Owner Builders and Contracts
I know we harp on about it, but as an owner builder, you have the same responsibilities and obligations as a registered builder.
This is true across all areas of owner building, including your responsibilities and obligations in respect to the relevant legislation that covers building contracts in your state and territory.
Queensland, through the QBCC, has possibly the most comprehensive range of standard contracts that may be downloaded free from their website and are available for use on all building projects including those of owner builders.
In this blog, I will discuss the legislative requirements as they apply to owner builders in Queensland, however, the general information is reasonably consistent across both New South Wales and Queensland. For the specific requirements that affect your project in each state and territory, owner builders should visit the website of their relevant governing authority.
All building works should be the subject of a contract, be it written or verbal. For works valued at over $3,300 in Queensland the works must be covered by a written contract.
The applicable legislation will outline the elements which are mandatory for a contract to be valid and the will specify the dollar amount that will require a written contract.
It is important to note that the dollar amount as specified includes the cost of labour and materials.
The QBCC and the relevant legislation, further provide information through fact sheets which outline the responsibilities of each party to a contract that covers domestic building works.
A good place for owner builders to start is the QBCC produced Consumer Building Guide. This document is a mandatory item to be provided to a client, (by the contractor), where the value of works is $20,000 or more.
The guide is to be signed as an acknowledgement that the contractor has provided the client information on the rights and responsibilities of each party. It includes important information on:
Cooling Off Periods
QBCC Licence Requirements
QLD Home Warranty Insurance
Deposit and Progress Payments
Building Approvals and Inspections
Dispute Prevention and Resolution
Extensions of Time
Practical Completion and Handover
Again, while there are differences across the states and territories, owner builders can get a good understanding of consumer law and protections as it applies in the building industry from this document.
The QBCC has made available to its contractors (including owner builders) a range of documents which if applied correctly, effectively and with a degree of discipline, form the basis of contract management for a small domestic construction works that would be typical of an owner builder project in any state or territory.
I would strongly recommend that our owner builder students visit the QBCC website and download each of those documents or forms which may be applicable to their site and works.
The documents include registers for project participants (contractors, suppliers, consultants etc), Prime Cost Schedules, and allows for the establishing of a relationship between the forms provided and other contract elements including working drawings or specifications.
Abacus Training are happy to discuss these valuable project tools and intend on developing a series of videos that show their correct use and application as they could relate to an owner builder project.
Any questions, drop me an email or leave a comment on this blog post.
Best Regards, and Happy Building,
Owner Builders need to be aware of their requirements and obligations when it comes to contracts.
Domestic building contracts are governed by the relevant state legislation and they do vary from jurisdiction to jurisdiction.
Our advice to our owner builder students is to always establish a contract for any works over a value of $1000.00. In some states, this is mandatory.
A contract does not need to be complex or wordy, but it must clearly detail the works to be carried out, the value of the contracted works and the terms of payment.
For minor works a hand written simple contract is enough to satisfy the requirements, but it must accurately represent the expectations of the client and the obligations of the provider.
Larger contracts may best be handled by using a readily available standard form such as those produced and offered by the Housing Industry of Australia (HIA) or similar industry groups.
Owner Builders will benefit from having a standard layout for all their contracted works which provide the opportunity to specify scope of works, deposits, progress claims, final payments and any retentions or warranties that apply.
Contracts may be developed from and reference the working drawings (approved plans), the specifications and any other associated tender documents.
Remember to be a valid contract that suits a typical owner builder project, there are certain elements that must be included. They must be signed by both parties (owner builder and the contractor) provide license and insurance details of the contractor and reference any certifications or inspections that apply to the works in respect to compliance. (eg waterproofing, electrical, plumbing etc)
We cover these elements in the owner builder course and the Abacus Owner Builder Study Guides.
Remember, we are here to assist and we have a range of resources available and accessible to all our owner builder students.
Rick Heaton is a Building and Construction Industry professional with formal tertiary qualifications in management and training.