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  clear business days of being provided with a signed copy of the Contract. The five  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.
This Q&A has been prepared by Peter Adams from Adams & Partners Lawyers and is current as of August 2019.