New home building contracts: here's what to review
Written By Annelyse Stead | Australian Home Building & Renovation Contract Specialist | M. Construction Law | B.Construction ManagementYou've been handed a 41-page building contract. Now what?
Most homeowners look at their building contract and think, "This feels like overkill." All you really want is to get into your new home on time and within budget so your family can enjoy Christmas around that Pinterest-perfect dining table you've dreamed about for years.
But here's the thing: skipping the step of thoroughly reading and understanding your building contract often leads to nightmares down the road. Delays. Unexpected costs. Disputes over simple things that a well-reviewed contract should prevent from happening.
As someone who's probably more enthusiastic about building contracts than anyone you've ever met, I can tell you they're actually your best protection. And you don't need to understand every word—you just need to know which sections matter most.
Why most building contracts are solid (except where they're not)
The standard sections of a building contract, like those found in Australian contracts, are usually solid. They provide good protections for both you and your builder.
However, it's those parts of the contract that you and your builder manually fill out where things can get tricky. This is where you need an expert eye to ensure everything is in order.
Here are the six critical areas you should pay particular attention to before signing:
1. Building permits
The most common cause of delay on new home builds? Building permits.
If your contract doesn't clearly state who is responsible for obtaining permits and when they need to be in place, your build could be delayed right from the start.
What to check:
Who handles permit applications—you or your builder?
When permits need to be secured
Whether all timeframes are realistic
Make sure your contract specifies exactly who handles permits and that all timeframes align with local council processing times.
2. Progress payments
The progress payment section outlines when payments are due and how much. The key is to ensure there's no vagueness—you should know exactly how much work needs to be done before a payment is made.
What to look for:
Clear descriptions of what work must be completed for each payment stage
The exact dollar amount or percentage due at each stage
The process for making payments
I always recommend agreeing with your builder to inspect the build progress before each payment claim. (Some banks require this already!)
3. Special conditions and exclusions
Special conditions and excluded items are where things get specific. This section clarifies what's included and excluded from your project.
Make sure you're comfortable with everything here, and that it doesn't raise any new questions or create budget surprises down the track.
4. Timeline and milestones
When does building start? When does it finish? What triggers each milestone, and what do you need to provide as the homeowner?
Building a home is not a hands off experience. You'll have tasks to complete throughout the build, so understanding what's required of you before work starts will help avoid unnecessary delays.
Key questions to answer:
What is the start date, and what needs to happen before work begins?
What is the completion date?
What selections or approvals do you need to provide, and by when?
What happens if you miss your deadlines?
5. Provisional sum and prime cost items
Provisional sums are allowances set for certain items where exact costs are uncertain at the time of signing. Prime cost items are similar, but they're specifically for materials and finishes selections like tapware, carpet, and joinery.
Here's what catches people out: if you choose items that exceed the allowance, you'll pay the difference. If you choose items under the allowance, you might not get that money back (depending on your contract terms).
Make sure you understand:
How provisional sums and PC items are budgeted
The approval process for variations
How they fit into your overall project cost
You can be strategic with how these are budgeted, so it's worth getting clarity upfront.
6. Liquidated damages
Finally, make sure the contract clearly outlines what happens if the builder is late. Liquidated damages specify what your builder will owe you if the build takes longer than stated, assuming the delay is their fault.
This clause protects you from financial loss due to delays—like paying rent while waiting for your home to be finished, or losing rental income if it's an investment property.
Check that:
The liquidated damages clause exists
The daily or weekly rate is specified
The conditions that trigger this clause are clear
Don't navigate your building contract alone
If reading this has sent you into overwhelm territory, don't worry—that's where I come in.
I'd love to help you review your building contract, give you peace of mind, and ensure everything is set for the best build of your life.
Ready to nail your new home build?
Building contract support that uncomplicates navigating a new home build.
Nail down the details of your building contract.
In just minutes, a Building Contract Health Check will provide the clarity you need to simplify your new home build. I dive deep into the details of your building contract and find solutions for issues before they happen.
Whether you need to prevent issues or solve something that's already happened, I'll get to the bottom of exactly how to solve it with your building contract.
Thanks for reading, and catch you in the next post 😊
Annelyse
Construction Management | M. Construction Law
