What are the home building contract regulations in QLD?

A home building contract is one between an employer and a contractor to outline what’s expected from both parties when carrying out the completion of building work. This will often be referred to as the main contract, especially when you’re planning on bringing sub-contractors in as well. When planning a new build, it’s essential that you have an up-to-date and thorough home building contract to make sure everything is agreed upon before construction starts.

Contracts are often regulated to make sure that the conditions are fair and clear to everyone involved. Making sure your contracts are regulated can prevent disputes and unexpected liabilities, protect your interests, and avoid fraudulent activity. Many territories have their own set of rules set out regarding home building contract regulations, and today we’ll be exploring these in Queensland.

What is Domestic Building Work?

Domestic building work is any work done on your property with construction, renovations, improvements, or maintenance involved. A home is a residential premises, and this can include any part of a commercial building or industrial premises that’s used in a residential way. If you’re planning on building a new home, you’ll be planning for domestic building work.

In Queensland, domestic building work is regulated by the Queensland Building and Construction Commission (QBCC).

Legal Requirements for Building Contracts in QLD

The QBCC Act

The Queensland Building and Construction Commission (QBCC) Act has been put in place to regulate the building industry in a number of ways. Some of these include:

• Making sure proper standards are kept throughout the work
• Achieving a reasonable balance between the interests of both employers and contractors
• Offering remedies for defective building work
• Giving support, advice, and education to anyone undertaking building work

Key Terms in a Building Contract

There are certain terms your building contract should include to make sure both parties are protected should any issues arise in the future. These could include:

• Contract price: The QBCC recommends that any domestic building work priced over $3,300 will need a written contract drawn up beforehand.
• Retention and security: The total amount of retention and security should not be more than 5% of the contract price.
• Licences: Contractors that carry out building work must have the correct licensing before signing the contract.
• Cooling-off period: Homeowners can withdraw from a new home contract within a certain time frame after receiving the signed contract and documents.
• Consumer building guide: Contractors need to give homeowners a QBCC-approved consumer building guide before any contracts are signed.
• Commencement notice: This is given by the building contractor and should notify the homeowner within 10 business days of when work is about to begin.

Consumer Protections Under QLD

The QBCC Act can protect consumers in many different ways, such as:

• Making sure deposits are limited to 5% for work over $20,000, 10% between $3,300 and $19,999, and 20% for work valued at $3,300 or less.
• Keeping domestic building contracts up to date and ensuring that a signed and dated copy has been given to the homeowner within five business days of work commencing.
• Homeowners can also use QBCC’s free Early Dispute Resolution (EDR) service if they find themselves in a dispute with their contractor.

Queensland Home Warranty Scheme

As you can see, the QBCC Act protects homeowners in several ways, but one of the main ways is through the Queensland Home Warranty Scheme. This is a compulsory insurance scheme designed to protect from defective construction and incomplete work, making sure you don’t get left in the lurch should your building work not be done to the correct standard. This is required on work valued at over $3,300 and gives you up to six years of protection after the work has been finished.

Commercial Building Contracts

Similar to home building contracts, all commercial building work should also include a signed contract before commencing. This is true for all commercial building work between developers, builders, and subcontractors, along with an owner-building permit holder. You can learn more about commercial building contracts in Queensland here.

Choosing the Right Building Contractor

Choosing the right building contractor in the first place can save you a lot of time and hassle in the future. Contracts are put in place to protect you from subpar contractors, but if you choose the best one to begin with, you probably won’t have to invoke the contract at all! Make sure you shop around and look for contractors with:

• The most relevant experience
• The best reviews from previous employers
• Great communication
• Detailed and realistic estimates
• The correct licences

Working with a Building Contractor

Assessing Contractor Reputation and Reliability

Evaluating a contractor’s track record is crucial for a successful project, as previous customer experience can give you an insight into a contractor’s work ethic and customer satisfaction. Seeking personal references and conducting site visits can assess the quality of a contractor’s previous work, making sure you only shortlist the best options for your specific job.

Importance of Professional Review

Some people might be tempted to navigate domestic building contracts without professional advice, but that can lead to a number of risks in the long run. This opens up the possibilities of loopholes, missing vital details, and ambiguity in contracts that can lead to higher prices and longer work times.

