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Do I Need To Have A Contract With My Builder?

Having building work done is almost certainly going to be a major investment. Not only is it likely to cost you a stack of money, if it isn’t up to scratch, the consequences can be pretty dire. Unlike buying a car or a boat, you can’t test drive it beforehand and check everything’s to your satisfaction. Instead, you’ll just have to wait and see if the building work that eventuates was what you asked for and meets all the standards. You can imagine that there’s a chance for misunderstanding, memory lapses and other shortcomings of the human brain when there’s nothing more to the deal than a few comments (perhaps that’s why people invented writing). So… you’ve got a lot of money at stake, there’s a potential for error, and the consequences could be serious. Do you need a building contract? That’s got to be a no-brainer!

“Nah, I mean, do I have to have a building contract?”

Well, all right, I probably only gave you the reason why you should have a building contract. Okay, that’s not quite the same thing as needing a building contract. Let’s put it this way, then: are you required by law to have a building contract? Depending on where you are and what you’re building, yes. In New South Wales, the Home Building Act 1989 says you must have a building contract for all residential housing work worth more than $1000. There are similar requirements in Victoria.

“If my builder and me just sign a scrap of paper saying he’s going to build my house, will that do?”

That’s better than nothing, but the Home Building Act wants you to take this contract thing seriously. For example, the Act requires building contracts to include the date, the builder’s full name and license number, a description of the planned work, and the full contract price. The contract must have a number of warranties and affirm that all building work will comply with relevant building standards and codes of practice. And any variation to the initial agreed building work must be put in writing and signed by both parties before it can become part of the contract. Before entering into the contract, the builder must inform you about the dispute resolution procedures in the Home Building Act, and they must give you a copy of the contract within five days of the date you signed it..

“Yeah, but seriously, do I really need to bother with all this legal stuff? My builder’s a top bloke, it’s a pretty straightforward job, nothing can really go wrong.”

Of course, most builders are thoroughly decent tradesmen or women whose word can be firmly relied on, but unfortunately there are a few shonks and wonks out there. And like I’ve said before, even the best of people can have disagreements. NSW’s courts and tribunals are full of them, every day. The law requiring you to have a contract is not just mindless bureaucracy indulging its love of complicated forms; it’s the result of years of unhappy punters realising that there’s nothing much they can do when the building work they’ve invested so much in turns out to be a lemon.

“So if there is a stuff-up, what happens?”

In NSW, the Home Building Act has a set procedure you can follow, which involves putting your complaints to the builder, then to the Fair Trading Office, and finally to the Consumer, Trader and Tenancy Tribunal, with a similar counterpart in Victoria. (For more information, please see our other article, “How can I recover money to get defective building work fixed?”) There is also the general law of contract, in which a breach of contract gives rise to a claim for loss or damage (ie, you’re allowed to sue and get compensation). The law of contracts does apply to oral (spoken) contracts, but it’s much easier to prove your case if you’ve got it in writing.

“You lawyers just want to get yourselves involved.”

Well, yes, we do. There is a reason for lawyers, for pedantic i-dotting, t-crossing, legalese-speaking lawyers. The law is basically about resolving disputes. Lawyers’ job is to prevent disputes as well as resolving them. If you’ve got a proper, detailed contract, you know where you are: it’s all there in writing, in a form that everyone will agree on. There’s much less room for disagreements.

Submitted by:

Frank Egan - LAC Lawyers

Frank Egan is the Chief Executive Officer of LAC Building Construction Lawyers and has over 27 years of experience as a lawyer.




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