Whether you’re the building contractor or the building owner, ensuring your building contract is compliant is key in reducing risk, protecting your rights and ensuring it is enforceable.
Generally, standard form contracts are used and will require little amending, such as the QBCC and HIA contracts for new home builds. There are also standard form contracts for renovations, extensions, repairs, subcontracting, natural disaster repairs, demolition, and small building projects. While these are readily available forms which may require little in the way of amendments, it is important that each building contract be carefully assessed before signing.
Contracts
In Queensland, domestic building contracts must meet several minimum legal requirements. Such requirements are regulated by the Queensland Building and Construction Commission Act 1991 (Qld). Schedule 1B of the QBCC Act provides for Level 1 and Level 2 Domestic Regulated Contracts, being:
Level 1 – (Contract Price between$3,300 and $20,000)
The Contract must be in written form, complete with date and signature by or on behalf of the parties to it. It must contain the following details:
- Named of all parties (inclusive of the building contractor as it appears on their contractors licence);
- Builders licence number;
- Description of the work to be completed;
- Any plans/specifications for the works;
- Contract price (or method for calculating it, including reasonable estimate by contractor);
- A provision which either provides a date for practical completion, or how the date is to be determined;
- Conspicuous notice advising the building owner of their right to withdrawn from the contract under schedule section 35 (‘the cooling-off period’).
Level 2 – (Contract Price exceeds $20,000)
The Contract must be in written form, complete with date and signature by or on behalf of the parties to it. It must contain the following details:
- Names of all parties (inclusive of the building contractor as it appears on their contractors licence);
- Builders licence number;
- Description of the work to be completed;
- Any plans/specifications for the works, including all plans and specifications required for carrying out the work in compliance with any development approvals or similar authorisations that are required by law for carrying out the work;
- Contract price (or method for calculating it, including reasonable estimate by contractor);
- A provision that states the start date for the subject work at the building site, or how the date is to be determined;
- A provision which either provides a date for practical completion, or how the date is to be determined;
- A statement of each of the statutory warranties that apply to the subject work;
- Conspicuous notice advising the building owner of their right to withdrawn from the contract under schedule section 35 (‘the cooling-off period’).
Further, if the contract is a fixed price contract, it must be stated in a prominent position on the first page of the contract schedule. If it is not fixed, then the method for calculating it (including allowances) must be stated in the contract schedule.
Should the contract price be changed under a provision of the contract, then in a prominent position on the first page of the contract schedule a warning to that effect and an explanation of the effect of the provision allowing such change must be included.
It is important to ensure small details are correct, as in the event that a domestic building contract states a company name as the building contractor when an individual is actually the building contractor, it will not be compliant with regulations.
What else is required?
In addition to the actual contract, there are various documents that are required throughout the build and regulations attached to them, such as:
Copy Of Contract for Building Owner
A building contractor must give the building owner a readily legible, signed copy of the contract (inclusive of plans/specifications) within 5 business days after entering into the regulated contract.
Commencement Notice
Such notice applies to level 2 regulated contracts and requires that within 10 business days of starting the works at the building site, the building contractor must give the building owner a commencement notice signed by the contractor stating:
- The date the work started on site; and
- The date for practical completion.
Copies of Certificate of Inspection
If the building contractor is responsible for engaging a building certifier for the work under the regulated contract, then they must give the building owner a copy of each certificate of inspection issued by the building certifier for the subject work as soon as practicable after receiving the certificate.
Copy of Consumer Building Guide
Such guide applies to level 2 regulated contracts and requires that the building contractor must give the building owner a copy of the guide before the owner signs the contract, and may be given attached to or separately from the contract.
Compliance with all legal requirements is critical to ensuring that your building contract is enforceable and your rights protected. A failure to comply with many of the requirements under schedule 1B of the QBCC Act can result in significant monetary penalties and carry significant risk should a dispute arise between the contracting parties.
If you would like a review of your contract, or are part of a building contract dispute, contact the team at Klein Legal for a comprehensive review of your contract and for advice on consequences of any non-compliance.
This is general information only and does not constitute legal advice.
If you or someone you know would like more information or require advice about anything raised in this article, please contact us on (07) 5458 6855 or email mklein@kleinlegal.com.au.