5 Myths to know about Building Contracts
This blog busts unhelpful myths I've heard over the past year about building contracts. Knowing the truth behind these myths can save you $$$ during your build!
Myth 1: Once you sign the contract, there won't be any other costs during the build
The reality is that all building contracts contain provisional allowances and variation clauses to account for unforeseen expenses during your build. The final amount for these provisional sums or variations won't be known until the end of your build.
The most important thing is to ensure you're not caught off guard or surprised by additional costs.
The more you can prepare and proactively avoid costs, the better off you'll be.
Take provisional allowances for in-ground site conditions, for example. Once you've identified that these costs aren't fixed, you can conduct a site survey pre-construction and check with your builder that the allowance aligns with the known condition of your site. This means you've validated that the allowance is sufficient and that you're less likely to be out of pocket for increases during your build.
Here's a tip: When reviewing your contract, keep an eye out for any provisional allowances or valid reasons for variations. This way, you'll know all the potential reasons additional costs can arise during your build, and you can be prepared.
Myth 2: The builder will handle everything, including permits and authorities
This misconception can be painful because it's often only discovered at the end of the build. For instance, when an occupancy permit is due, owners might realize that a condition holding up the permit isn't actually the builder's responsibility to resolve. (Yes, this has happened!)
How many builders actually take care of all the building permits, authority, and utility works? It's crucial that this is explicitly checked in your contract.
Here's a tip: Make sure the contract is explicit about the builder's responsibilities regarding permits, authorities, and utilities. If anything falls under your responsibility, ensure you know exactly what it is, how it's done, and the timing.
Myth 3: Building contracts are standard, so there's no need to look at them in detail
Every single building contract, even the standard ones, has sections that are filled out individually and can vary significantly from project to project. This is especially true for important areas like timelines, defect liability, payments, variations, and extensions of time.
My tip here is to have a professional review your contract before signing to ensure you understand the terms and are protected. You're much better off seeking advice from a pro to make sure everything is okay, rather than finding out down the line that there are unfavorable terms you didn't notice.
Myth 4: The completion date for my build is locked in
Contracts have sections called "extensions of time," where the completion date for your build can be extended due to pre-agreed reasons. Common reasons for this include weather delays, supply chain issues, or delays in permits.
The tip here is to make sure you're expressly aware of the reasons an extension claim can be made by your builder. When these situations occur, stay on top of them and understand their impact on your build.
Myth 5: Everything that's been discussed pre-contract is included
The pre-contract phase of the build can go on for months, and there are all sorts of conversations about what's in and out of the build that occur with your builder. It's crucial that the builder's exact scope of works and everything you've agreed upon is expressly documented in the contract. This is vital because if you ever get into a dispute with your builder, the judge can only consider what is expressly agreed in the contract.
My tip here is to ensure that the agreements you've made with your builder are expressly documented in the special conditions. Also, have a professional look at the exclusions and inclusions in the contract that's been prepared by your builder.
These tips provide you with more information on the realities of building contracts and emphasise the importance of having a detailed review of your contract before you sign. Having a review isn't about making changes; it's about understanding what you're signing up for and ensuring that it's all okay before you make such a significant investment for you and your family.
Wishing you the best of luck with your new home build!
Happy building,
Annelyse
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Written by Annelyse, Building Contract Enthusiast, Project Manager, and founder of Build Together Project Management.
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