Contracts

You must have a written contract if the domestic building work is worth $12,000 and more.

Building contracts must:

  • be clearly written
  • show the business name and licence number of the contractor and any partners
  • be signed by the contractor and owner – or their agents
  • state a fixed price and payment terms – can include a ‘rise and fall’ clause.

You must receive from the builder a signed copy of the contract with a Form 1 – your building contract – your rights and obligations (34KB PDF).

If there is something you don't understand, ask the builder to explain it or ask for advice from Consumer & Business Services

The SPASA Swimming Pool Construction / Installation Contract is appropriate for new pool builds and is compliant with the legislation for works over $12,000.

 

CBS licence

Many trade businesses must be licensed with CBS to carry out building work in South Australia. Ask the tradesperson to show you their licence card or you can:

 

Building Indemnity Insurance

Building indemnity insurance is taken out by a building work contractor when performing domestic building work costing $12,000 or more that requires council approval.

Building indemnity insurance can only be taken out and paid for by a builder's license holder. You cannot get this insurance if you are carrying out the building work yourself.

This includes when you are:

  • building a house
  • performing renovations
  • building an extension.

This insurance protects the current and future building owner if:

  • work has not been completed or faulty work has not been rectified
  • the builder dies, disappears or is declared bankrupt.

Claims can usually be made up to five years from the date the building work was completed.

It is your responsibility to protect and insure any items you own that are at the building site during construction and to insure the building when construction has been completed.

When building indemnity insurance is needed

Your building contractor is responsible for making sure that this insurance is in place. Building work can not start until all the following actions have been completed:

  • building indemnity insurance has been taken out by the building contractor
  • you have received a copy of the certificate of insurance
  • the council has received a copy of the certificate of insurance.

It is recommended that you read the contract and the certificate of insurance carefully. Do not sign any documents until you understand and are satisfied with all the terms and conditions. If you do not understand any conditions you should ask your contractor to clarify them.

The certificate of insurance

The contractor must give you and the council a copy of the certificate of insurance (293.5 KB PDF) before any work begins. You should keep a copy of the certificate of insurance for your own records. The information on the certificate will include:

  • the name of the person insured
  • the name of the insurer
  • details of any limitations on the liability of the insurer
  • the name of builder
  • the builder's license number
  • the date the insurance was issued
  • a description of the building work insured
  • any conditions that apply when making a claim.

When you sell the property, you must disclose to the purchaser whether or not indemnity insurance is in place.

 

Deposits

Builders and tradespeople can ask for a deposit before they start work on a property. There is no limit on a deposit for jobs that cost less than $12,000, but more than $1,000 is usually unreasonable. The legal limits for jobs costing more than $12,000 are:

  • $12,000 to $20,000 – no more than $1,000 deposit
  • More than $20,000 – no more than five percent of the total

Builders can also ask you to pay for things like council approval and soil testing. It is risky to make any other payments upfront.  Then once the building work has started, only pay for completed work when you receive an invoice.

 

Legal Requirements

You must be provided certain warranties when having domestic building work completed. All work must:

  • meet plan, specifications and legal requirements
  • be finished within a reasonable time
  • be made of good and suitable materials
  • be fit for humans to live in if building a house
  • constructed with care.

Claims can be made up to five years after the work was finished. Defective building work is covered for ten years.

 

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