Contracts Under Home Building Act

Requirement

The Home Building Act 1989 (NSW) ("the Act") requires that all residential building work which costs over a $1,000.00 (inclusive of labour and material) should be done pursuant to a written contract.

Contents of the Contract

The Act and the Home Building Regulation 2004 (NSW) ("the Regulation") prescribe that the contract should be a written document and should have at least the following:

- the date of the contract
- signatures of the parties to the contract
- names of the parties, including the exact name of the holder of the contractor licence
- the contractor licence number
- description of the work to be performed under the contract
- any plans and specifications attached to it
- price, if known, prominently noted on the first page and if the price is not known or may be varied, then a warning to that effect
- applicable statutory warranties
- information as to the cooling-off rights
- a note in respect to home warranty insurance
- all work to be carried out under the contract is subject to the Building Code of Australia and other relevant legislations, codes, standards and specifications
- a checklist for the owners entering into the building contract together with the necessary caution

Other Information

Most of the time, the contractor will require a deposit to be paid before commencing work. If the contract price is up to $20,000.00, then a maximum of 10% deposit can be requested. If the contract price is more than $20,000.00, the deposit will be 5%.

The contractor is not required to have home warranty insurance if the work is less than $12,000.00. Where home warranty insurance is required, then the deposit should only be paid after the contractor has provided a certificate of insurance.

Together with the contract, the contractor should provide a copy of a guide prepared by the Office of Fair Trading.

The contractor is also required to give the owner a copy of the signed contract within 5 days of signing. The owner also has the right to rescind the contract during the cooling-off period.

It is illegal for a contractor to carry out work without a written contract meeting the legislative requirements and the contractor is not able to seek compensation or enforce any other remedy against the owner for any work done.

There are a number of standard form contracts available all of which favour the builder, thus in these circumstances it would be advisable to consult a solicitor to explain the contract to you and draft any amendments prior to signing it. In the majority of cases which come before us the home owner ends up signing a document they do not understand and when problems arise they are put to considerable expense to obtain a remedy.

Irrespective of your circumstances call LAC Lawyers for an appointment to obtain proper advice whether you are at the pre-contract stage or after any problem has arisen following commencement of works.