Building Contracts Update

In this article, I want to share some of the recent special conditions that we have seen in building contracts.

Over the last year or two the rapid rise in building costs seems to have dissipated.? As a result, we are seeing fewer special conditions inserted into building contracts that allow the builder to increase the contract price in a range of circumstances.

I am also encountering fewer instances of owners being forced to agree to ex gratia payments outside the terms of the contract.

However, builders are still going out of business fairly regularly and we continue to see outrageous special conditions inserted into building contracts.

Building Surveyors

We are continuing to see special conditions that strongly discourage owners from appointing independent building surveyors.? We covered this in more detail in a previous article that you can access here.

The consequences for wanting someone independent to inspect the builder’s work include:

·?????? Removing your right to also have a building inspection done on completion;

·?????? Making you pay if you want your own surveyor – whilst the builder will pay if you go with their suggestion;

·?????? Adding substantial extra time to the build, delaying the completion date; and

·?????? Requiring the independent surveyor to provide an extensive range of warranties.

The law was changed to allow independent building surveyors – and now the builders are trying to reverse this.

Near Enough is Good Enough

Perhaps the most amusing special condition I have seen over the past three months was one that specified that progress claims could be made when the stage was 95% complete!

I’m not sure that this would be acceptable to banks and construction funders for a start?

However, this near enough is good enough isn’t an attitude I want to see in a builder that I am paying hundreds of thousands of dollars to build a home for my family – or for anyone else’s family for that matter.

Heat Clauses

In a recent NSW residential contract, I saw a special condition that specifically allowed for work to stop if the temperature exceeded 35 degrees Celsius.

For the record, there is already a provision in the standard building contracts that allows time for adverse weather conditions.? I don’t think too many would argue it would be unreasonable for many trades to continue in direct sun in those conditions.

Whilst the specific drafting of the clause was cause for concern, this is another case of a builder inserting a special condition into a contract – because they don’t understand how favourable the building contract already is!

The Need for Advice

Owners need to get advice before they sign building contracts!

Builders are familiar with these contracts and work with them regularly.

The average owner might sign one building contract in a decade.

Lewis O’Brien & Associates offers a range of services for those about to sign a building contract:

·?????? Click here to contact us and arrange a fixed-price building contract review that includes a written review, our recommended special conditions and a follow-up Zoom or phone consultation with me; or

·?????? You can purchase a copy of our recommended special conditions from our website – just click here.

If you aren’t about to sign a building contract but know someone who is, please share this article with them.

June 2024