by Design Plus Drafting on 23 January 2020 in Blogs

You have the DA or CDC in your pocket. Congratulations!

You just need to find a trustworthy, quality builder.

Then it will take care of itself.

Right?

 

What Makes a Quality and Trustworthy Builder?

Building, renovating, or extending our home will be a significant financial investment. This means we need to minimise our risk.

Unfortunately, that does not mean simply getting a decent builder and taking a leap of faith that everything will sort itself out.

We need to be fully aware of the process and understand all the potential pitfalls so that we can avoid them.

So where do we start? What is the process and what are the rules and laws about building?

Let’s start with the fundamentals. 

 

The Home Building Act 1989

Whether you are doing a new home build or are getting any building work done at your place, including renovations, extensions, additions, the rules in NSW fall under the Home Building Act 1989 (NSW).

This Act outlines the minimum rights of homeowners, builders, and contractors.

It covers warranties, deposits, insurance, and relevant construction matters. It covers any residential building work. That means it includes new home builds, renovations on your existing home, additions, extensions, and modifications like adding attics or garages.

The purpose of the Act is to give homeowners a minimum safeguard. 

In a nutshell, the Act states that:

1. Only Licenced Builders can enter home building contracts. (An unlicensed builder cannot claim damages if there is a dispute.)
2. What the contract should state if it is for work below $5,000 and what it should state for work over $20,000.
3. The Works must be insured. The builder or tradesperson cannot subcontract certain warranties.

 

Why do Building Disputes Happen?

According to the Contracts Specialists in Sydney, the most common building dispute arises from a homeowner not paying or underpaying the builder. 

After that, the biggest reason for disputes is disagreement on the scope of work, or the quality required. Next: incomplete or abandoned work, and defective work.

The great news is that — assuming there is goodwill on both sides — most of these potential problems can be eliminated through good communication and a good contract.

 

The Building Contract

The most reliable guide for home building contracts in NSW (or your State) comes from the government.

For work that will be over $20,000, this definitive document outlines exactly what should be included in the contract.

The contract will include the quality of work, the start dates, a cooling-off period, and the payment terms. The contract should be easy to understand and in plain English.

A few things to be aware of include whether you or the builder is responsible for termite protection.

If you are undertaking a small job that will cost between $5,000 and $20,000, the contract will be a ‘Small Jobs Contract’.

 

Building Contract Template

A document like this is what you and your builder will both sign. You can use this as a guide to work out the terms you would like to see included.

Make sure you read and fully understand it and modify any terms first.

The builder is legally obliged to also give you a copy of the Consumer Building Guide. This is a short two-page summary of basic rights and responsibilities.

What Insurance Should the Builder Have?*

In NSW, builders should have Home Building Compensation Cover for every project over $20,000 including GST. 

This policy is taken out for each project.

Here are more details about Home Building Compensation Cover

It isn’t legal for licensed builders to do work without this cover.

 

Other Insurance for Your Building or Renovation

It is also good for the builder to have:

Construction Works Insurance

Construction and Public Liability Insurance

Workers Compensation Insurance

More information can be found on the NSW Fair Trading website 

 

Being armed with lots of knowledge about the legal considerations involved in building will help you understand what to ask and what to do. Having this information and understanding will demystify the process and arm you with better decision-making skills.

 

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*This is general information only. Requirements differ in each state and territory. It shouldn’t be considered as personal advice. Requirements differ in each state and territory.