Contract variations
It is sometimes necessary to make changes after the building contract has been signed. In this situation, you can approach the builder to make changes to the contract, but be aware that generally it is costly to do so.
Consider the following when you request changes be made to the building contract (for contracts between $6 000 and $200 000, the builder can issue a statement of a price rise to the owner where a variation to the contract is required in circumstances that could not be reasonably foreseen by the builder or where a lawful direction is issued).
- Any requests for changes (known as a variation) to the contract must be made in writing to the builder as early as possible to minimise cost and time delays.
If you discuss any changes with the builder over the telephone, confirm what was verbally agreed with the builder in writing and keep a copy of your letter for your records.
Variations should not be made orally as they are difficult to prove if there are disputes (and disputes can and do arise).
- As with any contract, changes to any terms, including the cost, must be dated and signed by all the parties to the contract.
All variations to contracts between $6 000 and $200 000 must be in writing, the terms set out and agreed to by all the parties and you must receive a copy of the signed variation before the work covered by the variation begins.
More information
For more information about varying a building contract call Consumer Protection on 1300 30 40 54 and ask for a copy of the brochure Home Building: The Laws.
Cost of amending or changing signed building contracts
Case study: Devil in the details
Bob and Judy were building their first home with a highly recommended project builder. The couple decided that the design of their house would be similar to the design of a display home they had recently inspected.
Before signing a contract with the builder, the couple did a lot of research on the features that they wanted to include in their home. Their research included trips to a number of hardware stores and display centres and discussions with friends and family who had recently built their own homes. Bob’s friends were so impressed with his newly acquired knowledge about the building project that they nicknamed him “Bob the Builder.”
Bob and Judy were familiar with the types and prices of floor, wall and decorative border tiles that they were interested in buying. The couple also did a thorough audit of the number and position of power points they required in their new house. Bob and Judy even discussed their future plans for children and knew exactly what sort of hot water system they needed. Friends rolled their eyes at dinner parties as the big topic of conversation became debating the pros and cons of a concrete or a brick paved driveway.
Once the building contract was presented to the couple, Bob and Judy were able to include all their requirements into the contract. During construction, the builder asked Bob and Judy to choose the spa for their ensuite bathroom. The couple took the plans to a spa specialist and soon realised that the spa they wanted would not fit into the space allowed on the plan.
Judy rang their builder’s representative, Anna, to discuss the problem. Anna carefully explained to Judy that varying the contract at this stage would involve significant costs. Anna explained their options and the worst-case scenario was changing the size of other rooms, some of which had already been built and changing the plumbing.
Judy discussed the situation with Bob. The couple decided that they would get the spa they wanted, but the shower recess in the ensuite bathroom would have to be removed. The couple also decided to place a shower rose above the spa to compensate for the shower being removed.
They immediately faxed their request to Anna, who provided them with the builder’s cost variation for the couple to sign. Bob and Judy were disappointed that they had overlooked this aspect of the design in their research phase and were also disappointed that the changes were costly, but the couple recognised that the changes were necessary.