There is no doubt that the great Australian dream of building your own home is a value which still exists in contemporary society.
Your own home, custom made to fit your lifestyle, equipped with everything you have ever dreamed of.
Although the final product is the dream, the process can be not so dreamy. The general building process can be very stressful, especially when you, the home owner, are forced to compromise your perfect, custom built dream home for mistakes which were completely avoidable.
Your dream home can be compromised if you are unaware of your rights as an owner. There are some important things to keep in mind as a home owner striving to move into their dream home without delay:
1. Pre Contractual negotiations with your builder:
Communication is essential in all parts of the build, including pre contractual negotiations. Some key points to keep in mind include;
Before engaging a builder:
– Look up the builder online for any reviews and obtain some recommendations from friends and family whom have already built;
-Ensure the builder you are wanting to engage is registered and has the required experience and knowledge to undertake your project within the time required; come to an agreement regarding who is to obtain certain permits, soil reports, planning permits and any other legal paperwork which may be required.
– Ensure that the plans you have are for working purposes and that all the details in the plans are detailed and that you are aware what will be included and excluded from the contract price with the builder.
Negotiation stage:
– Discuss possible disputes that may arise and ways in which they can be avoided; be on the same page as your builder and establish confidence and trust in one another.
– Take notes of key dates, completion, any anticipated delays and costs
– Have your builder acknowledge everything that was discussed and draft a rough pre contractual agreement and have it signed by yourself and the builder after checking its content with a building and construction lawyer to ensure that all that is contained therein complies with the relevant laws and that you are not signing away any of your rights.
– As the homeowner, the builder must provide you with a request for an extension of time to the completion date to avoid you charging liquidated damages for the delay in completion.
Keep in mind that some delays may actually be reasonable if caused by bad weather or important holidays like Christmas and others you may choose not to agree to.
Make sure you have noted liquidated damages that actually cover your rental per week and that are on the higher end to motivate the builder to finish your build on time
2. Recording, approving and signing off on any variations- but avoiding variations where possible:
It can be very difficult, even near impossible to pre determine the cost of every single item which will be used to create your dream home. Alternatively, you may change your mind and want different materials. Perhaps you want lighter coloured tiles, or the installation of a fire place. Despite that the contract has been drafted and signed, it is not too late to make changes, however variations will almost always cause a delay as there may be need for the amendment of plans or a wait for the ordering and delivery of the materials.
Variations to the contract are possible. Both home owner and builder can propose variations, but they MUST be approved by the owner and builder in writing and MOST IMPORTANTLY signed by both parties as evidence that the variation and costs associated with the variation have been approved. The variation then becomes a part of the main contract. We would advise that you avoid any variations where possible and make all your selections prior to obtaining your Building Contract since variations can considerably increase your contract price and this may not have been what you had budgeted for.
Whilst making variations to the contract is not out of the question and can definitely be done, they are likely to cause delays for a plethora of reasons. Try to make all selections at the required time to avoid any unnecessary delay, so that you can get into your new home faster.
3. Potential Defects and how to avoid them:
Defects are not uncommon and their repair can be very time consuming. Defects can be structural, such as a cracked slab or collapsing wall. Not all defects are visible, with some in areas not ever accessed by you, such as the roof. Defects can also be non-structural, such as the painting of the house.
A great way to avoid defective items in the first place is to engage a building consultant to carefully review each stage of the build. A building expert will assess the builder’s work and point out any items which require rectification so that they can be done ASAP.
4. Commencement and completion dates as per your contract:
Your building contract will outline specific dates for the commencement and completion of each stage, all up until the final stage of the build. This is not an estimate but a strict guideline which the builder must adhere to.
In a Master Builders Residential Building Contract the builder is usually required to commence works within ten days of the owner providing:
- All information, evidence and consents required to be given by the owner
- Satisfactory evidence of their capacity to pay the contract price
- All necessary building and/or planning approvals required
- Notice to the contractor from the lending body that works may commence (if a financial institution is providing loan money)
A signed copy of the Engineer Specification and confirmation, if required under the contract.
It is important to provide these documents on time so as not to cause any delays.
5. Potential extension of time claims:
Some delays cannot be avoided, however those who can should be avoided at all costs. Events which may be reason for an extension of time claim include:
– Variations (to allow time for amendment of plans, delivery of materials etc.. where necessary)
- Adverse weather events or “acts of god”
- Council works, such as road works which may prevent vehicles from entering your property
- Failure to provide necessary information
- Sub-contractors causing delay and not allowing the builder to do their job
- Possession issues
- Changes in statutory requirements
If you are unsure of whether or not your builder’s request for an extension of time is legitimate, consulting an experienced legal practitioner is your safest bet.
6. Liquidated Damages Clause:
Liquidated damages are a form of compensation for late performance of a particular good or service. In the event of unjustified delays, the liquidated damages clauses in your contract will entitle you to a cash payment from your builder, compensating for the lost time.
Liquidated damages are a fixed sum that accrues to the “injured party” as a means of compensation following a breach of a contract. Most commonly they occur as a result of late performance, such as the builder causing unreasonable delays. Liquidated damages can also be used for other breaches.
When dealing with liquidated damages clauses, it is important you consider whether the damages are a genuine, pre-agreed estimate (liquidated damages)?
– Genuine: the amount is reflective of the loss that would be suffered as a result of the breach.
- Estimate: this estimate is to be calculated at the time of contracting – thus, if no damage actually occurs following a breach, liquidated damages are still payable.
If you are unsure about any of the information outlined in this text, it is highly advised that you contact an experienced legal practitioner for advice specific to your situation.
For more information on this, call Boutique Lawyers for a FREE telephone or in office consultation on 1300 556 140 or alternatively visit our website at www.boutiquelawyers.com.au for more helpful tips to guide you through your build.
