Charges for variations before signing contract?

I have signed a tender with my builder but have not seen or signed the building contract yet. On the tender it states that there is a $1500 admin fee for changes to the plans made after signing the tender. However, during the sales process the salesman told me that minor changes wouldn't attract this fee.

I have requested to remove/add some internal doors, which affects the location of some windows, and they are now wanting to charge this $1500. Would this be unreasonable, as I would have thought it would classify as a "minor" change i.e. we are not making any big floor plan changes.

I have searched this forum but most topics relate to variation charges after signing the contract, so I'm wondering if it's even a common practice to charge for variations between tender and contract.

moving windows and doors does not seem like a minor change to me.

in terms of a charge prior to contract, that does seem odd, however it's what you have signed up to as you have signed the tender.

Not only are clients susceptible to price variation increases at the tender stage, this extends past contract signing.
Discussed here Contract lawyers Perth

Now, they builder has issued a Price Variation (rise of by 2.5%) pursuant to clause, where, if there is a delay in the commencement of the Works beyond 45 Working days from the date of the contract (not being a delay cause by the builder), then the contract price can be increased to reflect actual increases in cost.

Thinking of getting lawyers involved here as this looks to be an excuse to trigger the price rise clause by builder. Querying back to builder to provide clarification on the delay to commencement of works.

The Clause mentioned:
"
If there is a delay in the commencement of the Works beyond the period of FORTY FIVE (45)
Days after the date of this Contract, not being a delay caused by or attributable to the Builder,
then subject to any provisions of the Home Building Contracts Act 1991 to the contrary:

Hi an3035


Assuming you are in NSW, then the Home Building Act applies. You should refer to section 7 of that law.


It beggars belief why builders these days think they can charge an admin fee for a variation. Admin Fees are not building works. You might consider deleting the admin fee prior to signing the contract.


The answer to your question requires consideration of the Tender. What is the purpose of the tender. It does not sound like the tender is the construction contract for the purpose of section 7. If the Tender is simply an offer, then the admin fee is not enforceable because there is no contract.


I’d suggest you consider walking away from the job if the Builder refuses to remove the admin fee and there is no binding contract.


Best bet is to get legal advice from a specialist construction lawyer who can assist with the particulars of your matter.


Cheers,
John

Great advice John

In our experience building with Rawson Homes after we signed the tender, there were several stages. Like structural, external, internal , flooring, electrical. On each we were allowed to make changes with corresponding price for each item. Then they will finalise the say structural variation, you accept the variation. Then on acceptance of the variation, any further changes will attract admin fees and redrawing fee. So what we did was to tell them what we want to have and only accept those items that meet the budget.

Hi John, thanks for your reply!

Along with the contract I was sent another letter to sign which asks us to agree that there will be no further changes, and in fact any further changes after contract will incur an increased admin fee of $1850. Aside of how unfair it seems, is this standard practice in the building industry? I've pasted the letter below:


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I / We [blank] sign this letter confirming we have read and understood each page of our Architectural Plans prepared by [blank]. I / We understand that by signing this letter provides acceptance of the final plans to be issued to Council / Private Certifier for Approvals.

I / We acknowledge that we do not wish to make any further changes to the plans. I / We understand that if we wish to make any changes to the Architectural Plans, this will incur a variation fee of $1850.00 inclusive of GST payable prior to any changes being made. This fee is an administration and drafting fee additional to any other cost of the requested change (if costs are required for the change).

I / We acknowledge that if any change/s are made we are required to re lodged plans for approval to Council / Private Certifier and the fee incurred from council / private certifier will be an additional charge which will be confirmed at the time.

I / We acknowledge that whilst at our appointment with colour consultant we can request variations for internal / external colours and inclusions with No Administration Fee. Any further variations requested after colour selections and variations have been confirmed following appointment, this will incur an additional fee of $1850.00 inclusive of GST in addition to the variation costs.

I / We acknowledge that 48 hour cancellation notice period applies for any appointment with the colour consultant. If notice has not be provided within 48 hours a fee of $165.00 inclusive of GST will incur.

I / We acknowledge that we will have one (1) Electrical meeting with the Electrician. I / We can request variations for electrical inclusions with No Administration Fee. Any further Electrical meetings will incur an $500.00 inclusive of GST fee in addition to the variation costs.

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I still haven't signed the contract but I know I need to ask for another variation already and they will want to charge the $1500 admin fee...

It really depends on what order they are doing things in. Reasonable builders have those clauses to force clients to stop changing their mind every day, so at some point they can finalise things, get the plans approved and start building, instead of redrawing plans every week for the next year. They usually specify how many versions/revisions you get for free (not really free, but covered by your deposit) before you have to start paying additional fees. Unreasonable builders just use it as an opportunity to get more money out of customers.

Hi an3035!

It sounds like there is no contract in place. You might consider whether or not you continue your relationship with the Builder. In my experience, admin fees for variations is Unusual. Certainly it not a provision in any of the industry standard templates in NSW, Vic, QLD


I am not able to provide legal advice over the home one forum but you can always call a construction lawyer to assist you with specific matters.

Cheers,

John

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