Why your Building Contract could cost you thousands (and how to avoid it)
Written By Annelyse Stead | Australian Home Building & Renovation Contract Specialist | M. Construction Law | B.Construction ManagementYou've found your perfect builder. The quote looks good. Everything seems straightforward.
But here's what most first-time home builders don't realise: that building contract you're about to sign could be hiding costs and delays that won't show up until it's too late.
What if you could walk into your build with complete confidence, knowing exactly what you're committing to?
The hidden risks in your Building Contract
Most people treat their building contract like a formality. Sign here, pay the deposit, and construction begins.
But here's the reality: your building contract is the most important document in your entire build. It determines who pays for what, what happens when things go wrong, and whether you're protected if delays happen.
Without a proper Building Contract Review, you're essentially gambling with one of the biggest investments of your life.
28 building contract issues that could derail your build
After reviewing hundreds of building contracts across Australia, I've identified 28 common issues that catch homeowners off guard. Here's what you need to watch for:
Financial protections
1) Unfixed costs: Many contracts include "provisional sums" or "prime cost allowances" that provide variable allowances for certain items where the actual price is unknown at the time of entering the contract. These items can fluctuate in cost after the contract is signed. It’s important to be crystal clear about what's fixed price in your contract and what items are at risk of increasing during the build.
2) Payment Schedule: Does your payment schedule align with actual construction milestones? Is it clear exactly what work needs to be completed before each payment is made. Lookout for vauge descriptions and front-load payment structures to make sure your only paying for work that’s been completed.
3) Hidden Fees: Administrative fees, insurance fees, inspection fees—these "extras" can add $5,000-$15,000 to your build. A proper review identifies every fee before you commit.
4) Variation process: Without a clear change order process, every small modification becomes a negotiation. Make sure your contract specifies how changes are priced, approved, and documented.
Owner protections
5) Protections for termination: Do you know what you're entitled to if things go wrong? Make sure you’re across the process that your contract describes if for any reason either yourself or the Builder need to terminate the contract.
6) Penalties: What happens if you need to end the contract? Before signing it’s important you know the exit options available to you.
7) How are disputes solved: When disagreements arise (and they often do), how are they resolved?
8) Insurance: Have you asked for the right insurance to know your build is properly insured?
Quality of work
9) Preventing subsitutions: Some contracts that permit changes to the materials and colours used on your build. It’s important to be aware of how your contract specifies brands, models, and quality standards and checking there is control over the materials used.
10) Quality of work standard: What does "good workmanship" actually mean in your contract? What process can you follow if you notice something that needs to be fixed?
11) Subcontractors: Who's supervising the build of your home? If supervision and responbsibilities of management isn’t properly outlined, responsibilities become unclear and accountability becomes nearly impossible.
12) Warranties: Does your warranty cover structural defects? For how long? What's excluded?
Building period & avoiding delays
13) Project timeline: Is the Building timelines realistic? Who owns the delay if if there are weather and material delays?
14) Delay clauses: What happens when your build runs late? Contracts without clear delay processes cause real life consequances for Owners who are left to pay for rent and other costs if the Build isn delayed.
15) Criteria for completion:When is your home actually "complete"? It’s important you know the specific completion criteria for your build.
16) Defined milestones: Are project milestones clearly defined and measurable? Vague milestones can lead to payment disputes.
Protecting the design
17) Omissions in the drawings: Is every aspect of your build documented in the contract? Check what happens if there are missing details in the design.
18) Obligations of owners: Many contracts include homeowner obligations for things like land surveys and vehicle site access, utility connections, soil testing, ect. Know exactly what’s expected of you during the build before you sign.
19) Drawing versions: Does your contract reference specific plans, specifications, and selections? Check they are properly attached and referenced in the contract so there is no confusion about what revision the Builder should be constructing.
20) Special Conditions: Special conditions often override industry standard, it’s very important to review every single one carefully.
Compliance with Instrustry Standards
21) Building Code Compliance: Does your contract explicitly state that all work will comply with current building codes and standards? Or will recent changes be a variation?
22) Responsibility gaps: What exactly is your builder responsible for and what are you responsible for?
23) Payment milestones: Are your progress payments clear and aligned with industry best practices? Without proper safeguards, you could pay for work that hasn't been completed.
Managing common risks
24) Visiting the site: Can you inspect the work in progress? Take photos? Request changes? Know what access and rights you have during construction.
25) Weather & Supply Chain disrutions: COVID-19 and distrupting events have real impacts on build. Does your contract address these scenarios fairly?
26) Completion dates: Is there a fixed end date, or is it open-ended?
27) Know what’s in scope: Check that your contract includes all the critical documents like soil reports, engineering specifications, or council approvals. Make sure everything is included upfront so there is no confusion during the build.
28) Peace of mind: The most valuable benefit of knowing what’s in your contract? Confidence. Knowing you've had an expert review your contract means you can focus on the exciting parts of building - not worrying the contract!
The real cost of not reviewing your Building Contract
Here's what I've seen happen to homeowners who skip the contract review:
Budget blowouts of $30,000-$50,000 from hidden costs and unclear terms
Construction delays of 6-12 months with no recourse
Legal disputes costing $15,000-$40,000 to resolve
Compromised build quality because defect processes weren't locked in
Financial stress from paying for both rent and construction due to delays
The bottom line? Not reviewing your contract doesn't save you time or money- it costs you both, plus your peace of mind.
"The best time to fix contract problems is before you sign. The worst time is after construction begins."
Your building contract isn't just paperwork - it's your protection. Don't sign until you fully understand what you're committing to.
How to build your New Home with complete confidence
I've spent my career doing one thing for Aussies building and renovating: taking the stress and complexity out of building a new home.
My mission is simple - help first-time home builders understand exactly what's in their building contract before they sign, so they can build with confidence instead of anxiety.
Building Contract Health Check
If you want a personalised, independant review of your building contract at a fixed price, my Building Contract Health Checks are designed specifically to give you peace of mind from day 1 on your build.
Here's what you get:
A full review of your contract and special conditions (Checking EOTs/delays, variations, timing of notifications, progress payments)
Calculation of your liquidated damages rate
A ready-to-send email requesting the recommended changes from your builder
Follow-up support until you sign
I support clients across all Australian states and territories - including Victoria, ACT, Queensland, New South Wales, Tasmania, Western Australia, and the Northern Territory.
Who is this for?
You're a great fit for a Building Contract Health Check if you:
Want to dive into the details and truly understand your contract
Value education about what makes a strong, fair buidling contract
Want to know what to watch out for before problems arise
Prefer peace of mind that your building contract protects you
My goal is simple: I want you to start your build with complete confidence in your contract.
I’ll address all your questions - how to avoid delays, what red flags to watch for, how to keep costs within your original quote, and how to protect yourself if things don't go according to plan.
Thanks for reading, and I'll see you in my next post!
Annelyse
Construction Management | M. Construction Law
