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We are the Building and Construction Law Specialists
Phone: (02) 9689 3992
Problems before contracting
Pre contract planning and development approval services
You usually first meet a builder at the builder's display home when you are about to purchase your building block. You ask the builder if he will prepare a set of plans for you based on the display home. He will offer you a plan preparation agreement whereby for about $6,000.00 his company will prepare plans for your approval and then get a Development Approval from the Local Government Authority for the plans. The agreement will usually say that the money you spend on the plan preparation will be deducted from the eventual contract price if you decide to go ahead with him as the builder. The agreement has a lot of other terms which you do not really understand but it seems like a good deal and you sign the agreement and go ahead.
Various scenarios ,then arise:
- You are not happy with the plans he produces.
- You are happy with the plans he produces but the contract price he insists on to build the house is too high and you can get it done cheaper by another builder.
You are not happy with the plans he produces.
If you are not happy with the plans he provides, and often they are simply some $200.00 worth of drafting done by a semi skilled draftsman in his office, you have a set of plans of no value to you and you have spent $6,000.00. Part of that sum may be recoverable in the Consumer Trader and Tenancy Tribunal but you will have to spend the time and money required to do so.
You are happy with the plans he produces but not the contract price he asks to build the house
You then ask him to match the price offered by another builder to do the work. He refuses to do so and he points out that the plan preparation agreement reserves the copyright in the plans exclusively to him. That is, he can prevent you using another builder to build to those plans. If you wish to proceed using another builder he offers to sell a license to use the plans to you for $15,000.00. You may have provided him with all the sketches and the ideas but he now says that they are his.
To sum up, even at this pre contract stage it is a good idea to get competent legal advice before you sign anything.
If you'd like help in dealing with pre contract issues in relation to your home building contract, you can contact us through the button on the bottom right or contact Stefanie Dunnicliff directly by email at [email protected] or by ringing (02) 9689 3992.
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