FREQUENTLY ASKED QUESTIONS FOR HOMEOWNERS AND HOME INVESTORS

Yes, you can amend a clause in a standard form home building contract. The whole basis of a contract is that it is an agreement between the parties. One party dictating the terms of the contract to the other creates an unfair bargaining position between the builder and the homeowner. At Aitchison Reid, we recommend that all homeowners get contract reviews of their home building contracts so that: what the terms mean and their significance are explained; and any unfair terms are amended so that there is greater equality between the parties to the contract. Once the contract has been agreed and signed, you are stuck with the terms you have agreed to. However, please note that the contract after amendments will still need to comply with the requirements for a regulated level 2 contract ($20,000 or above) or for a regulated level 1 contract (between $3,000 and $20,000). To read more see the FAQ “Does a home building contract have to be an HIA, Master Builders or QBCC contract?” by searching for "section 14 schedule 1B".

We work for homeowner clients and home investor clients just like you. We can review your building contract so you know your risks before your sign and build. We can also work with you on your building dispute so that you can get experienced and sound legal advice and representation.

Most definitely. We have seen a number of cases where builders have taken advantage of absentee owners and have claimed and been paid for work that is not complete. This causes lots of flow on effects especially if you wish to rely on QBCC Statutory Home Warranty Insurance. We recommend that all homeowners use a building inspector to check the completion of each stage. This way you can be sure that the stage is complete before you pay for it.

When your builder has possession of the site, your builder is in charge of the site from a Work Health and Safety perspective. This means that the builder needs to be able to control who enters the site from a safety perspective and manage the safety risks of those people on the site. However, the builder cannot prevent you from having reasonable access to the site, if you request access to the site in writing (section 109 QBCC Act). Further, the builder cannot contract out of this requirement (section 109(2) QBCC Act).

It is always best to let the builder have clear possession of the site while the builder is completing the build. Having your own trade contractors on site can cause extra delays for the builder and additional complications. All of which could cause you additional cost depending on your contract type. So having the carpet installed after the builder’s work is completed and the builder has left site, is the simplest and least risky way to have the work completed.

NO. You should not pay a builder early for a stage payment because if you need to rely on your QBCC Statutory Home Warranty Insurance, you will be reducing the amount of insurance you are entitled to by the value of the overpayment. Secondly, the builder must not claim an amount, other than a deposit, unless the amount— “(a) is directly related to the progress of carrying out the subject work at the building site; and (b) is proportionate to the value of the subject work that relates to the claim, or less than that value.” (section 34, Schedule 1B QBCCA) If the builder does claim for amounts early, the builder risks receiving a maximum penalty, 50 penalty units.

Project builders are typically unlikely to want to negotiate the terms of the contract with you. This is largely because they make their money through scale and speed. Negotiating individual contract terms slows down the process, the speed of the project and reduces its profitability. However, even though the builder may not negotiate the contract, it still pays to have your contract reviewed because: you can learn how to avoid being hit with delay damages (project builders dislike delays especially those caused by owners and they are the most likely to charge you damages for owner delays); you can learn how to respond to variations, extension of time claims so that you protect your interests; and you can learn about provisional sums, prime cost items and how to reduce the risk of these costs blowing out.

Some builders do negotiate home building contracts and some do not. There can be a raft of reasons why some builder decide not to, including: For some large project builders, the cost of negotiating the contract terms with you reduces their return. For some builders it is that they simply do not understand the contract themselves. From our experience it is always better to have the hard conversations upfront. In the pre-signing stage of a build, the parties are usually on their best behaviour and it is difficult to see how parties will react if something goes wrong or becomes challenging during the build. Questioning the terms of your contract, before signing the contract, is a good way to test how flexible and easy to deal with the other side will be during the build.

