We are in discussion with our builder to finalize the building contract. We have supplied the architects and engineers drawings as well as specificat. ions, for those experienced in looking at building contracts, what should we be looking out for. Our contract will be specifying a retention fee as required by our bank. How common is this?
Hi Scott, I am somewhat confused. If I am retaining money from the contract, isnt that the same as the bank guarantee. What is the difference? Why would the bank guarantee be better?
A cash retention is calculated at each progress claim, held in a (separate) bank account, interest paid by bank is to be considered, tax payable on the interest etc CD sitting on 2 bg issued prior to the first day of construction, so you're sitting on 5% from day 1 which lessens the blow of any upfront loading of progress claims.
Ensure everything is included or you are aware and factored for something that is not included such has fencing, retaining walls, landscaping, driveway, services connections, sarking, etc. Include penalties if the builder goes beyond the agreed construction time. Make sure you include all variations and inclusions upfront - if you do this post contract it will be expensive. Make sure the contract is not front loaded (progress payments) however now days banks have specific guidelines re progress payment claims which protects you.
Make sure absolutely everything agreed, no matter how minor, is included in the contract. Regardless of what is said or you think promised, what you will end up with is exactly what is written into the contract. The fee for a solicitor to check that you fully understand everything may be money well spent. Marg
Some things can't be determined beforehand eg latent conditions (so schedule of rates for excavation and fill should be provided).
