- Home
- Fields of Expertise
- News
- Where are we?
- Security of Payment Resources
- Security of Payment Resources NSW
- Security of Payment Resources ACT
- Review of the ACT legislation
- Security of Payment Resources VIC
- Security of Payment Resources QLD
- Security of Payment Resources SA
- Security of Payment Legislation TAS
- Security of Payment - Service of Documents
- Home Building Checklist - amendments to HBA
- Critical times under the ACT Legislation
- Recent Amendments to the NSW Security of Payment Act
- 2014 Amendments to the Home Building Act
- SECURITY OF PAYMENT QUESTIONS AND ANSWERS
- Comments on the Standard Form Home Building Contracts
Interested? Contact Us!
We are the Building and Construction Law Specialists
Phone: (02) 9689 3992
Response to Issue Paper - Home Building Act 1989.
I was recently asked to respond to an Issues Paper sent out by the Office of Fair Trading on the reform of the Home Building Act 1989. I made a number of recommendations but the one dealing with Standard Form Home Building Contracts is as follows:
1. The Office of Fair Trading Standard Form Home Building Contract should be amended in certain respects and then versions should be published which are specifically adapted to deal with:
(a) home building contracts,
(b) unit building contracts
(c) home renovation contracts and
(d) cost plus contracts
2. There should be a general explanatory memorandum for each kind of contract explaining, in plain English, how the contract works
3. There should be a more detailed explanatory memorandum explaining, in plain English, the significance of each of the clauses in the contract.
4. The use of these contracts in an un-amended form should then be mandatory unless the owner or owners take certain required steps to vary them. This achieves some degree of protection for the home owner without sacrificing freedom of contract.
5. The contracts should only be allowed to be varied from the standard form if the owner acknowledges in writing that he or she has read and understood the more detailed explanatory memorandum where it deals with the clauses the subject of the variation, or there is an independent lawyer’s certificate that the owner has obtained legal advice on the variation from the standard form, and still wishes to proceed with that variation.
6. If there is no such acknowledgment or certificate, then the legislation should provide that the builder is to be unable to enforce any of the variations from the standard form against the owner.
7. Certain fundamental terms such as those in the statutory warranties implied by section 18B of the current Home Building Act should of course not be able to be varied by the parties whatever their wishes as these terms relate to the rights of later purchasers of the property as well.
8. There should be a 25% cap on the amount to which provisional sums can blow out as a result of the builder’s negligent estimates.
9. The practice of overcharging in the earlier progress claims, “Front End Loading”, should be prevented.
10. There should be a liquidated damages clause in the contract imposing a standard rate of liquidated damages.
11. The length of the defects liability period should be extended to 26 weeks.
There should be adjudication of the progress claim disputes under the Building and Construction Industry Security of Payment Act 1999 to give rapid and inexpensive resolution of minor disputes.
1. The Office of Fair Trading Standard Form Home Building Contract should be amended in certain respects and then versions should be published which are specifically adapted to deal with:
(a) home building contracts,
(b) unit building contracts
(c) home renovation contracts and
(d) cost plus contracts
2. There should be a general explanatory memorandum for each kind of contract explaining, in plain English, how the contract works
3. There should be a more detailed explanatory memorandum explaining, in plain English, the significance of each of the clauses in the contract.
4. The use of these contracts in an un-amended form should then be mandatory unless the owner or owners take certain required steps to vary them. This achieves some degree of protection for the home owner without sacrificing freedom of contract.
5. The contracts should only be allowed to be varied from the standard form if the owner acknowledges in writing that he or she has read and understood the more detailed explanatory memorandum where it deals with the clauses the subject of the variation, or there is an independent lawyer’s certificate that the owner has obtained legal advice on the variation from the standard form, and still wishes to proceed with that variation.
6. If there is no such acknowledgment or certificate, then the legislation should provide that the builder is to be unable to enforce any of the variations from the standard form against the owner.
7. Certain fundamental terms such as those in the statutory warranties implied by section 18B of the current Home Building Act should of course not be able to be varied by the parties whatever their wishes as these terms relate to the rights of later purchasers of the property as well.
8. There should be a 25% cap on the amount to which provisional sums can blow out as a result of the builder’s negligent estimates.
9. The practice of overcharging in the earlier progress claims, “Front End Loading”, should be prevented.
10. There should be a liquidated damages clause in the contract imposing a standard rate of liquidated damages.
11. The length of the defects liability period should be extended to 26 weeks.
There should be adjudication of the progress claim disputes under the Building and Construction Industry Security of Payment Act 1999 to give rapid and inexpensive resolution of minor disputes.
Contact Us