A home building contract does not need to be an HIA, Master Builders or a QBCC contract, but if the contract is over $20,000 (which means that the contract is a level 2 regulated contract), the contract must contain all of the information required by section 14 schedule 1B of the Queensland Building and Construction Commission Act. Section 14 requires that the contract is in writing and signed by each party and contains: the names of the parties; the building contractor’s licence number; a description of the subject work; any plans and specifications for the subject work; the contract price or the method for calculating it, including the building contractor’s reasonable estimate; the date for the start of the subject work at the building site, or how the date is to be determined; the date for practical completion or how the date is to be determined; a statement of each of the statutory warranties that apply to the subject work; a conspicuous notice advising the owner of its possible right to withdraw from the contract under schedule section 35; If the contract price is fixed, it must state the contract price in a prominent position on the first page of the contract schedule; and If the contract price is not fixed, the method for calculating it, including any allowances, must be stated in the contract schedule. If the contract price may be changed under a provision of the contract, the contract must state on the first page of the contract schedule: a warning to that effect; and a brief explanation of the effect of the provision allowing change to the contract price. Regulated level 2 HIA, Master Builder’s and QBCC contracts all comply with the section 14 requirements. If the home building contract is less than $20,000, but more than $3,300, the contract needs to comply with the level 1 regulated contract requirements set out in section 13 of Schedule 1B, of the QBCCA. Section 13 requires that the contract contains: the names of the parties to it, including the name of the building contractor as it appears on the contractor’s licence; the building contractor’s licence number as it appears on the building contractor’s licence; a description of the subject work; any plans and specifications for the subject work; the contract price or the method for calculating it, including the building contractor’s reasonable estimate; a provision that states the date for practical completion or how the date is to be determined; a conspicuous notice advising the owner of its possible right to withdraw from the contract under schedule section 35. Again, the regulated level 1 HIA, Master Builder’s and QBCC contracts all comply with the section 13 requirements. However in saying that, you may want to read our article on industry association contracts.

For testimonials from our homeowner clients, select Testimonials from the About menu on our www.homeowners.arbuildinglaw.com.au site. Or go straight to the page: www.homeowners.arbuildinglaw.com.au/homeowners-testimonials. See also our Homeowner Review post published on 12 May 2019.

As a homeowner, should the builder be giving me a cost plus contract for a new home build? There would need to be a very good reason why a cost plus contract should be used for a new build (for example if the design requires new architectural techniques that are rare or the builder has not used before). In all other normal circumstances, cost plus contracts should not be used for new builds. For a new build, most homeowners need certainty of price so that you have enough funds or can obtain enough funds for the build. A cost plus contract does not provide any certainty and allows for you, the homeowner, to bear a disproportionate risk. To find out more here in Homeowner FAQ about: Provisional sums, search for “what is a provisional sum”; Prime cost items, search for “what is a prime cost item”; Cost plus contracts, search for “what is a cost plus contract”.

A cost plus contract is defined by the QBCC Act as: “a domestic building contract under which the amount the building contractor is to receive under the contract can not be accurately calculated when the contract is entered into, even if prime cost items and provisional sums are ignored.” Basically a cost plus contract means that you pay for the cost of the materials and labour plus the builder’s margin. In the prefect world this would seem like a fair contract type, however the cost plus contract does not give the builder any incentive to: minimise your costs; or minimise the time it takes to carry out the work. However there are some occasions where a cost plus contract may be the only option, such as an urgent repair where the work simply has be done, but the actual cause is unknown and therefore the work needed to be carried is unknown at the time the contract was entered into.

A prime cost item is an item that you have not selected yet and therefore the price of the actual item is unknown. The builder then adds an estimate in to the contract price to allow for your selection, but if the item is more than the allowance you will be liable to pay for the actual cost of the item, plus the builder’s margin on top of the increased amount. For example, you have not selected your tiles at the time the contract is entered into. So the builder adds an allowance for tiles of $2,000. The tiles actually cost $5,000, then you are liable for the actual cost of the tiles, plus the builder’s margin of 20%, which gives a total of $5,600. Unlike provisional sums, you do have more control of the costs of a prime cost item, because you are the one who picks the item (and the associated cost). However it is always better to know your costs before you enter your contract. Please note that as part of the implied statutory warranties the builder warrants the prime cost items given have been calculated with reasonable care and skill, having regard to all the information reasonably available when the contract is entered into (including information about the nature and location of the building site). If your contract is $20,000 or more, the total amount of the prime cost items included in your contract should be stated on the front page of the contract schedule.

A provisional sum is an amount given by the builder for a particular piece of work, that the builder can only provide an estimate for. For a contract over $20,000 or more, the total amount of the provisional sums included in your contract should be stated on the front page of the contract schedule. The builder can only provide a provisional sum if the builder has made “all reasonable enquiries” and after making those enquires the builder cannot state a definite amount. All regulated contracts (contracts over $3,300 for domestic building work) include implied statutory warranties. One of these warranties states that the building contractor warrants the provisional sums given have been calculated with reasonable care and skill, having regard to all the information reasonably available when the contract is entered into (including information about the nature and location of the building site). Given the above you would imagine that provisional sums are rarely used, but unfortunately provisional sums are used frequently. This causes additional risk for homeowners because homeowners are liable to pay for the actual amount of that the provisional sum is given for plus the builder’s margin. For example a provisional sum is given for the construction of some stairs, the price given is $5,000, however the actual price is $10,000, which means the homeowner pays $10,000 plus the builder’s margin of 20%, which gives a grand total of $11,000. That is $6,000 more than was included in the contract price and, more than likely, $6,000 more than the bank is willing to finance.

