Contract with a builder

This page is a summary of various master builders websites.

Design your house

Engage an architect, or building designer, or find a standard design. Project homes allow you to see the finished product before you actually commence building.

Choosing a builder

Is he licenced? Check with the Master builders association in your state to see if he is qualified. A registered contractor or builder should have a card verifying his/her licence.

Getting quotes

It is normal to obtain 3 quotes. More is unreasonable as they require a great deal of time to produce and must eventually be covered in overheads. The more detail in the quote, the less room for misunderstanding.

The contract

A deal is an arrangement where each party benefits. The golden rule to avoiding disputes during the building process is to agree with your builder on what you want done, and to put it in writing.

If the cost of your building work exceeds $3,300, it must be covered by a written contract.

Issues to be decided are: Payment schedule, time frame, extension of time in case of unforseen events, 

Variations

Despite the best will in the world there will be variations to the contract.

  • All changes must be agreed and then put in writing.
  • The contractor should submit an extension of time quote, and payment should be made in accordance with the time stated in the variation document.
  • The contractor shouldn't demand payment for variations before the work has commenced.
  • If there is a disagreement about the amount of a variation and it has not been put in writing and signed off by both parties, the contractor cannot force you to pay for the variation. This does not mean the contractor is not entitled to payment. To gain payment they will need to make an application to the appropriate tribunal.
  • If a variation is requested by a contractor, you are only liable to pay if the contractor could not reasonably foresee the additional work at the time of entering into the contract.

Deposits and progress payments

It is unreasonable to ask the builder to fund your house, as he has his own cash flow challenges associated with running a business. Various arrangements can be made:

  • the client pays the suppliers direct,
  • The client puts up a deposit that is spent  as invoices fall due.

The final payment is often the one leading to most builder bankruptcies. Some suburbs and professions have a reputation for not making the final payment. The way around this is to:

  • Deposit the money into a Master Builders Assn. holding account. The payment is released to the builder after an independent certifier approves the work as completed according to the contact.
  • Open a joint bank account
  • Obtain an unconditional bank guarantee.

A typical payment schedule is as follows:

Stage % of total contract
Deposit 5%
Base stage 10%
Frame stage 15%
Enclosed stage 35%
Fixing stage 20%
Practical completion 15%

Practical completion is when the house is reasonably suitable for habitation.

Building inspections

The builder must notify a certifier at certain stages of the construction to carry out an inspection. The purpose of onsite building inspections is to ensure that construction work complies with the approved plans and recognised building standards. The certifier will not judge the quality of workmanship.

Building inspections on dwellings must be carried out at the following stages:

  • Footing
  • Slab
  • Frame 
  • Final.

Your building permit will also state at what stages of construction inspections are required. You should discuss and agree on inspection arrangements with your builder.

Building consultant

You can get independent advice from a building consultant.

Building approvals

The architect or the builder will organise building approvals.

Once building begins

The builder takes possession of the site, and is responsible for all the building materials, tools, workplace health, and safety requirements for anyone entering the site.

While you have the right to access the site, it must be at an agreed time.