Contracts and Legal
As with so many industries, in the building and renovation game you must enter into a proper and complete contract if you are to engage the services of tradesman or professional to carry out some work for you.
If you engage a contractor for work of $1,000 or more in value, you’re builder or tradesman must give you a contract for the work – by law – and it must contain the following:
- the date that it was signed by both you and your contractor / builder
- your name and the exact name on your contractor’s licence card and the licence
- a sufficient description of the work to be carried out
- plans and specifications attached
- relevant warranties required by the Home Building Act, 1989
- the contract price, which must be prominently displayed on the first page and a warning with an explanation if the contract price is subject to change or if the price is not known
- a clear statement setting out the cooling-off period of five clear business days after being given a copy of the contract (where it is valued over $12,000), or if no contract five days after signing, you may cancel the contract
- a checklist of 12 items for you to review, as follows:
- Does the contractor hold a current contractor licence?
- Does the licence cover the type of work included in the contract?
- Is the name and the number on the contractor’s licence exactly the same as on the contract?
- Is the work to be undertaken covered in the contract, drawings or specifications?
- Is the contract price clearly stated? If not, is there a warning that the contract price is not known?
- If the contract price may be varied, is there a warning and an explanation about how it may be varied?
- Are you aware of the cooling off provisions relating to the contract?
- Is the deposit within the legal limit? The limit is 10% for work costing $20,000 or less or 5% for work costing more that $20,000.
- Is the procedure for variations understood?
- Are you aware of who is to obtain any council or other approval for the work?
- Do you understand that the contract must have a policy of home warranty insurance under the Home Building Act 1989 and provide you with a certificate of insurance before receiving any money under the contract (including a deposit) or before doing any work for more than $12,000?
- Has the contractor given you a document that explains the operation of the Home Building Act 1989 and the procedures for the resolution of contract and insurance disputes?
- a caution about signing the contract if you cannot answer yes to all items in the above check list
- a note about your entitlement to a copy of the signed contract within five days of signing
- a note that the contractor must give you a home warranty insurance certificate if the contract is valued over $12,000
- a statement of acknowledgment by you that you have:
i) read and understood the Consumer building guide
ii) completed the check list and answered yes to all items on it
- a clause that states that all plans and specifications to be done under the contract (including variations) are taken to form part of the contract
- a clause that states that any agreement to vary the contract or any plans and specifications must be in writing and signed by you and your contractor
- a clause that states that the work will comply with:
i) the Building Code of Australia, to the extent required under the Environmental Planning and Assessment Act 1979
ii) all other relevant codes, standards and specifications that the work is required to comply with under any law
iii) the conditions of any relevant development consent or complying development certificate
- a clause that states that the contract may limit the liability of the contractor for failure to comply with the above work compliance clause if the failure relates solely to:
i) a design or specification prepared by or on your behalf of the owner or a design or specification required by the owner if the contractor has advised the owner in writing that it contravenes the clause referred to immediately above.
Always contact the insurance company shown on the home warranty certificate to check that the certificate is valid.
The builder or tradesperson must give you a copy of the contract within five business days after you sign.