Liquidated Damages
A liquidated damages (LD) clause is common in many building contracts for commercial or institutional buildings, but less common in residential contracts. Liquidated damages are an amount which the builder agrees to pay to the homeowner for late completion of the project. This is usually an amount per day or per week. Liquidated damages are […]
Practical Completion
Practical completion is a term that is misunderstood by many home buyers. Generally it means the point where all building work is complete or all but completed, in accordance with the contract, and the house is reasonably fit for occupation. A building contract usually defines practical completion being when all works are completed, except for […]
Home Indemnity Insurance
Home indemnity insurance covers the homeowner (and subsequent owners) for faulty, unsatisfactory or incomplete building work and loss of deposit should the builder die, disappear or become insolvent within 6 years from the date of practical completion. Currently all residential building work valued over $20,000 must be covered by a policy of home indemnity insurance […]
Off the Plan
An off the plan property transaction involves signing a contract with a developer to buy either vacant land, or land to be developed with a building on it, before land sub-division or titles are issued. Usually an initial deposit is paid at the time of contract signing, with the balance payable at settlement, after title […]
Preliminary Agreements
A Preliminary Agreement (PA), or Preparation of Plans Agreement, is a common document used by builders dealing with clients in the early stages of building a new home. These agreements do not involve building work and are preparatory to entering a building contract. Some common features are: the consumer is committed to paying a “deposit”, […]
Building Documentation
When applying for a building permit, the documents required need to be to a “ready for construction” standard. The minimum requirements for a building project when it comes to documenting can be summarised as: Drawings or Plans – These describe visually, what will be built, where the building is situated, the size of rooms and […]
Construction Times
While many contracts specify a definite time period in terms of “x” number of calendar or working days (which exclude weekends and public holidays), some contracts do not and this space is left blank. This does not mean that the builder has an infinite amount of time to complete the project. Courts have ruled on […]
Contract Variations
Variations to building contracts during construction are a common source of dispute between the parties. Many times clients visit site during the course of construction and request a different material or a structural change to the building plans. Such requests pose a dilemma for the builder because under the Home Building Contracts Act any variation […]
Contracts for Home Building Work
The Home Building Contracts Act 1991 (the HBC Act) provides protection for home owners and persons undertaking home building work. Part 2 of the HBC Act applies to fixed price contracts for ‘home building work’ valued between $7,500 and $500,000. Home building work includes: constructing a new dwelling; carrying out additions to an existing […]
Contracts for Building
A modest to large house could take about 12 months to build and involve 70 to 80 tradespersons. The slightest problem or variation can cause delays and cost increases. If we accept there are elements of risk in all building projects, the question is: who is to take on those risks? The basic premise of […]