• Before hiring a builder, define your plans, specifications, requirements, and budget.
  • Ensure the contract includes key details like names, addresses, start and completion dates, payments, and specifications.
  • Understand payment stages, residential building work insurance, and negotiate to prevent overpaying.
  • Never pay for work before a stage is complete.

Before engaging a builder or building company for construction work, have your plans and define your specifications. If you are hiring a business to both design and construct the building, have your requirements and budget set.

Before you choose a builder:

  • get at least three different quotes for the job
  • view the builder’s previous projects or talk to their previous clients if possible
  • check that the builder holds the relevant licence/s to do the work
  • check the disciplinary register
  • read the fine print of any quote or contract
  • ask lots of questions
  • be clear about arrangements for contract variations or other changes
  • understand who is responsible for arranging approvals and certification
  • as the landowner, you are responsible for appointing the building certifier, not your builder.
  • be clear about fees and costs

Getting independent legal and financial advice before signing a contract can also be a good idea.

Contract

You must understand and be happy with all the details in your building work contract or contract to buy off-the-plan. If you need help understanding what is included or are unsure of your responsibilities and rights, you should not sign it.

Learn more about building contracts:

To help avoid disputes, contracts for building work should be made in writing.

Important inclusions in a contract are:

  • it is signed and dated by you and any other parties to the contract
  • your name as owner and the names of any other parties to the contract
  • the address where the work will be carried out
  • the start and completion dates
  • the payment arrangements
  • the plans, specifications and inclusions
  • the total contract price and provisions relating to any contract variations
  • any specific requirements you have negotiated

It is in your best interest to ensure that the work is agreed to as stated in the contract. This will help prevent any misunderstandings and minimise the risk of potential disputes. It is essential that you are aware of who you have entered the contract with and whether it is directly with the licensed builder or with another party who will arrange for a licensed builder to do the work.

Contracts for building houses or work over $12,000 cannot give the builder or others the power to choose or remove a building certifier, or act as the owner's representative in dealing with the certifier for approvals.

For some residential building work, your contract may also include, or be taken to include a statutory warranty.

Payments and costs

Most building contracts are called ‘fixed price contracts’. The final contract sum can vary due to fluctuations known as prime cost and provisional sum items.

Find out more about building costs.

The contract should detail the stage of completion when payment is required. If you are unsure what work is included in each stage of construction, such as the lock up stage, ask for an explanation in writing or the contract.

Some work is covered by residential building work insurance (sometimes called warranty insurance by the market). Keeping stage payments at or close to the maximum you can claim is a good idea. In the ACT, this is currently $10,000 for a deposit for work and $85,000 for completed work.

You can negotiate with your builder to ensure that no stage exceeds this amount while still ensuring you are not overpaying for a stage. This may require the negotiation of additional stages.

Besides the initial deposit, it is important to only pay for a stage of building work after it is completed. This will prevent exposing you to financial risk if the builder goes into administration, fails to complete the job, or does not complete the job to the agreed specifications.

You should also ensure that if your building certifier is inspecting a stage of building work, they are satisfied that the work complies with approved plans and the building code before payment.

Your project may also be subject to statutory warranties.

Complaints and disputes

If there is a dispute between you and your builder or other professional there are options for you to resolve your dispute or make a complaint.