10 most important things to look for before signing a building contract for your new home

Buying land and building a home is a very exciting time! But it can be daunting, especially if you have not built a house before. One of the most important milestones when building a home is signing the build contract. To help you understand what you should be aware of before signing a build contract, we have listed the 10 most important things to look for in the contract. We recommend you to clarify with builder if things are not clear.

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1. What is the Building Contract start date?

This is important as you want builder to start construction as soon as the land is titled. You don't want to pay interest on the land repayments forever. Your building period starts on the date that the builder starts construction of your new home.  The builder usually commences construction within 30 working days of obtaining the construction certificate.

2. In what circumstances can you terminate my Building Contract?

We do understand build can be delayed due to bad weather, supply issues, industry shutdown etc. But you should be allowed to terminate your contract if there are unreasonable delays, if builder goes bankrupt, if builder rises price by more than 5%, if builder license is cancelled. Make you read the clause where it mentions circumstances you can terminate your contract.

3. What happens to my Building Contract if my land registration is delayed?

Land titles can be delayed due to slower approvals, land developer struggling with labor shortages or unforeseen circumstances. There maybe a clause in the contract that allows builder to terminate the contract or increase the prices. Always check if the contract is fixed for what time frame and if there could be price increase.

4. Can builder increase prices?

Builders definitely can increase prices under certain circumstances. Although contract price is fixed for a certain period. Make sure you understand how long is the price fixed for and under what circumstances can they increase prices, and if you can terminate the contract if price increases are more than 5%.

5. What is the process to make a variation to the contract?

You are usually allowed to make small changes to the plan and inclusions but be mindful of the extra cost that could incur. It is best to ensure that everything you are wanting in your building contract be negotiated before entering into it, this includes making sure your plans are correct.

6.What are the final list of Inclusions and exclusions?

Make sure that the floor plans, facade choice, inclusions and exclusions are listed in the contract.

Do not rely on what sales consultant told you verbally as that means nothing.

7. What is the Price and payment stages

Check if the price in the contract is same as discussed earlier. Double check if the payment schedule is pretty standard and will be accepted by your lender. If there is a discrepancy, sort it out prior to signing to avoid any dramas later on.

8. Defects Liability Period & Structural warranty

Defects can be fixed within the first 6 months. That is the standard.

By law the Builder must guarantee their work for a period of 6 years for any “major defect” (being defects to a major element of the house) and a period of 2 years for all other defects

Although some builders offer lifetime structural guarantee (25. years) if title stay in your name.

9. Any Special Conditions ?

The “Special Conditions” included in the Building Contract will differ from builder to builder. It is for this reason why it is so important that you either familiarise yourself with the conditions or alternatively, seek independent legal advice. This is because, the Special Conditions can amend the standard terms of the HIA Building Contract by either varying or deleting the existing terms or adding new terms to the Contract. There may be additional costs set out in the Special Conditions or other conditions which may not be in your best interest.

10. Make Sure Your Builder Is Fully Insured

Any unforeseen circumstances like storm damage, floods, injury, accidents can have huge cost in damages. Make sure your builder is fully insured and you are not liable for anything.

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This article is for information purposes only  and is not and should not be considered or relied on as legal advice. We arenot responsible for any cost, expense, loss or liability whatsoever in relation to this article.