By law, your chosen builder or tradesperson must give you a written contract if
Jobs worth between $5,000 and $20,000 require a ‘small job’ contract with minimum basic information, while building jobs worth more than $20,000 must be covered by more extensive written contracts.
Residential building work worth between $5,000 and $20,000 must be covered by a ‘small jobs’ contract. The written contract must be dated and signed by, or on behalf of,each party. It may specify that work be paid for at regular intervals.
It must contain:
Residential building work worth more than $20,000 requires an extensive home building contract and it must contain:
Caution: Check that an insurance certificate is valid by contacting the insurance company shown on the certificate or checking the certificates register on the NSW Home Building Compensation Fund site.
Important: The builder or tradesperson must give you a copy of the contract within 5 business days after you sign it (the weekend, NSW public holidays and 27-31 December [inclusive] do not count).
Download a home building contract for free.
Before you sign any contract with the builder or tradesperson you should:
Arbitration clauses are not permitted in a home building contract and are deemed void.
Important. A licence in the name of an individual does not permit the individual's company or partnership to make the contract, even if the individual is a director of the company or member of the partnership.
If the company or partnership is making the contract, the company or partnership needs to be licensed in the company or partnership name. Go to our Home building online licence check and look up the details of the contractor you are dealing with before you sign the contract.
Don't sign any contract if it doesn't meet all the above criteria. Contact your nearest Fair Trading Centre for general enquiries, but check with your solicitor for legal advice.
The following warranties set out what you are entitled to under the contract between you and your builder and tradesperson.
Even if these warranties are not written into the contract you sign, the law says that they still apply to the work you are having done on your home. Statutory warranties are in effect for 6 years for major defects and 2 years for all other defects, commencing from the date when the work was completed.
These warranties are:
For more information on defects, refer to our Frequently Asked Questions page.
The term 'completed' has a very important role in the legislation because it marks the beginning of the time periods for statutory warranties and insurance under the HBCF.
The Home Building Act 1989 has a clear definition of what is meant by 'completion'.
Residential building work is 'complete' when it is completed in accordance with the requirements of the contract.
If there is no contract, or the contract doesn’t specify 'completion', the work is regarded as 'complete' when it can be used for its intended purpose and is free of major defects. The earliest of the following events can be used to determine when this occurs:
For strata schemes, the date of issue of the occupation certificate that allows occupation and use of the whole building will be the date of completion for strata buildings.
Be wary of:
Choose fittings and appliances before you sign. Make sure you give enough details about products you want, so prices quoted in the contract can be accurate. Where possible, list the brand names and models of all fittings, tiles, appliances, etc that you want used.
While it is best to get a fixed price for all work under a contract, certain fixtures such as a stove or special fittings may need to be selected after you sign the contract.
These items cannot be costed exactly before the work begins and are listed as 'prime cost' items (PCs) in the contract. The builder or tradesperson should allow a price, which covers their expected cost.
For smaller jobs, such as changing a power point or unblocking a pipe, it's unlikely you'll be asked to pay a deposit. However, bigger jobs where a large component of the cost is in the materials, the builder or tradesperson may ask for a deposit.
Under NSW home building law, the maximum deposit you can be asked to pay is 10%.
If the work is required to be covered by insurance under the HBCF, it is illegal for the contractor to ask for a deposit or other payment under the contract unless the insurance has been taken out, and a certificate of the insurance is given to you.
Go to the Insurance page for more information.
Before you sign a contract, be confident that you've thought of everything. Changing something later could blow out your budget.
An addition would be something you may have thought about after signing the original contract and wish to add to the building project.
A variation is a change or adjustment to what has already been agreed in the contract.
The builder or tradesperson may need to vary the contract because of a council requirement or unforeseen circumstances. If the reason for variation is the builder's or tradesperson's fault, you do not have to pay for any extra work to rectify the problem.
Variations must be in writing and attached to the contract and signed by both you and the contracting builder/tradesperson, or their nominated supervisor or agent.
In almost all circumstances, any variation or addition to a contract will have an impact on the contract price. This impact will, in most cases, result in a price increase but may in some circumstances result in a price reduction. In all circumstances, documents authorising variations MUST contain a statement explaining the cost implications of the variation and their impact on the overall contract price. Ideally the basis for the calculation of the price change should be shown, rather than just a simple dollar amount.
Before the work commences on the variation, the builder or tradesperson should give you:
Both of you should sign this written notice if you agree on the work and price. Once this is done, the work may commence.
If the variation is needed because there is likely to be danger to someone or damage to property, there may not be time to put the details in writing. In this case, the written variation may be done after the work has been carried out. In all other instances, variations must be in writing.
For minor work the builder or tradesperson will probably be happy if you pay within a week of the job being finished.
However, if the job is several thousand dollars or more, it is reasonable for the builder or tradesperson to ask you to make progress payments. This is usually so they can pay for materials and labour as the job progresses.
All contracts over $20,000 in value must have a progress payment schedule. Progress payments must match the work carried out and, for cost plus contracts, be supported by receipts or other verifying documents.
Sometimes the bank lending you the money will have special requirements for progress payments. This may need to be included as additional clauses in the contract.
Your insurance policy under the HBCF may not meet the full cost of completing your home if you make progress payments that significantly exceed the actual work done.
For large projects such as building a new home, you may consider getting a progress inspection done by an independent building consultant or architect before each payment is made.
If you do, it will be the consultant's job to make sure all the work set out in the contract has been done and meets the appropriate standards. However, defective work may have been covered up with paint or internal wall cladding and may not be picked up by a building consultant.
Ideally, the consultant should inspect the work at times when problems can be identified. Be prepared to pay between $250 and $500 for each inspection.
Most contracts allow the contractor to be given access to the site for the purpose of carrying out the works. You shouldn't interfere with this as it may interfere with the plan of work and incur extra costs. If you think the contractor has breached your contract, get legal advice.
Home owners cannot unreasonably refuse access to a contractor seeking to fix defects.
The contractor should give you access to the site for the purpose of inspecting and viewing the works. It is recommended that owners and others who need access to the site make an appointment with the builder prior to attending the site for safety purposes as all visitors to a construction site must adhere to Work Cover requirements.
Persons needing access may include:
The contract normally contains provisions about ending the contract and these must be followed.
Ending the contract should be undertaken as a last resort and only after:
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