Renovating your home is an exciting time, but it can be daunting at the same time. Not only it’s one of the biggest investments you’ll ever make, but you will also need to make many decisions in unfamiliar field that will have a long-term impact on your family’s life.
To ensure that building or renovating your home is an enjoyable experience with as little surprises as possible, you’ll need to do your research and get an expert advice when needed.
When Do You Need a Building Contract?
Home building works between $7,500 and $500,000 are regulated by the Home Building Contracts Act 1991. The Act stipulates that contracts must be in writing and be signed and dated by both parties. Before you sign a building contract, your builder must give you a copy of a document called Notice for the Home Owner, outlining your rights and responsibilities.
For any home improvement works under $7,500 it’s recommended to ask the builder for a minor works building contract.
The building contract is a complex document and usually includes scope of works, specifications and working drawings. Before signing any documents, ensure your builder goes through all documents with you explaining in detail what your contract includes. Make sure your contract drawings are complete and reflect your selections, as leaving some items out might lead to extra costs during construction.
It’s common for builders to use contract templates issued by building association such as the Master Builders Association, Housing Industry Association or Australian Institute of Architects.
Deposits and Progress Payments
A fixed price contract will usually include a deposit, payable before the building works commence on-site. The deposit is to cover the builder’s costs associated with the construction and engineering drawings and all required permits and approvals. The deposit shouldn’t exceed 6.5% of the total contract price.
A building works contract will also include “milestone” or “progress” payments. The builder can only charge you for the works actually completed and materials already supplied.
Home Indemnity Insurance
It is mandatory for all residential building work above $20,000 to be covered by Home Indemnity Insurance. The builder must take out the insurance cover and provide you with a certificate before demanding any payments.
Knowing your right and responsibilities will allow you to protect yourself during the home renovation process and avoid any nasty surprises.
Disclaimer: The information included in this article is provided for general purposes only and is not intended to be a legal advice. The readers are encouraged to seek individual legal advice on the subject.