Signing the contract when you construct your new home is an important milestone.
However, before you scrawl your name on the dotted line, it is important to have a thorough understanding of what exactly it is that you’re signing. Full of legal terms and fine print, a building agreement can be difficult to digest.
Any construction job over $5,000 in value will need a contract, according to the NSW government’s Fair Trading initiative, and any work over $20,000 requires a major domestic building contract. While these laws may differ slightly from state to state, signing a contract will always be necessary before you begin building your new home.
Depending on where you’re located in Australia, there can be many different types of contracts that contain the responsibilities and provisos for both you and your builder. In order to minimise the risk of miscommunication, increase in costs and lengthy delays during the building process, it’s essential that you know exactly what these documents are locking you into.
Not sure which contract you’re signing? While we always recommend consulting a property contract lawyer or other qualified specialist to help you get started, we can point you in the right direction. Check out our quick guide to some of the most common contracts you’re likely to encounter when building:
A standard contract is the most common type of building agreement in Australia. These contracts abide by the regulations set out in the ‘Domestic Building Contracts Act 1995’ and are typically created by industry associations. The terms and conditions in this form contract are fairly standardised, though they can be adjusted if either party requires some changes.
Fixed price contract
As you may have guessed from its name, a fixed price contract is one in which the builder agrees to complete the work for a set amount of money. By operating within these constraints, both you and your builder are guaranteed a level of certainty – a key benefit that makes fixed price contracts the most common type of building agreement in Australia, according to Master Builders WA.
Cost plus contract
Cost plus contracts are typically used when the builder does not have enough information to calculate a cost when work commences. Under this agreement, your builder will strive to get the best materials and services and pass the costs of those items on to you, adding an agreed margin for profit.
For an unrivalled sense of certainty, G.J. Gardner always offers a fixed price contract. This removes the risk of any hidden costs and provides you with the ultimate peace of mind. To find out more, talk to us today.