Building contracts are typically 50-100+ pages of legal and technical content. Most people sign them without fully understanding what they're agreeing to. This can lead to disputes, unexpected costs, and a lot of stress during your build.
You don't need to understand every clause, but you do need to understand the key sections that affect your options, your money, and your finished home.
Key Sections to Review
Contract Price and What's Included
Is the price fixed or subject to rise and fall? What exactly is included? Check the specifications document carefully. Items not listed are not included - don't assume anything. Pay attention to flooring, driveways, landscaping, fencing, and appliance allowances.
PC and PS Allowances
Prime Cost (PC) items are supplied by the builder at a set allowance - you pay any difference. Provisional Sum (PS) items are estimates for work that can't be precisely priced upfront. Low allowances make the contract price look cheaper but cost you more later. Check these are realistic.
Site Costs
Most contracts have a site cost allowance based on assumed conditions. If your site has rock, reactive soil, or slope, actual costs will be higher. Understand what assumptions the allowance is based on and what happens if conditions differ.
Payment Schedule
Payments should be tied to construction stages, not calendar dates. Standard stages are: deposit, base, frame, lockup, fixing, and completion. Check percentages are reasonable (SA legislation sets maximum deposits). Never pay ahead of work completed.
Variations Procedure
How are changes handled? You should receive written variation orders with costs before work proceeds. Some contracts allow builders to proceed with variations without written approval - this leaves you exposed. Insist on written approval requirements.
Timeframes and Delays
What's the construction period? What happens if the builder runs late? Liquidated damages clauses compensate you for delays (but may have many exclusions). Extension of time clauses allow the builder extra time for weather, supply issues, etc. Understand both.
Red Flags to Watch For
Pressure to sign quickly: Take your time. Legitimate builders allow time for review. If you're being pushed to sign before the cooling-off period, something's wrong.
Unusually low PC/PS allowances: If allowances seem low, they probably are. $2,000 for kitchen appliances or $5,000 for site costs on a challenging block are warning signs.
Vague specifications: "Builder's standard" or "to be confirmed" leaves too much open. Specifications should be detailed and specific.
One-sided variation clauses: Contracts that allow builders to vary prices without your written approval expose you to unexpected costs.
Broad delay exclusion clauses: Some contracts have extensive delay exclusions. Understand what circumstances allow the builder to extend the completion date and whether liquidated damages apply in practice.
How BuildPilot Helps
- •Review contracts and explain key clauses in plain language
- •Identify potential issues and areas to negotiate
- •Check that PC/PS allowances are realistic
- •Compare contracts from different builders
Common Questions
For the cost involved (typically $500-$1,500), it's worth it for peace of mind. A building lawyer can identify unusual clauses and explain your options. At minimum, have someone experienced review it - whether that's a lawyer, building consultant, or BuildPilot's One on One Support.
Related Guidance
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