Timothy Wright, Commercial Litigation Lawyer at Attwood Marshall Lawyers, answers the most common questions asked by residential builders when working under a building contract.
Introduction
A comprehensive written building contract is vital for builders and homeowners when building, repairing, renovating, or extending a home.
Each state and territory has different requirements outlining when builders need to execute a contract with their customers.
As with any legal agreement, it is important to obtain trusted legal advice when entering a building contract to ensure all terms and conditions are stipulated correctly and each party understands their obligations and rights under the agreement, and to ensure that the contract does not contain any unfair terms.
Getting the right advice will usually mean you can identify potential issues early on, reducing the risk of disputes arising down the track and protecting parties from unnecessary disruption or delay.
Standard contracts available through builders’ associations may not necessarily protect the best interests of builders and their customers. However, seeking independent legal advice will.
To help breakdown misunderstandings about when building contracts should be executed and what needs to be included in them, we answer the most frequently asked questions we receive.
Q: Do I need a contract when I build a new home or carry out renovations or extensions for a homeowner?
In Queensland | In New South Wales |
Yes, it is a requirement that the builder and the homeowner enter into a written contract prior to the commencement of work if the cost of works to be undertaken is greater than $3,300. If the cost of the work is less than $3,300, no written contract is required. However, prior to the commencement of works, a written agreement between the homeowner and builder is still recommended. This can be brief and set out the material and labour costs. | Yes, a written contract is required if the work to be carried out is estimated to be greater than $5,000 inclusive of GST (the amount is inclusive of both labour and materials). If the cost of the work is less than $5,000, no written contract is required. However, prior to the commencement of works, a written agreement between the homeowner and builder is still recommended. This can be brief and set out the material and labour costs. |
Q: What needs to be in the written contract?
In Queensland | In New South Wales |
Short form contract (between $3,301 and $19,999):
In addition to the above:
| Short form contact (between $5,000 and $20,000):
In addition to the above:
|
Q: Do I need Home Warranty Insurance before I commence building work?
In Queensland | In New South Wales |
Yes, any building work valued at $3,300 (including labour and materials) or more is covered by the QLD Home Warranty Scheme operated by the Queensland Building and Construction Commission. | Yes, if the work is valued over $20,000 inclusive of GST (including materials and labour). The insurance must be in place prior to the commencement of the works. A copy of the certificate of insurance MUST be provided to the homeowner. |
Q: What if the homeowner wants to alter work after the contract is signed?
In both Queensland and New South Wales |
This is known as a variation. Generally, any variation to the contract must be in writing, dated and signed by both parties. If the homeowner seeks to vary the works or the subject of the contract, the builder must, in writing, set out the works to be varied, the proposed method and the costs of the new/varied works. The written variation should be served in accordance with the notice clause in the building contract. |
Attwood Marshall Lawyers – experts in resolving building and construction disputes
Prior to executing any building contract, you should always seek independent legal advice from a lawyer who practises in this area.
Attwood Marshall Lawyers has a dedicated commercial litigation team who are well-versed at assisting builders and homeowners resolve disputes that arise throughout the course of construction. Our team has an enviable track record in pursuing alternative dispute resolution strategies to help anyone involved in a building dispute settle their matter quickly and cost-effectively.
We can also help you review or amend contracts if you suspect they are lacking any of the above details or include unfair terms.
If you are involved in a commercial dispute or require legal assistance in the building and construction industry, please don’t hesitate to contact our Department Manager Amanda Heather on 07 5506 8245, email aheather@attwoodmarshall.com.au or free call 1800 621 071 to find out where you stand.
For any enquiries on the initial drafting stages of a contract, please contact our Property and Commercial Department Manager, Jess Kimpton on 07 5506 8245 or email jkimpton@attwoodmarshall.com.au.
