Hi Folks,
Planning to sign my first build contract with a volume builder in VIC and planning to hire an inspector for various stages.
Any suggestions/advice that I should keep in mind, while reviewing contract, to avoid any future variations causing significant increases ?
In terms of contract wordings what are the things I can negotiate on? Any other tips/suggestion ?
TIA
Cheers
As someone who has been though this and didn't get a lawyer, this is the most important thing, spend that money on a good lawyer. Also, inspect whenever possible.
Double OzB points if you get that advice after you sign the contract.
But seriously, yes, get a lawyer. This is most likely going to be single most "risky" contract you'll ever enter into (far more so than buying an established property).
Don't try to be tight now and then complain later. Don't assume the other party is acting in your interests. Don't assume everything is "as advertised".
Also, understand that there will almost certainly be blowouts in terms of cost and or time, both for entirely legitimate reasons that you won't necessarily have any recourse over. Plan accordingly.
"HIA has put together a fact sheet about contracts and important clauses to assist in dealing with situations arising from cost increases".
This seems to be a document for the builder itself, not the buyer. But you should read it anyway so you understand the terminology and clauses.
https://hia.com.au/resources-and-advice/covid-19/managing-yo…
You can also look in their resources section to find other related documents.
Q First Time Signing Home Build Contract. Advice ?
A get a lawyer. not conveyancers unless you want to regret later on…
Please read your contract carefully and don't post back in 9 months and with a new thread "My Builder wants more money, what do I do? LEL."
Good luck.
100% get a competent lawyer to review and give you a summary list of key clauses to be aware. Most builders have words in there that factor in rise in material/labour costs are passed on to you. So many people aren't aware of this as don't read contract properly/don't understand it.
Put in a finish date with penalties for going over that set finish date.
They'll never accept conditions with penalties going over a specific date. Too many variables in a build normally (weather being a huge one), but now with supply issues and risks associated with the tradespeople themselves (COVID restrictions etc), no way any builder would agree to it… let alone a mass market produced display home builder.
Mine had it, with adverse weather being a reason for delay. Each time adverse weather was there, builder had to advise me.
They have this in there by default, at least mine did, but the timeframe is inflated to give them wiggle room and they wouldn't increase the value of the penalty even though the opportunity cost to us would have been higher.
Pray they don't go bust
Any suggestions/advice that I should keep in mind…..to avoid any future variations causing significant increases
Lol. There is 99.999999% guaranteed to be a clause stating the builder CAN do this.
They won't negotiate that.
See a lawyer and/or buy an existing build.
Agreed
I've been lurking in some volume builder discussion facebook groups and I don't think I've come across any volume builders that don't have this clause in their contract
Do your due diligence, don't make assumptions. If it's not written in the contract, it means nothing. If you don't understand, ask your lawyer/conveyance to clarify. Better to be look stupid before signing anything, than be stupid after signing.
Yeah get a lawyer instead of a conveyancer. When I did a build, having a lawyer go through the contact was a good comfort.
Get a lawyer. As it's a volume builder they will likely not negotiate on any of the terms in the standard contract as it's so heavily swayed towards the builder but you can always try. Make sure you have told your builder you plan on having inspections at each stage (the builder will likely charge you more to have someone accompany the inspector and to read their reports). Prepare yourself for delays, cost overruns and disappointment.
The builder (and especially the random tradies they hire) does not care about your home as much as you do.
Triple check everything on the contract is what you wanted, I've often seen things being agreed to either verbally or email before the building contract then it being left out on the contract. Then if it's missing in the build you have no leg to stand on because it wasn't in the contract.
Good idea getting an inspector, make sure it's for all stages and you don't make payment until issues are sorted.
As others have mentioned having a solictor/lawyer look at the contract would be a good idea, especially with the costs of everything going up and the potential for extra costs to be passed onto you.
And always ask as many questions as you can! Don't ever assume everything is done correctly.
Being in the industry and deal with builders constantly and the shit i see everyday. Yes lawyer please.
Make sure you get it in the contract for "inspections" by say a building engineer - we did. The other contract clause to have is the "right of access" - again we did!.
I was a property valuer in a former role… completed progress inspections for many a build.
