Monday, 18 June 2007

[Tips.006] Ask for a copy of Contract in early stages

I found a lot of people asking questions in forum about the progress payment details. You can actually ask your builder for a copy of the contract in the early stages (e.g. after you paid $600 for your initial site survey, soil test, ...etc, or before paying for preparing drawing for council submission).

Most project home builders use the standard "Building Contract for New Dwellings" from HIA (this link is for NSW, other states also available). Anyone can spend $22 to get a copy. But it's the changes your builder added that makes each builder's contract unique.

Changes to Progress Payments
Using ours as example, the standard contract has 6 stages for progress payments: Floor slab complete, roof frame complete, close up complete, fixings complete, painting complete and practical completion. Our builder cross the whole lot and put in their own ones: deposit, slab, frame, roof on, lock up and practical completion, including a percentage for each stage. We don't like some of the figures and are working on it with the builder.

Other Changes
Our builder also added a few clauses here and there to protect themselve, such as:
"An automatic extension of time applies for every day a progress payment is late. No notification by builder is necessary."
"adverse weather means any rain day recorded by the Bureau of Meteorology - daily rainfall report." --> so if it rains in New Castle, our construction site in Sydney will have to stop, thanks for that!

The contract is in plain English, but I still recommend to find a solicitor to go through it for you.

If you can request for a copy of contract earlier in the process, you can try to work out any issues with the builder. Rather than having everything done and council approved then you are stuck and have not much bargain power in case you found some unreasonable surprises in the contract.

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