Any contract for building work should be made in writing. It is important that you understand and are happy with all the details contained within your building contract. If you do not understand what is included under the contract or are unsure of your responsibilities under the contract, you should not sign it and you should take steps to obtain independent legal advice. Disputes about contracts are civil in nature and the Registrar has no power or role to play in the enforcement of contracts.
In general a contract should:
- be signed and dated by you and the builder
- contain your name as owner and the builder’s name
- have the address where the work is to be carried out
- contain the builder’s licence details
- state the start and completion dates
- state the payment arrangements
- have the plans, specifications and inclusions attached
- contain the statutory warranties
- display the total contract price and provisions relating to any contract variations.
It is in your best interest to ensure that the work that has been agreed to is stated fully in the contract. This will help prevent any misunderstandings and minimise the risk of potential disputes.
It is important to sign the contract with the licensed builder contracted to do the work, and not the company or any other person who contracted the builder. Be sure the name of the builder appears on the contract, the statutory warranty and insurance certificate or fidelity certificate.
The contract should detail the stage of completion when payment is required and it is important to never pay for a stage of building work before it is completed.
In accordance with the provisions of the Building Act, every contract for the sale of a residential building, and every contract to carry out residential building work to which the builder is a party (excluding owner–builder licence holders) is taken to contain a warranty except if the building work is exempt from requiring building approval and/or the cost of works is less than $12,000.
Under these provisions the builder warrants the following:
- That the residential building work has been or will be carried out in accordance with the Building Act.
- That the work has been or will be carried out in a proper and skilful way.
- That good and proper materials for the work have been or will be used in carrying out the work.
- If the work has not been completed, and the contract does not state a date by which, or a period within which, the work is to be completed – that the work will be carried out with reasonable promptness.
- If the owner of the land where the work is being or is to be carried out is not the builder, and the owner expressly makes known to the builder, or an employee or agent of the builder, the particular purpose for which the work is required, or the result that the owner desires to be achieved by the work, so as to show that the owner is relying on the builder’s skill and judgement – that the work and any material used in carrying out the work is or will be reasonably fit for the purpose or of such a nature and quality that they might reasonably be expected to achieve the result.
The period for which statutory warranty operates is:
- six years after the completion day for the work for residential building work in relation to a structural element of a building and
- two years after the completion day for the work for residential building work in relation to a non-structural element of a building.
The completion day is taken to be the day the work is completed or the day the contract relating to the work ends, whichever is the later.
Residential Building Insurance
It is a requirement under the Building Act 2004 that a licensed builder must obtain complying residential building work insurance or a Fidelity Fund certificate from an approved Fidelity Fund scheme before commencing any building work over $12,000 that is not exempt from requiring protection under this Act.
NOTE: Certificates are not required for class 10 structures such as swimming pools, fences, landscaping, mail boxes or garages (unless structurally adjunct to the class 1 structure). The appointed Building Certifier may assist if you are unsure about these requirements. Certificates are also not required for Federal or Government projects.
Depending on the nature of the contractual concern, the Office of Regulatory Services (Fair Trading) may be able to assist. Find out more on their website www.ors.act.gov.au.