Things to know before to sign a building contract.

You are almost ready to build your home.

You are now close to sign your building contract but you don’t have any experience in the building industry so you are a bit lost.

MAKE SURE THE BASICS ARE INCLUDED:  Contractor’s business name, builders license number, contract date and detailed description of the work to be carried out should all be included.  A fixed price or agreed upon fee should also be included.

CLARIFY EVERYTHING:  The contract should include a copy of your building plans and a clause stating the work will be carried out as per the plans.

WHAT IS INCLUDED AND EXCLUDED:  Make sure everything that you understand is included is itemised, along with any exclusions.  Have it detailed who is responsible for what to minimise any confusion or issues during the project.

HOW ARE VARIATIONS TO BE HANDLED?:  The more detailed and confirmed things are at the beginning the better.  However sometimes it’s unavoidable that extras may need to be added or changes made during the build that will affect the price.  Know exactly how these variations will be charged and what, if any, penalty rate will be added to the cost.

ARE ALL THE INSURANCES IN PLACE?:  It should be noted that the builder is aware of his insurance obligations and will meet them.  They include builders’ liability and other insurances designed to protect you in case an accident occurs during the build or the contractor dies or disappears before the job is finished.  There are also compulsory fees to be paid by the builder for Portable Long Service Leave for construction employees.

CONFIRM THAT ALL BUILDING REGULATIONS WILL BE COMPLIED WITH:  It should be stated in the building contract that the builder will ensure that all relevant statutory warranties are included and that the work will comply with the codes, standards and specifications of the Building Code of Australia.

GET INDEPENDENT LEGAL ADVICE:  It might be a “standard” building contract but, unless you’re dealing with them all the time, it is advisable to get legal advice before signing.  Ensure that you understand the clauses and any implications for you.  If things go pear-shaped at some stage, knowing that you’re fully covered by the contract will save a lot of heartache and money.

WHAT ARE THE LIQUIDATED DAMAGES?:  A building contract will usually include provision for Liquidated Damages – either for the builder or for you as the home owner.  They cover costs relating to taking too long on the build.  This could be in favour of the home owner if the builder goes over time and should assist in covering extra rent or accommodation costs that might be required.  If the home owner holds up the build for some reason, then the builder can claim damages for costs.  Make sure you know and agree to how these costs are calculated.


If you don’t know the answer, ask the builder.  If they can’t answer to your satisfaction, get independent advice.  It’s too late to find a problem after the contract has been