Building Contractor Obligations

There are certain things a building contractor must do before commencing work, including giving you a copy of the QBCC consumer building guide before you sign the contract. This offers you general information about the domestic building work, including:

• Key building and contract issues
• How to avoid or handle disputes
• Common pitfalls

Building Contract Essentials

Timeframes and Project Schedules

One of the most important things to include in your contract is various timeframes. These include a cooling-off period, commencement notice, potential delays, extensions in time, and practical completion. You should also make sure you include provisions for the payment of damages if building works are not completed on time.

Standards and Specifications

No one wants to imagine their business work falling through or becoming problematic, but in case it should happen, it’s important to have certain standards and specifications included in your contract. These might include defects, contract termination, disputes, and liquidated damages. Standards-related terms are essential in a building contract because you need protection should the overall work not live up to your expectations.

Avoiding Disputes and Ensuring a Smooth Build

Common Mistakes to Avoid

There are several mistakes both contractors and homeowners make when entering contractual agreements, including:

• Ignoring the correct licences and safety protocols
• Forgetting to include quality control in contracts
• Inaccurate budgeting and planning
• Skipping the contract altogether
• Not utilising professional advice on contracts
• Misunderstanding costs
• Forgetting the little things
• Setting unrealistic or ambiguous completion dates

Strategies for Resolving Disputes

Disputes can arise from poor planning and contracts. They’re unfortunate, and it’s vital you know how to deal with them as soon as they crop up. Here’s some advice the QBCC has for homeowners:

• Understand the rights and responsibilities of both you and your contractor as detailed in your contract
• Communicate with your contractor through regular meetings
• Take the time to understand the building process and its practices, and be realistic with your expectations
• Make sure your contractor has a current QBCC license
• Check your contract clearly outlines the schedule of work, total price, payment details, and anything else the dispute might include
• Pay attention to details and keep accurate records to use in the future

Development Approvals

Developmental approval is needed before commencing your development, authorising ‘accessible development’ to take place. Your local authority will issue this, with or without conditions that must be met.

There are four steps in the development approval process:

1. Determining what type of development you’re planning on
2. Figuring out what type of assessment is required
3. Completing the appropriate application submit to your Local Government Authority (LGA)
4. Receiving your decision notice from the LGA

You’ll need development approvals on all home building plans in Queensland, including new builds, and you can read more about them here.

Building Permits

A building permit is required before construction can begin on most types of domestic building work, and you’ll need to apply for this through your local government or building certifier.

Some types of building work won’t need building permits, such as:

• If the work is considered accepted development and self-accessible, such as a small tool shed or a one-metre high retaining wall
• If the accepted development owner doesn’t need to meet minimum building standards, such as minor attachments fixed to a building, or construction of playground equipment no more than three metres high

Financial Aspects of Building Contracts

Progress Payments

In Queensland, the standard progress payment schedule often follows the Housing Industry Association (HIA) guidelines. This framework offers a balanced approach that can hopefully protect both homeowners and builders throughout the construction process. The framework means you’ll pay certain amounts throughout the entire process of creating your new build, so you won’t automatically lose all of your money should something go wrong.

Here are some common payment stages that contractors and homeowners can agree on:

• Deposit: This is usually the first payment and 5% of the total contract value
• Base stage: Typically around 10% of the contract price
• Frame stage: This will be paid when the frame has been erected and approved by the building inspector, and is usually 15% of the total value
• Enclosed stage: After the roof is on, windows are placed, and external walls are completed, you’ll pay around 35% of the overall price
• Fixing stage: This is usually around 20% of the total value and covers things like internal fittings and fixtures, along with plasterwork, internal doors, and cabinetry
• Practical completion: This is the final payment and is usually 15% of the final price, and is made after the building has been completed

Financial Protections Against Insolvency

Insolvency is a financial state where a business can’t pay its debts, and it’s the last thing you want to hear about your contractor when they’re halfway finished with your construction. Don’t worry, though; this is where the Queensland Home Warranty Insurance comes in. This should cover you if your contractor fails to complete or rectify defects in their work up to $200,000.

To qualify for this, you must meet the criteria the QBCC sets out, which are:

• The contract needs to be for a fixed price
• The contractor is in liquidation and their licence has been cancelled
• The contract ended within two years to the day work began
• You need to have lodged a complaint to the QBCC within three months of the date your contract ended

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