by rob@elementsofhome.com.au | Jun 29, 2023 | builders, building, contracts | 0 comments


By law, you must have a written ‘major domestic building contract’ for work worth more than $10,000

including:

  • erecting or constructing a home and associated landscaping, paving, retaining structures, driveways, fencing, lighting, heating, air conditioning, water supply or sewerage
  • renovations, alterations, extensions, repairs and any other improvements
  • work associated with renovation, alteration, extension or repair of a home. This includes landscaping, paving, retaining structures, driveways, fencing, garages, workshops, swimming pools or spas
  • preparation of plans or specifications by the builder (unless prepared by a registered architect, engineer or draftsperson)
  • demolition or removal of a home
  • any work associated with building on land zoned for residential purposes and for which a building permit is required.


Only registered builders can:

  • enter into a major domestic building contract and take out domestic building insurance, which is required for work over $16,000 and protects you if the builder dies, becomes insolvent or disappears
  • reblock, restump, demolish or remove a home, regardless of the value of this work.


Before you sign a major domestic building contract


Check:


 

Types of Contracts:


New Homes Contract

This contract is suitable for the construction of a new home. It is a fixed price contract, subject to variations and other price adjustments.

The contract is plain language and tailored to meet all legislative requirements, including rules relating to domestic building insurance, has a fair and balanced risk allocation and includes the required Contract Information Statement.


Alteration, Additions and Renovations Contract

This contract is suitable for alterations, addition, renovations to a home or where the work to be performed is not to completion (e.g. to lock-up stage).

This contract is similar to the New Homes Contract (fixed price) but with additional clauses specific to alterations, additions and renovations projects.


Cost Plus Contract

This contract is for domestic building works to be done on a cost plus basis. We recommend you consult HIA before using a cost plus contract as the law places restrictions on its use when doing domestic building work.

A cost plus contract can be used for domestic building work where:

  • The cost of the construction is estimated to be $1,000,000 or more; or
  • The work involves the renovation, restoration or refurbishment of an existing home and it is not possible to calculate the cost of a substantial part of the work without carrying out some domestic building work.


Small Works Contract

This contract is for domestic building work which is not complex, does not affect the foundations or slab of an existing building or require engineered footings or foundations. It would be suitable for smaller alteration and renovation projects.


Kitchen, Bathroom and Laundry Supply and Install Contract

This contract is suitable for the supply, installation or renovation of kitchens, bathrooms and laundries. However, is not suitable where structural changes are involved.


Domestic Building Contract For Building Works under $10,000

This contract is not suitable for domestic building work with a cost greater than $10,000 as it does not comply with the legal requirements of a major domestic building contract. It is suitable for use in the manufacture, supply and installation of cabinets and related works, bathroom renovations, carports, garages, pergolas and other small projects.


Factory Built/Transportable Homes

This contract is suitable where a home is not constructed on site. The contract includes a progress payment schedule for the course of manufacturing the home in the factory and provides the cost of transportation as a separate item.


Kit Homes

This contract can be used where the owner is supplying the majority of the materials. It provides the necessary protection where materials are supplied by other and clearly defines the owner’s obligations and responsibilities.


Commercial Contracts

HIA also has a suite of commercial contracts which are suitable for commercial works and for use between builders and subcontractors.


Medium Works Commercial Contract – with or without an Architect or Superintendent

This contract is for small and medium size commercial building work. There are two versions of this contract available to provide for situations where the owner is, or is not, engaging an architect, engineer or other professional to superintend the building works.


Cost Plus Medium Commercial Contract – with or without an Architect and Superintendent

This contract is similar to the Medium Works Commercial contract however building works will be completed on a cost plus basis.


Project Trade Contract

This contract is for used between builders and subcontractors and sets out the terms and conditions that relate to performance and completion of trade work. This contract is to be used where a subcontractor is only engaged for a single project. While it is not mandatory for builders and trade contractors to have written contracts, this is highly recommended as it clarifies the terms of the agreement and is helpful in the event of a dispute.


Period Trade Contract

This contract is similar to the project trade contract however is suitable where you have an ongoing relationship with a subcontractor or multiple jobs over a period of time. The contract allows for negotiation on the period that the contract runs and the length of the defects liability period. The contract conditions are to be used with a Work Order or quote.

While it is not mandatory for builders and trade contractors to have a written contract, this is highly recommended as it clarifies the terms of the agreement and is helpful in the event of a dispute.


Further sites to check:

Building contracts – Consumer Affairs Victoria

Which building contract should you use in Victoria? (hia.com.au)

Building contracts | Victorian Building Authority (vba.vic.gov.au)

Building a home | YourHome