It is okay to push back and ask for time to read your contract and to have it reviewed. If your builder does not agree to give you more time, then you really need to question whether you want to enter into a contract with the builder and walking away from the contract. It is vital that you understand the contract before you sign it and that you have time to read it. If you do sign the contract, you could rely on section 35, which allows you to terminate the contract during a 5 day cooling off period, however this requires you end the contract when you just might want to amend one clause. A contract review only takes 2-3 days and in the scheme project plan of your build it is such a short amount of time.

At Aitchison Reid, we always recommend that homeowners: understand their contracts; and use a building inspector to check that the stage has been properly completed before paying the stage progress payment. All too often we have seen homeowners pay for stage payments before they are due because the builder asked for payment too early. This has the effect of potentially reducing the amount of QBCC Statutory Insurance the homeowner is entitled to so it is really important that only pay if the stage is complete.

We’re your building and construction lawyers in Queensland. We focus on practising in our specific area of the law, which is building and construction law. Here in Queensland, we perform home building contract work (homeowner contract reviews) and home building litigation work (home building disputes) for our homeowner and home investor clients. Our homeowner clients come to us from across all parts of Queensland, and from outside the state and across Australia too.

For homeowners’ legal work we don’t perform (such as conveyancing, environmental, human resources, tax, company, etc...), we can tell you about other law firms which may be able to carry out the work for you.

In compliance with the Queensland Law Society’s strict requirements, we are clear and transparent about our legal fees when people or organisations consider engaging us to work on their matters. The pre-engagement process for homeowners and home investors starts off with you contacting us to tell us about your legal matter and you asking us whether we may be able to help you. At that stage, we’ll have a conversation to find out enough information for us to estimate whether or not we can help. If we think we can help you, we’ll send you an engagement pack (containing an engagement letter, disclosure notice and costs agreement) which describes the scope of work we believe you want us to work on, our estimates of costs (depending on our assessment of your matter, some cost estimates may be based on time based charges and others may be fixed fee) and our terms and conditions of engagement. If we think we are unable to help you, we will refer you to one or several other law firms for you to consider approaching for help.

We work Monday to Friday, our business hours are 9.30am to 4pm (Australian Eastern Standard Time). We have a voicemail system operating outside our business hours, and when our team is all engaged on phone calls during business hours. Our contact phone number is 07 3128 0120. Our general enquiries email address is ask.us@arbuildinglaw.com.au or use our Contact form at the bottom of our homepage.

Please visit our Meet Our Team page.

We operate from our home office in Redland Bay, Queensland 4165. Our main ways of communicating with our clients on their matters, is by telephone and email. We don't take client meetings at our home office.

As building and construction lawyers, we help Queensland homeowners and home investors with legal matters regarding their building projects. The building projects may, for example, be new home builds, existing home extensions or home renovations.

Perhaps as a homeowner or home investor you may also want to ask "How do I know you'll understand me and my interests in my legal matters?" and "How will I know and understand the legal advice you give me?". At Aitchison Reid Building and Construction Lawyers, we listen. We pride ourselves in being friendly, ethical and professional. We make the law easy to understand because we write and speak in plain English. We involve you so that you feel consulted on the pace and direction of your matter and so that you know and understand what is going on and being done for you. As our legal practice is focussed on building and construction law, our specialisation helps you save time and expense. We live and breathe building and construction law and the industry every day.

It’s less expensive and more cost effective to get good and proactive frontend legal advice about your home building risks and problems before they happen. Don’t wait for those risks to turn into big problems and home building disputes. Should a big problem or home building dispute occur, it’s always more cost effective to get good building dispute and litigation advice from experienced building and construction lawyers. This is what Aitchison Reid Building and Construction lawyers does for its homeowner and home investor clients. Although you may feel that legal advice is a cost to your home building budget, we focus on providing cost effective value for your money and budget. Please note that if you have a home building dispute, it is always important to get legal advice from an experienced building and construction lawyer as soon as possible.