The ABC's of a Builders Contract in NSW

The ABC's of a Builders Contract in NSW

Before you even begin building a home or completing a renovation in New South Wales, you have the builder’s contract to contend with. According to the Home Building Act 1989, you may need a building contract depending on what’s involved in your project. To determine the type of building contract that is required, there are three areas to consider: The size, cost, and elements involved in the build.

Small Jobs Contract NSW

Projects with a cost of between $5,000 and $20,000 require a small jobs contract. This type of builder’s contract is covered by section 7AAA of the Home Building Act 1989. There are a number of details that must be included in the contract, including:
  • Names of all parties to the contract, including the licensed contractor
  • Contractor’s license number
  • Full description of work involved in the contract
  • Detailed contract plans
  • Contract price or estimate
The contract must include a clause stating that work will comply with all relevant codes, standards, and building consent. There is also a requirement for a limited liability clause protecting the contractor for failure to comply with the work compliance clause. This clause comes into effect if the failure is due design elements which the contractor has stated go against the work compliance clause.
The homeowner or developer will receive a copy of Consumer Building Guide. The CBG provides information on laws and regulations related to residential building.

Larger Building Contracts

Work that is outside the scope of a small jobs contract may require a different type of builder’s contract. For major projects that will cost over $20,000, homeowners may refer to section 7 of the Home Building Act 1989. Your contract will include all the same items as a small jobs contract, with a number of additions:
  • Statutory Warranties for required work
  • Progress payment records in accordance with the contract
  • A termination clause that allows all parties to terminate the contract under general law principles
  • An inclusion in the termination clause that allows all parties to terminate the contract under separate agreements
  • The addition is any variation to the contract is covered by an additional clause, stating such changed must be added to the contract and confirmed in writing
  • The Home Building Regulation Act 2014 states that a checklist of 14 mandatory items must be included, with a signatory warning if the homeowner does not respond in the positive to all included items
  • A receivership of a signed contract clause stating that the homeowner should receive a copy within five days of signing
  • An insurance certificate must be provided by the contractor to the homeowner
  • A statement confirming a cooling-off period of five working days
  • A statement from the homeowner confirming acknowledgement
  • Additional regulations for inclusion
Fair Trading Home Building Contracts

The good news is that, although you can draft your own contract, there are builder’s contracts for New South Wales available from the Fair Trading Website. The website may is regulated updated which may result in changes to the direct link. However, you can easily find the latest checklists by searching the term “Home Building Contracts.” You may also opt to use a builder’s contract from another association so long as it includes all necessary provisions.

Building a new home is a major project that involves a lot of preparation and work. To help the process go more smoothly, Houspect can provide stage building inspections in New South Wales. All reports are thorough and detailed, providing you with information on any defects identified during each stage of the build.