Residential Building Contract: What to Understand Before You Sign
Most clients sign a building contract with limited scrutiny. The clauses you overlook at signing are the ones that matter most when something goes wrong.
A residential building contract is a legally binding document that governs your relationship with the builder for the duration of the project. The clauses you overlook at signing are the ones that matter most when something goes wrong.
Fixed price versus cost plus
Fixed price contracts provide the most client protection — the builder agrees to complete the defined scope for a fixed price, and cost overruns are their risk subject to legitimate variations. Cost plus contracts transfer all cost risk to you and the final cost is unknown at signing.
The clauses that matter most
- Commencement date — without one, there is no enforceable programme
- Liquidated damages — your financial remedy if the builder is late. $50 per day is inadequate on almost any residential project.
- Variations clause — no variation work should proceed without a signed variation order
- Payment schedule — tied to physical milestones, not calendar dates
- Defects liability period — standard is 12 months after practical completion
- Prime Cost Items — all listed with realistic allowances, not blank or zero
Before you sign
Do not sign until a full specification is attached, all Prime Cost Items are itemised, a commencement date is confirmed, and the QBCC licence is verified. For contracts above $500,000, consider a solicitor review.
Already feeling the budget pressure?
If your project has drifted beyond budget, realignment can bring it back.
We help homeowners, architects and developers recover cost and buildability without losing the design they set out to build.