Understanding Your Home Building Contract

Understanding Your Home Building Contract

Understanding your new home building contract is essential for ensuring a stress free and rewarding building journey.  There are a lot of documents involved and, sometimes in all the excitement, it’s easier to just skip over to the signing section.  However, this is your property that you are building and one of your biggest (if not the biggest) financial and emotional investment that you will make. So, it’s important that you clearly understand what it is you are signing up for.

Builders in WA generally use a fixed price or cost plus building contract. The majority of these are industry standard contracts produced by the Housing Industry Association or the Master Builders Association.  These associations make sure that their contracts are up to date in complying with all relevant legislation.  Your contract will outline everything from what is being built, the responsibilities of the builder, the responsibilities of you as the owner as well as disputes resolution processes.

It’s important to note that this is a legally binding document for both parties and that it carries certain obligations.  If you are unsure of what you are signing, it’s important to seek independent legal advice or contact the HIA or MBA for clarification.

You will also need to sign a specification and set of plans.  There are generally two specifications to sign.  The first is a Standard Specification which informs the local council of what we are building and how.  It deals more with the general materials and method of construction that is being used.  The second is your job specific specification which outlines the particular inclusions and exclusions for your new home.

The plans that are signed along with your contract may be sketch plans (floor plan & elevations only) or full working drawings.    If the plans are still at sketch stage, it’s worth clarifying with your builder what your contract includes when it comes to things like electrical and cabinet details that are yet to be drawn.  Note that your plans should reflect your specification.  For example, if you have a shelf and rail included in your robes on the specification, this should be shown on the plan.

At Activa, we also have a Disclaimer Document that is to be signed as part of the contract.  While ‘disclaimer’ may sound to some people that the builder is trying to avoid liability, in fact, this document is a list of things that we as builders have learnt from experience, that we believe it is important for you to know up front.

This is a lot of information to take in and understand.  The important thing is to ask for clarification about the paperwork. The industry is full of jargon and sometimes there can be a misunderstanding with regards to documentation.  By asking questions, we will be able to explain the paperwork in more detail and make sure that your idea of what you are getting and what is actually built are the same thing.