Three things you should know about industry association home building contracts
Industry association home building contracts are standard form contracts written by building industry associations. The most common are written by HIA and Master Builders. Here are three facts that anyone who intends to build should know about industry association home contracts.
1. Industry association home building contracts are written for their members
Industry association home building contracts are written for their members. Despite the Queensland Building and Construction Commission providing free home building contracts, builders and other contractors pay for industry association home building contracts because they correctly believe that the industry association contracts will protect their interests more. In other words, HIA and Master Builder home building contracts are not written to protect the homeowner or consumer.
In fact the Inquiry into the Building Service Authority (BSA) in 2013 recommended that if the Government refused to introduce a mandatory standard building contract (which it did) then all of the contracts drafted by industry associations should be reviewed:
"with a view to discouraging any inherent bias towards the building contractor."[1]
In other words, the Inquiry acknowledged that industry association contracts are "inherently biased". Unfortunately, the Government will only be reviewing its own QBCC suite of contracts.
As a building lawyer who reads and reviews industry association contracts on a regular basis I agree the contracts are biased and require amendments to restore balance to the contracts.
2. You the homeowner can agree changes to an industry association home building contract
There seems to be a common misconception that because industry association home building contracts are standard form contracts the general terms and conditions are set in stone and cannot be changed. This is simply not correct. All contracts should be read, reviewed and negotiated.
I have been involved in a number of cases where builders have agreed significant amendments and changes to the general terms of their standard form contracts.
3. The Queensland Government recommends all homeowners receive legal advice
The Inquiry into the BSA recommended that the Government amend the legislation to require that homeowners get legal advice before signing a building contract, or require them to sign a statement if they decide against seeking legal advice.
In other words the Inquiry thought that pre-contract legal advice for home building contracts is so fundamental that it should be required by law.
Unfortunately, the Government has not put as much weight on pre-contract advice for home building contracts and is not about to legislate to require it, but it still recommends that homeowners seek independent legal advice before entering into a building contract.
For home investors the risks of home building contracts are even greater than that of homeowners and the need for good legal advice from a building lawyer is even more critical.[2]
Contact us
If you would like to know more about the issues and risks with the industry association home building contract your builder has presented to you for your home building project, feel free to call our office to speak with one of our building lawyers on 07 3128 0120 or email us at homeowners@arbuildinglaw.com.au.
End Notes
[1] Recommendation 21.
[2] Investors do not receive the warranties or protections that consumers do with domestic building contract requirements. Further, specific legislation such as the Building and Construction Industry Payments Act 2004 applies to all non-resident owner building contracts.
