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  • Peter Merity

Home Building Contracts


Things are looking up. The NSW State Government is going to pay the demolition and removal costs of all homes burnt in the recent fires and there will soon be a large number of insurance payouts to home owners who will then look for builders to repair or rebuild their homes. This will create immediate employment and economic activity in the fire damaged areas. The problem is, not all, but certainly some, of those builders, may seek to take advantage of the homeowners in two ways.

Predatory Contracting Behavior

For some years, on my web site and in seminars and submissions to the NSW State Government, I have pointed out the many unfair and difficult provisions in the latest standard form home building contracts. Although I have published draft amendments to these contracts to assist my solicitor colleagues in their negotiations with builders, in times of high demand for their services, builders are in a position to say “take it or leave it”, and in my experience, the home owner clients, despite my advice, prefer to take it. They then enter into these one sided contracts and, when a dispute arises, they will be at an immediate disadvantage.

Building Litigation is Prohibitively Expensive

Once a dispute arises the homeowner then faces another problem. Home building litigation, both in NCAT and the Courts, has become very costly. The building companies are usually much more cashed up than the home owner and have the advantage that their legal costs are tax deductable whereas for the home owner they are not. The people who have recently lost their homes in the recent fires will probably be at an even greater financial disadvantage. Most likely, after replacing the essentials lost in the fires, their only remaining money will be the insurance payout.

A Pro Active Legislative Solution

I propose that the Home Building Act be amended to provide that a fair standard form home building contract be compulsory in all low rise ordinary residential constructions. The Act should provide that the terms of the contract may only be changed if the homeowner has received competent independent legal advice. In addition, The Act should also require that any disputes during the course of the contract are to be determined by a quick and cheap adjudication process similar to that followed in security of payment adjudications.

Please think about this and, if you feel I may be right, please consider joining with me, and start agitating for these reforms with your local Law Society and your local member of Parliament.

Practitioners - What You Can Do Immediately

I will update and publish my amendments to the standard home building contracts and explanatory notes on my website. You are very welcome to down load them and use them. Please give me a call to discuss them if you need to do so. Also, should you wish to refer a client to me for the negotiating of such a contract, I will be delighted to look after them and I give my usual undertaking that I will not take any further instructions from that client without your express consent.

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