Fixed Price Contracts
Fixed price contracts are the most common form of domestic building agreement. As the name suggests a fixed price agreement is where the builder agrees to perform building work for a fixed sum. This provides a degree of certainty to both parties, but during a period of escalating costs the builder is likely to include […]
Government Tendering
The Department of Treasury and Finance oversees Tenders WA, which commenced from March 2009. The system replaced Gem Tendering, also known as the Contracting Information Bulleting Board, as the central online source of information on Western Australian public sector tenders and awarded contracts. Key functionality enhancements to the previous system include: · Automatic email notification of new tenders · […]
Home Indemnity Insurance
Home indemnity insurance covers the homeowner (and subsequent owners) for faulty, unsatisfactory or incomplete building work and loss of deposit should the builder die, disappear or become insolvent within 6 years from the date of practical completion. Currently all residential building work valued over $20,000 must be covered by a policy of home indemnity insurance […]
Legal Aspects of Home Purchase
Normally a buyer first comes into contact with the property through a real-estate agent. Remember that the agent works for the seller, not for the buyer, and that the seller pays the agent’s fees or commission for negotiating the sale. This means that the agent’s obligations are primarily owed to the seller, not to the […]
Liquidated Damages
A liquidated damages (LD) clause is common in many building contracts for commercial or institutional buildings, but less common in residential contracts. Liquidated damages are an amount which the builder agrees to pay to the homeowner for late completion of the project. This is usually an amount per day or per week. Liquidated damages are […]
Off the Plan
An off the plan property transaction involves signing a contract with a developer to buy either vacant land, or land to be developed with a building on it, before land sub-division or titles are issued. Usually an initial deposit is paid at the time of contract signing, with the balance payable at settlement, after title […]
Preliminary Agreements
A Preliminary Agreement (PA), or Preparation of Plans Agreement, is a common document used by builders dealing with clients in the early stages of building a new home. These agreements do not involve building work and are preparatory to entering a building contract. Some common features are: the consumer is committed to paying a “deposit”, […]
Practical Completion
Practical completion is a term that is misunderstood by many home buyers. Generally it means the point where all building work is complete or all but completed, in accordance with the contract, and the house is reasonably fit for occupation. A building contract usually defines practical completion being when all works are completed, except for […]
Prime Costs and Provisional Sums
Prime Cost (PC) items and provisional sums (PS) are two items in a standard building contract which cause great confusion among homebuyers. Most building contracts are called “fixed price contracts”, but the final contract sum can vary due to fluctuations in PC and PS items. A PC item is an amount of money included in […]
Progress Payments and Disputes
Many building contracts have an agreed price for the whole of the work with payments made when the house reaches certain stages – slab, plate height, lock-up – and so on. Usually the builder makes a progress claim which needs to be settled within a specified time period or else penalties and interest can apply […]