In Victoria there has been a wave of legislative reform over the past couple of years. As a result, the Housing Industry Association (HIA) has been required to update its contracts on a regular basis.
What does this mean for builders?
The new legislation and updates to the contracts mean that builders using older versions of the HIA contracts, and other industry standard contracts, are at risk of using a contact that does not comply with the Victorian legislation for domestic building contracts.
This article summarises the major changes to the legislation and contracts.
Major domestic building contracts
For over 20 years a contract for domestic building work with a price exceeding $5,000 was a major domestic building contract. A builder entering into a major domestic building contract must use a more detailed form of contract with a cooling-off notice, checklist, consumer guide, progress payment schedules and price warnings.
As of 1 August 2017 a builder is required to use a major domestic building contract for domestic building work with a contract price exceeding $10,000.
The checklist
In Victoria, a major domestic building contract must include a checklist. On 4 August 2016 a new version of the checklist was published and this must be used in any major domestic building contracts signed from 1 September 2016.
The Domestic Building Consumer Guide
From 1 September 2016 a builder entering into a major domestic building contract must give the owner a copy of the Domestic Building Consumer Guide. This Guide is included at the back of HIA contracts.
An updated version of the Domestic Building Consumer Guide has been released and must be used in contracts signed from 1 August 2017.
Progress payments
The Domestic Building Contracts Regulations specify how a builder and owner can agree to use an alternative to the progress payments prescribed by the Domestic Building Contracts Act. The Regulations include two forms, Form 1 and Form 2, which must be used in contracts to provide evidence that the owner agrees to the alternative progress payments.
From 1 August 2017 these forms have been changed. Now the owner needs to sign both Forms and the builder needs to sign Form 2.
What to do?
From 1 August 2017 when a builder wants to sign a domestic building contract with a client with a price over $10,000 they need to ask the following questions before using the contract:
- Is the checklist (usually towards the front of the contract) dated 4 August 2016? If no, you cannot use the contract.
- Is the consumer guide (usually towards the end of the contract) dated 1 August 2017? If no, you should not use the contract unless you provide a current version of the guide to the owner and get them to sign an acknowledgment.
If the builder wants to use the alternative progress payments (method 2) they also need to ask themselves the following questions:
- Does Form 1 (in Schedule 3 in HIA contracts) refer to regulation 13? If no, you cannot use the contract.
- Does Form 2 (in Schedule 3 in HIA contracts) refer to regulation 13 and require signatures by both the owner and builder? If no, you cannot use the contract.
If you require further assistance, HIA members can contact HIA workplace services on 1300 650 620.