Here are some of the common questions we get asked about terminating a residential building contract in NSW:

Q: Can an Owner terminate/cancel a Building Contract after it has been signed by both Parties without penalty where the Contract is for an amount in excess of $20,000.00?
A: Yes, providing the Owner cancels the Contract within five [5] clear business days of being provided with a signed copy of the Contract. The five [5] clear business days is referred to as the cooling off period. The cooling off period can be reduced however such reduction can only be accomplished with a Notice from the Owner’s Solicitor. We refer to section 7BA(5) of the Home Building Act 1989.

Q: If the Owner has paid a deposit can the Builder retain the deposit?
A: No, unless the Builder has taken out Home Warranty Insurance and has incurred reasonable costs in the cooling off period. We refer to section 7BA(3) of the Home Building Act 1989.

Q: Can either an Owner end or a Builder terminate the Contract during the construction period?
A: No as a general right. However, either Party has a right to terminate for substantial breach of Contract normally after reasonable notice is given as defined by the Contract and a Notice of Termination is issued.

Q: What if both the Builder and Owner agree to Terminate the Contract during the construction period.
A: Yes, however a Deed of Release should be drafted by your Lawyer.

Q: If the Contract is terminated/cancelled after building work is commenced do the Statutory Warranties still apply?
A: Yes, the Statutory Warranties still apply. The Builder is unable to contract out of the Statutory Warranties contained in section 18B of the Home Building Act 1989.

NOTE: There are exceptions to the answers given above. You should consult your Lawyer before seeking to terminate/cancel a Contract.

Contacts at Adams & Partners Lawyers are as follows:
Mr Peter Adams
Mr Atul Singh
Mr Cameron Spanner
All Solicitors can be contacted on 02 4721 6200

This Q&A has been prepared by Peter Adams from Adams & Partners Lawyers and is current as of August 2019.

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