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 The importance of a building contract

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By Real People at 21 Dec 2017, 10:21 AM

 

To avoid any disappointments with the building of your new house it is important to have a valid legally binding building contract in place between you and your builder.

Be sure that your contract includes the following:

Requirements

  • According to the National Home Builders Registration Council (NHBRC), you need to have a written agreement between you and your chosen builder/contractor
  • This ensures that you are protected by the NHBRC if the builder does not build your house according to the agreed plan
  • The document should include the following details:
    • signatures of the contractor and employer (yourself)
    • all the materials that will be used during the construction
    • the building plans as approved by the local council / municipality
    • the budget and how much has been delegated to each section of the construction
  • According to the Housing Consumers Protection Act, your builder must enrol your project for a Standard Home Warranty which you, the employer can use against the builder if in breach of contract/agreement

Type of Agreement

  • The agreement that is required during a home renovation or construction project is a construction contract.
  • A standard building contract template that covers all the necessary building work and services will be created by your contractor
  • The contractual agreement must be in writing and include both signatures
  • Carefully read any contract your builder gives you before signing it. If you do not fully understand something, ask the builder to explain it to you, or seek the assistance of a lawyer
  • Ensure that the information provided and the details of materials, measurements, fittings, and work schedule meet your requirements

Content of Building Contract

  • Acceptance of contract – This section should include a written document detailing the names of the involved parties, their individual responsibilities as well as acceptance of the project
  • Pricing – Include details of the payment schedule, the amounts allocated to each section of the project, and all labour costs
  • Scope of work – The work schedule describes the supplies, services, engineering and construction of the project
  • Site information – Images and details of the property should be included, as well as the building plan and the property boarder within which the builder must work

Common Blunders

  • Avoid contracting the builder on an upfront lump-sum basis. Rather schedule and sign-off payment once each section of the project has been completed to standard
  • Check the builder’s registration with the National Home Builders Registration Council and ensure that you follow up on any references that have been provided
  • Tip: Do not agree to a verbal contract!
  • Ensure that you and the builder have copies of the written agreement and legal contract

 

Sources: NHBRC