifications to be done under the contract (including variations) are taken to form part of the contract.
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Caution

You should be very wary of:
  • Any builder or tradesperson who encourages you to sign a contract quickly to
    avoid a price increase - this is usually just a sales pitch.
  • Any builder who suggests you get an owner-builder permit while they organise all the building work for you. This can be a ploy used by builders who don't have the right kind of licence, or can't get home warranty insurance. Or it may simplybe to simply to avoid responsibility. If you become an owner-builder, you take on added responsibilities and place yourself at greater risk if the work is not done properly. Check with your State fair trading authority for clarification.
  • Any builder or tradesperson who gives you a quote which seems extremely low compared with the others.

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Before you sign
 

Before you sign the contract you should contact the insurance company shown on the home warranty certificate to check that the certificate is valid.

The builder or tradesperson must give you a copy of the contract within five business days after you sign it (the weekend, NSW public holidays and 27-31 December [inclusive] do not count).

Before you sign any contract with the builder or tradesperson you should:
  • Make sure there's nothing in your contract which makes you responsible for
    termite control instead of the builder or tradesperson;
  • Ensure that progress payments listed on the contract are for work actually done and not just time on the job;
  • Make sure the dollar value placed on each stage of work is realistic;
  • Get more information about insurance from your Government's Fair Trading or Consumer Affairs website;
  • Be clear about the duration of warranties;
  • Discuss anything you don't understand with the builder or tradesperson;
  • Do not sign if you're unhappy as you have the right to request changes to the
    contract; and
  • Get legal advice before you make a change to a standard contract or if the
    builder or tradesperson has amended a standard contract, or included any
    special conditions.

    Make sure the contract is with the licence holder and not a company or partnership. If a company or partnership is making the contract, it needs to be licensed in the company name.
     

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Do a licence check

If you're building, renovating or doing maintenance on your home and need to check that the builder or contractor holds a current licence, use the following links:



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Contract checklist

By law in NSW any written home-building contract you sign must contain the following checklist for owners. Home owners in other States will find this checklist useful:
make sure there's nothing in your contract which makes you responsible for termite control instead of the builder or tradesperson;

  1. Does the contractor hold a current contractor licence?
  2. Does the licence cover the type of work included in the contract?
  3. Is the name and the number on the contractor's licence exactly the same as on  the contract?
  4. Is the work to be undertaken covered in the contract, drawings or specifications?
  5. Is the contract price clearly stated? If not, is there a warning that the contract  price is not known?
  6. If the contract price may be varied, is there a warning and an explanation  about how it may be varied?
  7. Are you aware of the cooling-off provisions relating to the contract?

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  9. Is the deposit within the legal limit? The limit (in NSW) is 10 per cent for work costing $20,000 or less or 5 per cent for work costing more that $20,000.
  10. Is the procedure for variations understood?
  11. Are you aware of who is to obtain any council or other approval for the work?
  12. Do you understand that the contract must have a policy of home warranty  insurance under the Home Building Act 1989 and provide you with a certificate of insurance before receiving any money under the contract (including a  deposit) or before doing any work for more than $12,000?
  13. Has the contractor given you a document that explains the operation of the  Home Building Act 1989 and the procedures for the resolution of contract and insurance disputes?
Remember, if you answer NO to any of the questions in the checklist, you may not be ready to sign a contract.

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