What to know before signing a building contract

I am just curious as to what length a potential home buyer goes through to try and understand the building contract before they sign (Payment clauses, liquidated damages, construction times, penalties and the like).
Also, what checks are done to ensure what was requested is actually included in the tender. For example, are the codes on the tender reflective of what was chosen?
The other area is plans. Is the "average" home buyer able to understand if the fridge they have will fit in the cavity on the plan? Will the SUV with roof racks fit in the garage or even will that wall unit fit where they intend to place it when they move in?

interested to know everyone's thoughts and experiences.
regards,

From my web site statistics I look at the most popular reasons for arriving at the site (10420 visits in the last month)
No 1 is questions about ceiling height. (967 visits a month)
No 2 is the Home page
No 3 is questions relating to garage size (396 visits a month)
The first understanding contract related question is about progress payments at No 8 (266 visits a month)

How long do the builders give you to go over the contract and sign?

Lots of builders want you to go to their office see the contract and sign the best day. . . NOT A GOOD IDEA!

The better ones send it a few days early.

You should be able to take as long as you need to be comfortable with everything in it. Ours was emailed to us , we emailed back things we wanted changed, and we met the builder for us both to sign it maybe a week later. I saw someone walk into our builders office once to pick up contract and try to sign on the spot. He insisted she go home and look at it properly first.

Re the details like garage height, fridge space, etc. I just emailed these things to the builder and asked that they were included in the list of specs. I kept a list and made sure everything I needed was in there before signing off

I haven't got my contract yet, but I'd read through almost every article on Bashworth's site and a few other sites to try and figure it out. I will probably do more research once I get the contract too and I am thinking of paying for a contract review with an independent party. But yes it get's very confusing..

I could barely understand the plans I received, but my builder was helpful when I went over them.

In my opinion if your builder uses a HIA or MBA contract, it'll be the fairest you'll get (as long as they don't add, change or delete clauses) even though it favours the builder. Pay attention to the variables they input such as margin, liquidated damages etc and if they seem reasonable I think it'll be the best you can do.

My mate who owns his own building company said - "a contract is worthless compared to the reputation of the builder". You can have a questionable builder write whatever clauses you want into a building contract, but it's useless if their reputation is terrible and don't even end up sticking to the contract. Your recourse will involve a lot of cost, effort and heartache. That's why a builder's reputation trumps whatever words are written on a contract any day.

My one cent of advice on progress payment term... min 14 days after invoice. Anything less will hurt you if the bank delays.

Agree, HIA or MBA contracts are standard and "reasonably" safe to the consumer. Having said that, areas such as the points in schedule 1 should be negotiated to suit the home owner. Simple points such as % of interest (point , days to make progress claims (point 7) are just a few that the builder will fill in and the owner in most cases will sign unknowingly.
The majority of errors resulting in disputes are related to product/colour selections. It is amazing how many get these wrong. A simple product code error can result in a completely different product which unfortunately, the owner unknowingly signed for.
There are several examples of this on this site alone.
Regards,
CR Partners
Contract Review Partners

It's a contract! Take as long as you like to review it. If they use high pressure, walk away.

Yes we are using a custom builder. He delivered the (standard MBA) contract to our house and just said, take your time and have a look. Let me know if you have any questions. We dealt with some of the project homes. If any of them had tried to pressure me to sign quickly I would have walked away.

Well i am going through contract signing now. I took a good two or three weeks to read through and fully understand and send through questions. In the end most of the HIA contractual clauses are fixed, i queried some but noluck. I confirmed with a lawyer if it was worth engaging her services and she bluntly ans honestly mentioned these hia building contracts are pretty much fixed. Tough luck.

So id focus on reading and understanding it head to toe. More importantly go over the drafted plans which tbh for me wasnt rocket science. Get a ruler and follow the markings onto the plan and confirm number by number its as per your initial planning. Ipicked up a few rooms where additional 100mm were shaved off accidentally or to comply and cross checked this with my contract quotation to pick out inconsistencies. I also had to correct contract quotation amounts incorrect.

