Building Contract Advice

Building Contract Advice Graham Legal provides a Building Contract Advice Service that includes a face-to-face question and answer meeting of up to 30 minutes in addition to the provision of a comprehensive letter of legal advice.

The letter of advice needs to be comprehensive. Building Contracts are thick documents and they are never the same. Whilst the majority of Building Contracts are of the HIA or Master Builders Association format, this does not mean that they are identical from builder to builder.

Not all provisions of the standard Building Contract are fair and reasonable. Often important entries and the operation of the pro-forma printed terms and conditions are simply not understood.

Problems are always best resolved by avoiding them in the first place. Phillip Graham thoroughly examines each Building Contract and provides clients with a comprehensive letter of advice. Phillip’s advice is drawn from his considerable experience of domestic Building Contracts and from disputes in which he has acted.

The Building Contract must contain a notification that a Building Owner is entitled, unless one of a number of stated exceptions applies, to end the contract within 5 clear business days of the day that the Owner received a signed copy of the Building Contract. Do not waste those days, Graham Legal will need time to examine your documents.

Preferably, Owners should seek advice regarding the Building Contract before they sign it. In that way the advice given will highlight the changes that ought to be made to the contract before it is signed.

The letter of advice provides invaluable information regarding potential issues that might otherwise lead to disputes once the works begin. The letter may be used as a checklist of issues to be mindful of as the project develops providing clients with important advice how to handle specific situations that commonly arise.

The comprehensive letter of advice deals with the following subjects:

  • The proposed schedule of payments of the price as compared with the prescribed instalment payments ordinarily permitted under Section 40 of the Domestic Building Contracts Act 1995;
  • The dangers that may be experienced where progress payments are weighted heavily in favour of the early construction stages;
  • A review of any Special Conditions included in the Building Contract and an assessment of the reasonableness of them;
  • A review of the circumstances in which the price payable under the Contract may vary after the signing of the Contract;
  • The Owners obligations before the Builder is obliged to begin work;
  • Issues that may arise due to registered or unregistered easements, restrictions or covenants;
  • A review of the means by which the construction period is actually calculated;
  • The Builder's obligations in connection with calculation of the cost of constructing the foundations;
  • The Builder's obligations in connection with calculation of the cost of prime cost and provisional sum allowances and the Owner's rights in connection with such claims;
  • The circumstances in which a Builder may lawfully obtain an extension of time in the calculation of the construction period;
  • The contractual relevance of the "plans" and "specifications" and the necessity for comprehensive and unambiguous particulars;
  • The circumstances in which variations may arise after the works begin and the issues to be wary of in connection with them;
  • What is a reasonable "Builder's Margin" and how does it apply to the Building Contract price;
  • Responsibility for the costs of conveying, connection and/or installation of gas, electricity, telephone and water and sewerage services;
  • Penalties for late payments and precautions that should be taken to ensure that an Owner's payments are not late or unreasonably calculated;
  • Damages for late completion and how much should reasonably be allowed in the particular circumstances of each case;
  • The requirement for and effect of Builder's registration and warranty insurance;
  • What to look for in connection with the Certificate of Builder's Warranty Insurance and the circumstances (and limitations) in which an Owner may claim for defective and/or incomplete works;
  • The Builder's obligations under the Contract;
  • The reasons why "advance payments" must be avoided;
  • The Owner's rights to enter the construction site before completion and the risks associated with doing so;
  • The special obligations a Builder must observe when building a home similar to a display home;

In ordinary circumstances the Builder has a decided advantage over his customer in that the Builder has usually been party to contracts of this kind many times over. A builder is usually (but not always) very much at home with the technical language and procedures mentioned throughout the contract documents.

The provision of comprehensive advice to an Owner before the Contract is finalised gives the Builder notice that his client is not someone over whom he will be able to exert undue influence.