Building and Construction – FAQs

Questions Asked By Builders

Q – Do I need a contract when I build a new home or carry out renovations or extensions for an owner?
A. – Yes. It is mandatory that a written contract is entered into under the provisions of the Home Building Regulations 2014.

Q. – Do I need Home Warranty Insurance (now called Home Building Compensation Fund) taken out before I commence building work?
A. – Yes. It is a provision of the Home Building Act that with residential building work in excess of $20,000.00 (including GST), Home Warranty Insurance must be taken out prior to work being commenced.

Q. – What if the owner wants to alter work after the contract is signed?
A. – You must obtain a written variation from the owner which sets out the work and the method of calculating the price or the agreed price.

Q. – What if there is a delay in the building works due to inclement weather or the owner failing to provide instructions?
A. – You must issue a Notice seeking an extension of time and/or suspension of works. The contract provisions must be followed as there are strict time limits and processes involved.

Q. – What if the owner refuses to pay progress payments on time?
A. – Follow the provisions of the particular contract and, if necessary, suspend work and take steps to terminate the contract.

Q. – Can I place a Caveat on the owner’s property before I commence building work?
A. – If the work is residential building work, as defined by the Home Building Act, then a Caveat cannot be placed on the owner’s property until you obtain Judgment in a Court or a Tribunal.

Questions Asked By Owners

Q. – How do I choose a builder?
A. – Normally owners choose a builder through a network referral system, however it is advisable to check with the Housing Industry Association and the Master Builders Association for builders in your local area.

Q. – How do I check out whether my builder is appropriately licensed or qualified?
A. – You should carry out a search on the NSW Fair Trading website on whether the builder has a license.

Q. – Do builders and trades persons need to be licensed?
A. – Yes. Builders and trades persons need to be licensed through the Office of Fair Trading. The currency of their licences can and should be checked on the website as noted above.

Q. – Do I use the builder’s contract or request a contract from NSW Fair Trading when building a new home?
A. – Many builders wish to use their own contract and/or use contracts supplied by the Housing Industry Association or Master Builders Association. You should obtain legal advice before signing a contract.

Q. – Should I sign a fixed price contract or a cost plus contract?
A. – It is normally recommended that you sign a fixed price contract when carrying out residential building works, however some work the builder will not carry out unless on a cost plus basis. You should obtain legal advice before entering into any such contract.

Q. – What warranties do I have in respect to the builder’s work and what protection do I have?
A. – If the work is residential building work the protection is set out in the contract and in the Home Building Act, specifically Section 18B of the Act. Under the current legislation, all residential building work needs to be insured for work over $20,000.00 (including GST). Currently, builders are required to take out Home Warranty Insurance with an approved insurer such as Vero.

Q. – When may I make a claim if needed under the Home Warranty Insurance policy?
A. – Current policies require notification to the insurer, however a claim cannot actually be made under current policies until the builder is taken to task in the Court or Tribunal system. This is subject to exceptions and legal advice should be obtained prior to entering into the contract concerning this issue.

Q. – Do I have a right to cancel the building contract?
A. – Yes, subject to certain conditions being met and the building contract being followed for the issue of Notices.

Q. – If I wish to vary the contract whilst the builder is carrying out the work, what do I need to do?
A. – You will need to have a Variation agreed upon and a written document entered into prior to the work being commenced. You should make sure that the variation document shows you the price for the work to be done and/or a method of calculating that price.

Q. – When are progress payments due?
A. – The contract will set out the progress payments during the contract period.

Atul Singh has over 11 years experience in dealing with show cause / disciplinary proceedings, which he gained whilst working for NSW Fair Trading. He can also advise on matters relating to licensing issues and requirements. In addition, he has worked on cases which dealt with fraudulent applications, fit and proper issues, rectification orders and breaches of statutory warranties. Read more about Atul here.

About Atul Singh

Atul Singh has over 11 years experience in dealing with show cause / disciplinary proceedings, which he gained whilst working for NSW Fair Trading. He can also advise on matters relating to licensing issues and requirements. In addition, he has worked on cases which dealt with fraudulent applications, fit and proper issues, rectification orders and breaches of statutory warranties. Read more about Atul here.