So id focus on your floor plan, contract plans(elevations and the drawings of each room etc) and your contract quotation (prices) as to pick up errors and get things fixed.

Im about to create a thread on it but from what i needed to clarify i believe the protocol is we haveto sign all these contract documentation up front regardless of changes then they will get us to sign variation requests.

Why they don't just edit and reprint corrected drawings, contract details and quotation prices and signoff only once is beyond me.

Cr partners- how can you possibly negotiate a builders hia schedule 1 amounts for interest or days to make progress payments? These appear to be fixed areas volume builders standardise and don't change.on a regular basis....

I agree at my prestart i get the standard list of specs addenda. Along with my selections id triple check its exactly what you wanted and chose.

I also think its good for the builder to let you know but your ultimately responsible on knowing frisge recess sized, ceilings etc. I personally know now what a course means and how to measure it. Midland brick even give you a coursing size chart. Based off this and simple qs to my sales rep i can read window sizing teminology and work out how many courses from ceiling its written downwards, to how wide. I then tape measured in my current house and did all my window sizing corrections and checks that way.

I also scanned a few catologues and got a feel for rough fridge dimensions. Based off that i know for a fact any height up to 1800 mm will get every fridge you'll likely see in.

Most fridges are circa 700 to 780mm deep max. So most will just out of the standard 600mm deep recess. Width is commonly 700-820 for most decent sizes, some odd ones hitting the 9s. So my fridge recess is 950mm wide so i know im safe also.

This is one aspect of self educating yourself. I probably wrote 10 essays before i got to contracts, im surprised my sales rep even tolerated it. For that i know id recommend him onwards because most people dont even spend more than 30 mins a display let alone 15. I was one of few who spent hours,askef questions. You'll be surprised at what people dont do.

When i bought my land the developer commented i was the only one asking all these questions or taking the time to sit there and read it in the office than sign. So obviously 9/10 pplz dont! I was also the only one who ever emailed back askinf for the list of landscapers due to it being in contact /follow up letters. Apparently know one else ever asked for details or followed up and i was promptly updated on that none was chosen and process had changed (we'll now be advised of landscaper closer to settlement) than upfront at signing.

My point is, like building most peoples angst and bad reviews is probably their lack of education and detail. That said i still got caught with an odd cost i missed. But clearly my rep let this slip. I caught the vast majority so before i even signed my PPA agreements with the sales rep to engage them i already had all the site costs and potential additional costs down.

DyOR and you'll be well off. Good luck!

Hi Saberx,
Good work and, if everybody went through the due diligence you seem to have done, I'm sure there would be less angst and problems in the "building world". It is unbelievable how many clients we talk to that are "expecting" things to be right. unfortunately things do get missed, errors made and things not explained in detail.
What some people think they understand isn't always the case for eg, a floor plan showing a fridge opening of 900mm means your fridge space will actually be 844mm. The note on the plan states "dimensions are taken from frame" so, not everyone will understand that 20mm for plaster and 36mm for skirting boards needs to be subtracted from the original 900mm (sounds simple, but it does happen). The result... a fridge that doesn't fit and a builder that reminds you that "you signed the plans!"
In regards to negotiating schedule 1, there are numerous points that can be negotiated and we have done successfully for quite some time (although most builders will try with "no we cant do that" at the beginning). Points 6, 7, 8, 9,10, 11 and 12 CAN all be negotiated just to name a few. The reality is, most builders will have these already typed out, tell you its a "standard contract" (which it is.... excluding the parts typed in) and expect you to sign without allowing you to take them away and do your research.
As stated earlier, one of the biggest area we find errors is in the colour selection/specifications. As you can imagine, your average home owner will not check every single thing chosen. As a simple example, Clarke Monaco sinks have 4 different models which only has 2 different letters in the part numbers distinguishing one from the other... can be confusing!

regards,