Building or renovating can be a very rewarding and exciting experience.
NSW Fair Trading regulates the home building industry to protect consumers during this time. We’ll help you understand your rights and responsibilities when you build or renovate your home.
Preliminary contracts in residential building work
Builders sometimes provide services to consumers which occur prior to construction. The contracts used to perform these types of services are commonly referred to as ‘preliminary contracts’ or ‘preliminary agreements’ and may include services such as:
- arranging a site inspection and conducting a survey of the property to acquire measurements
- demolition work
- obtaining a soil report or foundation data
- developing design, plans or specifications to support the construction (e.g. engineering or environmental reports), and
- submitting documents to the appropriate authorities for approval (e.g. local council or certifier).
Builders offer these types of contracts as there needs to be initial work done to work out the type of construction possible on a project. Preliminary contracts cannot include any ‘residential building work’ as defined by the Home Building Act 1989.
It is important for builders to know that if a preliminary contract does include any residential building work, and the total value of the contract is over $5,000 (including GST), then it will be considered a residential building contract. If the total value of the residential building work is over $20,000 (including GST) builders will need to comply with other requirements, such as needing appropriate home building compensation cover.