The crap builders try and swing to have the funds released earlier than what the completed works dictates is never ending. Get a lawyer who specialises in construction… not just any lawyer who dabbles in it. You want someone who reads construction contracts every day, not one that 'thinks that sounds about right'.
If financing (most people are when building), the bank will arrange progress inspections before releasing money at each stage (and bill you of course!), but don't just rely on those 3 or 4 inspections. Be involved in the build- without being a pain in the bum on the job site every day.
Variations can and will happen, but only when the contract allows it. This is where a lawyer BEFORE you sign will potentially save you thousands.
Some builders will also forbid site access (under the guise of safety, or will at minimum only under appointment and only in their presence). My strongest suggestion is to still gain access to the site (after hours if you can't get in during the day), to keep an eye on the build. That is of course, if you know what you're looking at. If not, arrange your own building inspector. They can be costly, but again if you have no idea what you are looking at having a knowledgeable watch the footings go down, or be present for plumbing works prior to sheeting etc. is invaluable.
Also look carefully at what variation charges the builder charges you when you would like to alter something. Some do it at cost, some will charge you $1000 per variation (to greatly discourage it).
Step 1) Get a good property lawyer.
Step 2) Google heavily the builder you're re looking to build with. Reviews sites, construction forums, news articles etc. See what the common issues are, if any.
Step 3) Always budget for more than what the contract says. There WILL be variations that you'll make. My last build had 43… but my builder only charged for the actual cost of the variation quote (which was reasonable). BTW, some builders will charge ridiculous amounts on variations… again, to discourage them and/or to scalp the customer.
Building a home is one of the most stressful things you'll do, but one of the most satisfying when it all comes together at the end.
Good luck with it all!
UFO, you are exactly on the mark, we had a great builder and only had 1 paid variation - caused by us!, ply floors and not particle board - we were having much rain at the time of build!. We also had full access to the build 24/7 and no notice required - the safety issue is there but often used to deny access.
I did indeed pick up a few issues during the build, and the builder was very happy I did for ALL of us! ….. they were a long term Italian background family builder and they were superb!. Building is stressful, and never expect to have the house finished on time - you are warned!!. Ours was held up by special order windows, around 10 weeks extra, but we were never hit with Extras - scaffold, site toilets etc. There are some great builders out there but there are also many that are very average.
GOOD LUCK.
• double check the payment schedule, make sure that it does not deviate from a standard payment schedule (e.g. the one from HIA)
• if you have an existing house to demolish, make sure that will meet the anticipated build date per contract, otherwise you can get in trouble
• check any clauses that allow your builder to make changes to specifications, sometimes you can negotiate around the wording
Get a lawyer to make sure that the most relevant stuff is explained to you (when a price contract can increase, etc).
Keep in mind that even a good contract does not prevent your builder from being an (profanity). Some of them don't care any can do price increases even when that is not allowed per contract.
what stage is your land ( is it titled) and building process are you at, all drawings/colours/electricals have been finalised? Check your rights for cooling off period.
Some VB are asking for client to sign contracts before even doing their colour selections.
Understand what every finish is, what every tap is, etc. Often with these builds there is a base level of finish and you are charged extra if it varies from it. We didn’t go with a lawyer but there were some discussions back and forth about variations. We made sure we allowed extra money to cover different finishes we wanted. The earlier you set things in the cheaper it, normally, is. We had a good builder but it was still a bit fraught. Understand things will get stressful.
Best of luck.
Domestic building contracts are usually not negotiable. I tried to negotiate a few terms with builders (mostly to do with independent inspections at each stage before payment is made) and they all told me to piss off. None are desperate for work and the contracts are skewed in their favour. Too bad unfortunately.
Which builder are you going with OP?
Use a solicitor that does conveyancing. Don't use just a conveyancer.
Get 2 independent surveyors/inspectors. Do not rely on one that the builder provides or suggests.
The surveyor ensures that everything is done to plan and properly.
Good idea to get a 3rd independent inspector to inspect that independent inspector 2 is inspecting independent inspector 1's work sufficiently.
But that's provided you trust independent inspector 3, otherwise you have a bigger issue entirely.
I'm guessing you're signing before you've done all your selections and upgrades.
Make sure you've allowed yourself a large buffer to add those upgrades in! Maybe 30-40% over the base price. And allow for site costs too.
Get a lawyer to advise you on the contract.
That is all.