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The majority of building disputes occur when no written agreement exists or the agreement has been poorly documented, as this can lead to misunderstandings.
Having a written contract in place between you and your builder clearly sets out what you both agree to and helps to prevent disputes throughout the building process.
Building work valued over $3,300, must legally be covered by a written contract – though it’s a good idea to have a contract regardless of the value of work.
Typical types of contract documents include:
- Preliminary agreements
- Residential building contracts
- Specifications and plan drawings.
Be sure to read all contract documents carefully, especially the conditions set out in your residential building contract.
Your builder may ask you to enter a preliminary agreement before signing the residential building contract.
Although it isn't a regulated contract, the preliminary agreement sets out any costs you need to pay the builder to perform the work listed in the agreement, such as developing plans, performing site surveys or soil tests, or arranging building approvals..
Residential building contracts
A residential building contract is a legal agreement between you and your builder that covers work to be undertaken at a specified price, within an agreed period.
The contract schedule in your residential building contract should state when building work is to commence.
Master Builders Residential Building Contract (Level 2) usually requires a builder to begin work within 10 days of you supplying:
- All required information, evidence and consent
- Satisfactory evidence of their ability to pay the contract price
- All necessary building and/or planning approvals
- Notice from a lending institution to the builder that work can commence (if applicable)
- Signed copy of the Engineer Specification and confirmation (if required).
The builder must confirm the commencement date by giving you a commencement notice within 10 business days of starting the work.
Your contract should comply with Schedule 1B of the QBCC Act 1994, which includes a right to a ‘cooling off’ period – usually over a time-frame of five business days. If you withdraw from the contract during the cooling off period, you must notify the builder in writing and may be required to pay them a $100 out-of-pocket expenses fee.
Consumer Building Guide
Your builder should supply you with a Consumer Building Guide. The ‘cooling off’ period technically doesn’t commence until you receive both a residential building contract and the Consumer Building Guide.
Specifications and plan drawings
In addition to a residential building contract, you should receive a specification listing all materials and fittings to be included in the build.
You should also receive plan drawings to ensure you and the builder agree on what is to be built.
Under a Master Builders preliminary agreement, all specifications and plan drawings remain sole property of the builder.
You warrant that use of the design, plans or documents don’t infringe on copyright or other intellectual property rights when:
- The builder carries out the work in accordance with plans or documents supplied by you
- The work incorporates designs prepared under your instruction, supervision or direction
- The works were prepared from sketches supplied by you.
As the owner, you also indemnify the builder against any proceedings, claims, losses and demands in relation to any actual or alleged infringement of copyright or any other intellectual property rights by the builder as a result of carrying out the work.
Master Builders contracts
Master Builders has produced a suite of residential building contracts that meet legislative requirements and allocate risk fairly between you and your builder, which should give you added peace-of-mind. Nevertheless, you should always seek independent, legal advice before signing a contract.