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As you have no doubt heard through the media, a growing number of building companies have collapsed and gone into liquidation recently affecting a significant number of homeowners. The great Australian dream was shattered with partly finished homes and homeowners out of pocket for thousands of dollars.

So, what do you need to know if you are thinking about building or renovating?

Below are some things that you should keep in mind to safeguard your interest before engaging a builder:

Avoid issues with builders

Understanding your rights as a consumer and the builder’s responsibilities is the key. You are responsible for paying what you contracted, and the builder is responsible for building your home according to the contract and approved plan. Make sure there is a contract in place, and if you are given one, get advice on it before signing.

Use a licensed builder

You should only engage a builder with a valid Building Work Contractor’s Licence, and the same should apply to the supervisor and any subcontractors. Doing a licence check on a builder before engaging them is quick, easy, free, and can be done at https://www.sa.gov.au/topics/business-and-trade/licensing/licence-check. This quick check could save you a lot of pain in the long term.

Contract and variations

Did you know that any building work that costs $12,000 or more is required to have a written contract? The contract must clearly state the agreed terms, the name and licence of the builder, and must be signed by you and the builder. Make sure you get advice on any contract given to you before signing to ensure you understand it and that it protects you.

Need a variation after the contract is signed? No problem. Firstly, ensure you and the builder have agreed to the variation. Then, simply record the variation in writing (what is to be done and supplied and for how much) and include it as an addendum to the building contract.

Progress payments

It is a common practice in the building industry for a builder to request progress payment during the course of work being undertaken. It means you will only have to pay when the work is complete and ready for the next stage. You, as a consumer, should never pay for work in advance. Ensure the stages, and the work to be completed by each stage, are clear in any contract as this will trigger the payment by you for that section of the work once completed.

Deposits

You should only be paying a maximum of $1,000 as a deposit for building work that costs between $12,000 and $20,000. Anything over $20,000 is 5% of the total cost.

Building indemnity insurance

Make sure your building work is approved by a local council and has building indemnity insurance that protects you in the event the builder disappears or becomes bankrupt.

Warranties

You are covered under the Statutory Warranties that allow you to lodge an action for breach of warranties against the builder within five years from the date of completion and ten years for any defective work that fails to comply with the Building Code.

Make sure you understand what you are signing when engaging a builder and get contracts reviewed before signing. If you are having problems that you cannot resolve with the builder, then call us to find out about your rights as a consumer and what steps are available to you to resolve the issue. There are several options available to you before a court dispute is required.

While sometimes things go smoothly, often building projects don’t, so ensuring you are properly protected if this happens is critical.

If you need any assistance with contract reviews or disputes with builders, please call the professional team at Clarke Hemmerling Lawyers for a no-obligation discussion on 08 8333 2130.

We have lawyers who specialise in Construction Law and can help you with your specific needs.

Clarke Hemmerling Lawyers. Specialists in Building and Construction Law.

This blog post does not constitute legal advice and should not be relied upon as such. It is a general commentary on matters that may be of interest to you.  Formal legal or other professional advice should be sought before acting or relying on any matter arising from this communication.