You’ve found the perfect site, finalised the plans and specifications, arranged your finance and your builder has now given you a building contract to sign, but you’re not sure what you should be looking at.
The important question is: Does the building contract accurately record the terms agreed with the builder? It is therefore important to read your contract carefully and ensure that you fully understand its terms and conditions.
Attention should be paid to the following:
Plans
Do the plans correctly record your requirements? Do not rely on verbal agreements with your builder. Any extras and variations made during the course of building should be recorded in writing and the price agreed on before the work commences.
Payment
A common payment method is progress payments (i.e payment following a particular work being completed). You should ensure that progress payments tie in with completion of certain work e.g. foundation laid, roofing.
The Construction Contracts Act 2002 sets out the procedure for how the builder can claim payment and how you need to respond. You need to clearly understand this process and in particular the strict time-frames provided under it. Please note, it is common for these time-frames to be shortened in building contracts, so you need to check this carefully.
Default
In case the builder is declared bankrupt, the building contract needs to allow you to terminate, by giving written notice to the builder.
Maintenance
On completion of the work, the building contract usually allows you to inspect the builder’s work and will then require you to acknowledge the work as completed. If you do find defects, it is wise to have the builder fix these before you take possession.
If, after taking possession you find that there are defects in the building work, most standard building contracts provide that the builder must remedy these, provided written notice is given within a specified time-frame. This time frame is often quite short so you need to deal with it promptly.
Code Compliance Certificate
You should always ensure that the builder gives you a copy of the Code Compliance Certificate, issued by the relevant Council before you take possession.
General
Building a house can sometimes be frustrating, however some efficient planning and dotting of “I”s and “t”s at the start will better protect you later on.
For more information about Building Contracts please feel free to contact us.
