Building a property can be exciting and daunting – it can be a dream to see a building emerge from an empty plot of land. But, It can also be a nightmare to be paying for that building only to have it delayed, over budget, poorly built, or not built at all. These stories have permitted the news cycle lately as there are a lot of developers and builders who are falling short of buyer expectations. So how can you protect yourself? Here are some things to look into before signing on the dotted line to avoid getting into trouble. Read on for our article in Construction Law - a guide to navigating your contract.
Construction contracts can be written in a way that might result in a building that doesn’t match your expectations.
So the most important decision you can make when you're building is not the type of oven, or showerhead, or bathroom fittings – it’s to have a construction law specialist review the contract before you sign it. They know what to look for, can identify hidden traps, and ensure there are protections in place for you.
First and foremost, it’s critical to look into the company you’re engaging, and to understand the quality of their workmanship. This involves quite a bit of legwork and preparation, so be prepared to put in the time and effort – it will be worth in the long run.
Solid research means you’ll have a better idea of what you’re getting yourself into, what the outcome is likely to be, any feedback by prior clients (including problems and complaints).
Go online. You can do this at any time of the day or night. Look up the company qualifications, work history, reviews – what are other customers saying about the work? Look at the number of reviews.
What you’re looking for is reliability, quality of work, ability to mange costs, and managing a schedule.
The NSW Department of Fair Trading suggests:
Other research tips:
Know what you’ll be getting.
Be sure you have a very clear understanding of the plans and specifications set out in the building contract. Know what’s included, including standard or quality, and what’s going to cost you extra.
If you’re expecting the property to be in ‘turnkey’ – meaning it’s literally ready for you to step into, nothing more to do – you need to agree with your builder that this is what you’re paying for.
It’s also important to be aware of payment timings, so you’re prepared.
As anyone who has watched Grand Designs or any other home development program knows, building costs usually (mostly!) blow out of scope.
Builders like to use words like fixed costs – meaning the builder agrees to build the property at a specified and agreed price. But there are traps that could cause costs to escalate out of proportion. Some examples are:
This might add significant dollars to your costs so it’s important to be prepared in terms of money and time (if it delays the project).
Lastly, be sure of the timeframe. The other factor that’s inevitably revealed in Grand Designs etc is the project doesn’t usually run over budget – it also runs over time. So how quickly do you need the work done, and what are the impacts on you if the building works aren’t completed on schedule?
You don’t want to be homeless or out of pocket. If you’re renting during the build, you’ll have to accommodate the additional cost, assuming you’re able to stay beyond your original lease. Or if you’re planning to lease the property, what does a delay in rent mean for you?
Good legal advice would help you incentivise the builder to complete works on time by including monetary penalties for delays.