Jun

26

Building a House

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A STRESSFUL EXPERIENCE

Building or renovating a house can often be one of the more stressful experiences in one’s life. To ensure that your rights are protected to the fullest extent it is important to consult your lawyer prior to engaging a builder or entering into a contract with a builder.

Our experience is that a large number of people entering into contracts with builders are not familiar with the terms of the contract, and therefore are not familiar with their rights and obligations under the contract.

TYPES OF CONTRACTS

There are a number of different types of building contracts published by various authorities such as the Housing Industry Association (HIA), Queensland Building Services Authority (QBSA) and Queensland Master Building Association (QMBA).

The obligations on a builder are largely governed by the Queensland Building Services Authority Act and the Domestic Building Contracts Act.

HOW TO CALCULATE THE COST OF CONSTRUCTION

There are a number of different ways that the costs are calculated. These may include:

  1. A lump sum or fixed price contract – this stipulates that the builder must complete the construction in accordance with the plans and specifications to a fixed price;
  2. Cost plus contract – this requires the builder to complete construction in accordance with the plans and specifications at the builders cost plus a margin to be applied by the builder;
  3. Contract price including provisional sum and prime cost items – this allows some flexibility in the price on the part of the builder as the cost of a number of items may not be able to be accurately ascertained at the time of contract.

The third option usually creates the most fertile ground for dispute.

VARIATIONS TO THE CONTRACT

Another area where costs can blow out in building contracts are variations. The governing legislation and the contract require that before any variations are carried out by a builder the variation must be in writing and signed by both parties. This variation should include the work being attended to and the cost of that work. A builder may have difficulty in recovering money for that variation in some circumstances where the requirements for the variation documentation are not met.

SEEK ADVICE BEFORE YOU SIGN A CONTRACT

To reduce the risk of incurring further expense through protracted and unnecessary litigation it is important to seek comprehensive and experienced legal advice before entering into any building contract. This will ensure you’re fully aware of your rights and obligations under the contract as well as the obligations of the builder. Being aware of your rights and obligations could save you large sums of money that may otherwise be lost.

Byron Cannon @  Ferguson Cannon is a member of the Housing Industry Association and is able to provide advice on any building related matters to both consumers and builders.

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Category: Business & Corporate Services, Construction Law, Contract Law, Conveyancing, Fact Finders, General, Property Development

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