A residential building contract is probably the biggest contract you will ever sign, and most people sign it in the builder’s office in about eight minutes. Almost every building dispute we see traces back to something that should have been picked up on signing day. Here are the twelve things to check.
1. Is the contract price actually fixed?
Look for the words “fixed price” or “lump sum” versus “cost plus”. Then look for the rise and fall clause. Some contracts allow the builder to pass on increases in material costs. After the last few years, that clause matters. If it is there, negotiate a cap or delete it.
2. Prime cost and provisional sum items
These are allowances for things not yet chosen (tiles, tapware, site works). Builders sometimes set them unrealistically low to make the headline price look good. Check every PC and PS figure against real-world pricing. Anything under-allowed becomes a “variation” you pay for later, usually with a margin on top.
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3. The deposit
State law caps deposits. New South Wales: 10% (Home Building Act 1989, section 8). Victoria: 5% for contracts over $20,000, 10% under (Domestic Building Contracts Act 1995, section 11). Queensland: 5% for contracts over $20,000, 10% under, or 20% where most of the work is done off site (QBCC Act 1991, Schedule 1B, section 33). If the builder wants more, that is a red flag and it is illegal.
4. Home warranty insurance
Do not pay a cent until you have the certificate. New South Wales: HBCF cover is required for work over $20,000 and must be attached before deposit. Victoria: Domestic Building Insurance for work over $16,000. Queensland: the Home Warranty Scheme premium must be paid to the QBCC. Western Australia: home indemnity insurance for work over $20,000. No certificate, no contract.
5. Commencement and completion dates
The contract must state a start date and either a finish date or a number of days to complete. Vague wording like “as soon as practicable” is a problem. Check how the builder can extend time and whether they have to notify you in writing within a set number of days after a delay.
6. Liquidated damages
This is what the builder pays you per week if they run late. Many builder-prepared contracts set it at $1 or leave it blank. A realistic figure is your rent or interest cost per week. Negotiate it before signing; you cannot add it later.
7. The variations clause
Confirm that variations must be in writing, signed by you, and priced before the work starts. That is what the law requires anyway, but the contract should not try to water it down with “deemed acceptance” clauses.
8. Progress payment schedule
Payments should be tied to completed stages (base, frame, lock-up, fixing, practical completion), not to dates. Check the percentages. Queensland and Victoria have legislated stage payment structures for certain contracts. A schedule that is front-loaded means you are paying for work not yet done.
9. Cooling-off period
New South Wales, Victoria and Queensland give you five business days to withdraw after signing (with a small penalty in some states). The contract must tell you this. If it does not, the builder may be in breach before work even starts.
10. Defects liability period
How long after handover does the builder have to come back and fix things? Thirteen weeks is common in HIA contracts; some are longer. This is on top of the statutory warranties, not instead of them.
11. Retention
Can you hold back a small percentage of the final payment until defects are fixed? Standard contracts often do not allow it for residential work, but you can negotiate it in. Even 2.5% gives you leverage at handover.
12. Dispute resolution and termination
Read what happens if things go wrong. Some contracts require mediation before you can go to the tribunal. Check the builder’s rights to suspend and terminate and make sure they mirror yours. Watch for clauses that let the builder terminate for late payment after only a few days.
Also check the basics
- The builder’s licence number is on the contract and matches the regulator’s register.
- The contracting entity is the licensed entity, not a related shelf company.
- Plans and specifications are attached, initialled, and match what you were quoted.
- Every special condition is in writing. Verbal promises are worth nothing after signing.
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What does the contract review report cover?
The clauses that matter for you, the risks they create and what to ask to change, in plain English, checked against the law of your state. It is a document review, not legal advice.