For most people, signing a building or renovation contract is probably the most expensive contract they will sign in their lives.
Nearly everyone knows someone with a horror story regarding builders, contractors, architects or planners.
In fact, from a survey of Material Law’s residential clients, majority of them said they knew a friend or family member who has gone through “hell” as a result of a renovation or new build.
So that begs the question, given the risk, why aren’t more Homeowners seeking contract advice prior to signing the contract?
Again, turning to our existing clients, there appears to be three answers….
- They didn’t appreciate the complexities of common contracts used today such as Queensland Master Builders, HIA, QBCC, AS/NZ, ABIC until it was too late and mistakes were made.
- They didn’t want to upset the relationship with the Builder.
- They thought lawyers would cost too much and didn’t know help was available.
Lawyers cost too much
Dealing with the last point first, it is fair to say that lawyers are expensive. Although everything is expensive these days, there is a stigma about lawyers and fees. However, this may come as a shock, but on average, Material Law charges between $500 and $2,000 (excluding GST) to provide advice to Homeowners prior to the contract being signed.[1] As part of that advice, we talk to you about your specific project and help guide you through the complexities of the common contracts used today.
Complexities of common contracts
Perhaps the most common residential construction contracts used in SEQ is the HIA Contract and Queensland Master Builders Contracts. While there are certainly benefits to using these documents, we are finding it common for Homeowners to add special conditions which help level the playing field.
Even the most basic residential contract is complex and lengthy (you can probably thank lawyers for causing that…) but it’s important to ensure that the terms and risks are fair and your specific project requirements are well documented.
For example, let’s say as part of your new home you want to have a custom pool installed. For whatever reason the Builder does not want this work to form part of his scope of work or perhaps his price was too high. Under most residential contracts, you are required to give the Builder possession of the site and if you interfere with that (say by having your pool builder undertake some excavations, concreting etc.) you could be in breach of contract with serious consequences. If it is practical to install the pool whilst the Builder is on site (say during Base Stage Works), the Contract should expressly note this.
Perhaps one of the biggest issues we see relates to progress and payment claims (invoices) particularly if the Builder has changed the Progress payment schedule to include new stages, such as “Roof installed” or “Garage completed”. The difficulty is those terms are not usually defined in the Contract meaning it is open to interpretation as to when the Builder has completed those works. Ie. Does Roof Installed mean the roof and gutters or just the roofing material?
Relationship with your builder
For most Homeowners, they don’t want to start off with the Builder on the wrong foot. Most of the time the Builder provides the contract to the Homeowner to review and sign. However, given the very strict payment procedures under the Contract, its important that the right information and special conditions be added in to help avoid a disagreement during the build. Using the above example, it may be as simple as adding a special condition that defines what “Roof Installed” actually means.
Most good builders will agree to add in special conditions providing they understand why. If your builder is aggressive about changes, then this could be a sign that your project may be in challenging. Material Law can help you understand what’s in the Contract and what changes may need to be made for your specific project. We can discuss these with the Builder or, more commonly, provide you with the right guidance so you can speak to the Builder and try and reach a resolution. Its about helping you understand the process and the Contract.
So the short answer to why you should get legal advice before signing a contract with the Builder is, it will save you a lot of money and stress in the long run.
[1] Average is based on a typical review of a HIA or Master Builder’s residential contract for a home in Brisbane, Queensland.