What to put in a written contract with your builder

A written contract is the single best protection you have when you hire a builder. It records exactly what you're paying for, when the work happens and what happens if plans change. If something goes wrong later, the contract is the first thing anyone will ask to see.

Every state and territory has its own rules about when a contract is required and what it must contain. This guide covers the things a good contract should include wherever you live, with links to official guidance so you can check the rules for your state.

When do you need a written contract?

In most states, the law requires a written contract once a home building job goes over a set dollar amount, and the amount is different in each state. For example, the NSW Government's page on contracts for residential building work says a written contract is needed when the price is over $5,000 including GST, with a more detailed contract for jobs over $20,000.

In Queensland, the QBCC's guide to contracts and agreement types says you need a contract for work valued at more than $3,300, and a more detailed contract for work of $20,000 or more. In Victoria, Consumer Affairs Victoria's building contracts checklist says a major domestic building contract is required for work over $10,000, even if the job is split into smaller contracts.

Even when the job is below your state's threshold, it's still worth getting the agreement in writing. Regulators in all three states recommend it, and it saves arguments later.

The essentials every contract should include

Who you're dealing with

The contract should name both parties, and the builder's name should match their licence or registration exactly. It should include the licence or registration number. Check those details on your state regulator's licence search before you sign. A mismatch between the name on the contract and the name on the licence is a warning sign.

A clear description of the work

Vague descriptions cause most building disputes. The contract should describe the work in detail and attach any plans and specifications. If you've chosen particular fixtures and finishes, such as tiles, tapware, benchtops or appliances, list the make, model and colour.

Consumer Affairs Victoria recommends making your selections before you sign and stating who is responsible for supplying each item. Choices made after signing can become variations, which usually cost more.

The price, and how it could change

The contract price should be easy to find. In NSW, the price must be shown prominently on the first page of a large job contract, with a warning if it isn't known or could change.

Look closely at anything that could move the final cost:

• Prime cost items: allowances for things not yet chosen, like an oven or tiles
• Provisional sums: estimates for work that can't be priced exactly yet, like excavation
• Rise and fall clauses: terms that let the price change if costs go up

Consumer Affairs Victoria suggests avoiding prime cost items and provisional sums where you can, because the final cost can end up higher than the allowance. If they're unavoidable, ask how each figure was worked out and whether it's realistic.

Payment schedule

The contract should set out the deposit and each progress payment, and what stage of work each payment is linked to. Stages should be described in plain language so you can tell when a stage is actually finished.

Deposits are limited by law in several states, and the limit depends on the state and the value of the job. Check your regulator's guidance before you pay anything up front.

Start and finish dates

Look for a start date, or an explanation of how it will be worked out, and a completion date or the number of days needed. Good contracts also say how delays from bad weather or other causes are handled and how the builder must notify you of an extension of time.

Variations

Plans change. The contract should say that any change to the work or the price must be in writing and signed by both of you before the extra work starts. Never agree to variations verbally, even for small extras.

Insurance

Most states require home warranty insurance (called different names in different states) above a certain value of work. The builder should give you a certificate showing the cover for your property address before you pay a deposit. Ask too whether the builder holds public liability insurance.

Warranties and defects

Builders generally have to meet statutory warranties, such as using suitable materials and doing the work with reasonable care and skill. The contract should set these out, along with how defects will be reported and fixed after handover.

Cooling-off and ending the contract

Many states give you a cooling-off period after signing a larger contract. In Victoria and NSW it's five business days, according to the official pages linked above. In Victoria, getting legal advice on the contract before signing can mean losing that cooling-off right, so read the official guidance carefully. The contract should also explain how either party can end it.

Before you sign

• Read the whole contract, including the fine print and any attachments.
• Make sure every promise the builder made out loud is written into the contract.
• Check the builder's licence, insurance and ABN.
• Compare the contract against the quote you accepted.
• Get independent legal advice if anything is unclear, especially on a big job.
• Keep a full signed copy, including plans and specifications.

Many regulators publish free contract templates and checklists. If your builder uses their own contract or an industry association contract, it should still cover everything above.

Find a builder

Comparing builder quotes is the first step, and our guide to choosing a builder for your renovation covers what to check next. When you're ready, search for builders near you or browse builders in Sydney and contact them directly.

Find builders in your area

Frequently asked questions

This guide is general information only, not legal or financial advice. Rules change, so check the official sources linked above for your state.