(VIC) About to sign a HIA building contract with a builder

Hello all.

I am about to sign a building contract with a builder. I was informed that this will be a standard builder contract developed by HIA.

Is there any clauses that I should be watching out for?

Thank you.

 

Liquidated damages - penalty they pay you if late. Should cover your loss of rent.

 

Anything else?

And does the liquidated damages works both ways or just the builder?

 

Liquidated damages as per above - insist on a reasonable amount, PC allowances and payment schedule in current economic environment spring to mind. Builders can/tend to overrun on items that are PC allowances rather than fixed price.

 

what is PC allowances?

 

PC - prime cost. Perhaps a PC allowance of $3,000 for appliance etc.

 

are prime costs associated to selecting extra furnitures, appliances after signing a contract? i don't really understand why this is an issue because if we select additional stuff after signing, can't we just pay it out of our own pocket?

 

No, for delay claims or extension of time, you pay.

There will be a schedule of allowances eg Wall Tiles $X/m², landscaping $X/m², pool $X, flooring or carpet $X/m² etc.

 

Mine is just as follows?

 

is there an ideal or fair % that should be allocated or by individual line items?

 

what will be a reasonable amount of compensation to ask? the builder has put a flat $250 per week?

 

There should be line items for each of the allowances unless they have already been specified and included in the builder's price eg Miele Underbench oven/cooktop combo model no. ABC123, 300x600mm gloss porcellain wall tiles, polyurethane kitchen 24 cabinets etc.

 

It is liquidated and ascertained damages - should equate to the rent or other justifiable expenses that you would otherwise have to pay sue to the delay in handover (If you were living in the house you would still be paying interest/rates/insurance/services etc but not rent etc on the temporary accommodation).

 

This makes sense. What are the chances that the builder accepts it?

And can it backfire on me if I were to ask for a higher compensation?

 

Yes it can but get them to justify why it is so low.

 

do you know how it can backfire on me for asking a higher compensation?

 

If the construction programme is too short, they will increase the price to cover the LD's.

 

can you elaborate more about the construction program? Is this the building period? My contract says building period is 270 days. Is this too long or too short?

apologies but i am not familiar with a building contract at all - its my first time.

What is an LD?

 

On another matter, these are the other details in my contract. Should i be questioning or asking the builder to change anything?

1. Percentage if contract ended - 25%
2. Number of days to make progress payments after stage completed and notice received - 7 days
3. Agreed interest for late progress payments - 21% per annum
4. Percentage applicable to extra work - 25%
5. Agreed damages for late completion of building works - $250 per week
6. Agreed damages for delays - $250 per week (Scott No Mates mentioned this is too low)
7. Special condition of maximum of 1 hour inspection available for completion of each stage

 

9 months to build a house or is it a 3 townhouses? Why is it any more than 6 months? Does it include a pool or difficult terrain (steep site), basement/extensive earthworks?

Get clarification

Pretty standard

2-3% maximum above CBA overdraft rate

Excessive

- see comment below, this is your costs not just the builder's nominal assessment

- Is the builder paying you for delays or is this what they are charging you, it doesn't appear to be the LDs

You need a minimum of 1 hour plus access for any of your own inspectors/bank/qs etc

You should get independent legal advice before entering into a contract.