What to look for in a residential building contract
19 February, 2014 | Wade Hansen
No two building contracts are exactly the same. But there are a few key points that we think should be discussed with the building company in every case – there is always scope to negotiate on these points:
Who is completing the work under the building contract?
- What do you know about the builder?
- Can they sub-contract any work?
- Can you complete any of the work yourself?
What protections are in place for you?
- Could the building company run out of money?
- Is the builder’s insurance enough?
- Are the terms of the guarantee suitable?
- Do you provide any indemnities for the builder?
What does the purchase price include?
- What are you paying for?
- Is everything specified?
- Can the builder change anything?
- What will future variations cost?
- Is it clear when payments are due?
When can you take possession of the house?
- What if the works take longer than expected?
- When will the contract be at an end?
- What if something is wrong with the house?
What happens if you have a dispute with the builder?
- What processes are in place?
- What are the consequences?
- Are you at risk of losing any money?
This is by no means an exhaustive list of things to consider with a building contract but hopefully this will get you thinking about the risks and costs involved in building from scratch. When we review building contracts, we take into account what is important to you in your circumstances, and provide you with a list of questions and points we think you should discuss with your builder.