Tag: Specification

Your New House Contract

The most important document you sign is the ‘New Home Contract’.

This document describes the house to be constructed and provides remedies to deal with any defaults by the builder or the house owner.

The more you understand the contents of this document the better you can sleep at night.

This post will briefly describe the contents of a typical ‘New House Contract’ . Other posts go into more detail about the individual parts of the contract.

Bound into a single package you should see.

  • A New Homes Standard Contract. This is most likely to be either; a Housing Industry Association (HIA) Contract or a Master Builders Association Contract. In my opinion both these documents are reasonably fair to the Owner. However if a different contract is offered; or the contract has been heavily amended beware.
  • Various Schedules and Attachments. These describe things like specific details of payments, naming legal entities legal rights etc.
  • Conditions of Contract.
  • Copies of Builders documentation. That is Registration, Structural Guarantee and Insurances Check these are up to date, especially Insurances.
  • Contract Estimate This should show how the price has been calculated including any variations in cost from the initial cost.
  • Copy of the Site Investigation (Geo-technical Investigation)
  • Specification, describing the construction, type of fittings, and finishes, of various aspects of the house in words.
  • List of the builders standard inclusions. (NB this will be less than you have seen in the Display Home!)
  • Full set of contract drawings including plans, elevations and structural details.

Make sure you read the whole contract before you sign.

If any of the above are missing ask for them to be included before you sign.

Remember if problems arise the first thing you should to do is go back and read the contract.

For similar posts see Contract Documents

 

Contract Meeting Advice

It can seem like an age since you paid the initial deposit for your new house.

You have spent ages going through everything at Selection.

Surely you can just sign the contract and get started?………….That’s what the builder wants,………… but in my opinion you shouldn’t rush this step.

Time To Examine Contract

Most people aren’t familiar with looking at Contracts so they need time to take it all in in, or perhaps check with someone more experienced.

Let the builder know you want the documents a few days before the signing day, so you can have some time to examine them.

If they can’t provide the contract documents in advance be prepared to take the documents home without signing. You can always schedule another meeting.

Things to Check

Here are  things I look out for:

Changes to Standard Conditions of Contract. Having built using both the Master Builders and HIA Conditions of Contract  I consider these documents are reasonable to both parties. Make sure you ask the builder if they have modified the conditions, and look through the modifications carefully as they won’t be in your favour!

Stage Payments Not paying until after the work is done is your best protection against builder insolvency. Click on the title of this paragraph for more information.

Contract Period. How long will the build take, and has the builder taken into account bad weather and holidays.

Liquidated Damages Unless the Builder has to pay you a reasonable amount of compensation for delays there is little incentive for them to meet the Contract Period

Responsibility for Access. Most Standard Contract Conditions require the builder be responsible for ensuring the footpath is not damaged. I find some builders are trying to transfer the responsibility to you. I believe this is unacceptable as the the Builder is the only one who has control of  the situation.

Contract Estimate (Statement of Costs) This details how the cost of the house is calculated. Make sure that all upgrade items are correctly described and the price is as previously stated or agreed.

Schedule of Inclusions. Are all the Inclusions / ‘Free’ Upgrades, mentioned at the time of paying the initial deposit, mentioned in the documentation.

Specification Check that the specification also correctly describes what you want from the house. Often this will be a fairly standard document which will  refer to the Contract Estimate, Schedule of Inclusions and Drawings.

Drawings Check all the drawings to make sure they show what you want  including:

    • Correct facade.
    • Roof Details.
    • Room arrangements and sizes.
    • Electrical fittings layout.
    • Window sizes and types.

It’s much better to make sure everything is covered at this stage than try to deal with it later!

Finally

If the builder says he will reprint the whole document before you sign. . . . you need to check all the amendments you asked for are in the reprinted document. ( A friend of mine didn’t check and got caught out!)

 

My E book Guide to Selection/Pre-Start includes checklists that you will be able to refer to during Contract Checking.

 

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