ABOUT THE BUILDING CONTRACT
Major Domestic Building Contracts are extremely detailed, legally binding and require a complete understanding prior to signing. Ensuring that you that you understand what you are agreeing to significantly reduces the likelihood of disputes and unexpected costs down the track.
Building contracts can be split into three main parts:
The Conditions of Contract: Generally based on HIA or Master Builders conditions.
The Specification: Specifies in words what is included and the quality.
The Plans: Architectural and engineering drawings showing what the house looks like and how the structural elements will be constructed.
If there are inconsistencies between the documentation, there is an order of precedence set out within the contract which explains which document prevails. Typically, the order of importance is the “Contract conditions” then “Specifications” then the “Plans”. As an extreme example, if your Architectural drawings nominated gold taps yet your Specification nominated chrome taps, the builder is only obliged to supply/install chrome taps.
THE CONTRACT IS DRAFTED
Signing the building contract can be an exciting time – it might mean that building work may soon commence on your block. However, it can also be a very stressful and overwhelming time. You may find yourself sitting in the builder’s sales office having been scheduled for a contract signing meeting. You may be asked to sign the contract then and there, and you haven’t even had a chance to read it properly yet. With all the anticipation leading up to the meeting, a part of you probably can’t wait to sign away!
BUT DON’T SIGN JUST YET…
Too many people sign their acceptance of the building contract on the dotted line without having examined it first and this can lead to unwanted surprises, stress and disappointment later.
Some reasons for signing the contract before you’re properly ready:
Lack of time to thoroughly review the 100-odd pages
Pressure from the builder
Reading contracts is ’boring’
The terminology is difficult to comprehend
You’re eager, and hurry to be one step closer to having a beautiful new home.
This is the most important (both contractually and financially) document you may ever sign, so it is imperative that you take the time to thoroughly go over the contract and understand it – there is no need to rush this step. Even if it takes an extra week, this is insignificant and in the long run and could save you a lot of head/heart aches.
HOW YOU CAN BE PREPARED
Request that your builder emails a copy of the completed contract and all relevant documentation prior to attending the meeting. Go over it with a fine-tooth comb as once the contract is signed, even the smallest changes can result in costly variations. Ensure that what you have agreed upon with your sales representative is reflected in the contract with no discrepancies.
In addition to looking it over yourself, an independent contract review prior to signing will assure that your contractual documents are in line with industry standards. It will also identify items that require clarification and ensure that you feel confident before you commit to one of the biggest financial contracts of your life.
WHERE TO SEEK HELP?
A lawyer or solicitor will be helpful for reviewing the contract from the legal perspective however when it comes to construction knowledge, their experience can be limited. For example, reviewing construction drawings and level surveys to determine suitable allowances for site costs i.e. retaining walls/drainage in relation to falls of the land may not be their strong suit.
Most Domestic Building Contracts in Victoria include a cooling-off period of five business days. What many do not realise is that the cooling off period is void if legal advice has been obtained prior to executing your Domestic Building Contract.
Conveyancers are another profession that is commonly asked to look over building contracts because they review the contract of sale when the land is purchased to build on. Building contracts are very different to a land sale and therefore conveyancers will generally refer you onto someone more suited in this area. Similarly, if we were asked to review a contract of sale or real estate agent’s agreement, we would recommend you talk to your conveyancer.
HOW WE CAN HELP
Our thorough building contract reviews consider your project from a building perspective; examining all relevant documentation including architectural and engineering drawings, engineering details, specifications and variations.
Cross-referencing these important documents allows us to identify discrepancies and highlight any clauses or items that we suggest the builder clarifies before you sign. We walk you through each section of the contract that you have queries or concerns about and highlight the main clauses and conditions that we believe could pose risk to your build.
As changes can be made in the tender/quotation stages prior to entering the Major Domestic Building Contract, we often find cost savings due to the builder/sales department not offering credits for items removed and replaced. For example, a laminate bench top upgraded to a stone bench top with the whole cost for the stone added but no credit applied for the laminate bench.
Reviews are conducted by a Registered Building Practitioner and qualified Carpenter; this extra set of expert eyes can provide invaluable advice which sets your project up to be a success from the very start. As our reviews are completed by a building expert rather than a legal professional, your cooling off period still applies.
It is certainly a step in the right direction to have your contract reviewed (by anyone), our advice is to choose the most relevant person for your project. Ultimately, you need to be able to confidently commit to your builder with complete peace of mind and nothing but excitement for your project to get off the ground.
Source: Manse Group