All residential building work worth over $1,000 requires a written contract

By law, the written contract you sign must contain:

• the date and signatures of both the contractor and home owner
• the home owner’s name and the exact name on your contractor’s licence and licence number
• a sufficient description of the work to be carried out
• attached plans and specifications
• relevant warranties required by theHome Building Act 1989
• the contract price, which must be prominently displayed on the first page and a warning with an explanation if the contract price is not known or subject to change
• a clause that states that any agreement to vary the contract or any plans and specifications to be done under the contract (including variations):
  i) are taken to form part of the contract
  ii) must be in writing and signed by both the home owner and contractor.
• a check list of 12 items
• a caution about signing the contract if the home owner cannot answer yes to all items in the check list
• a note about the home owner’s entitlement to a copy of the signed contract within five days of signing
• a note about the contractor's obligation to give a certificate of home warranty insurance if the contract value is over $12,000
• a clear statement setting out the cooling-off period of five clear business days within which the home owner may cancel the contract, applicable to contracts valued at over $12,000
• the contractor must provide the home owner with a copy of the Consumer building guide. The home owner must provide a statement of acknowledgement that they have:
  i) read and understood the Consumer building guide which explains procedures for the resolution of contract and insurance disputes
  ii) completed the checklist and answered yes to all items on it.
• a 'work compliance clause' that states the work will comply with
  i) the Building Code of Australia, to the extent required under the Environmental Planning and Assessment Act 1979
  ii) all other relevant codes, standards and specifications that the work is required to comply with under any law
  iii) the conditions of any relevant development consent or complying development certificate.
• a clause that states that the contract may limit the liability of the contractor for failure to comply with the above work compliance clause if the failure relates solely to:
  i) a design or specification prepared by or on behalf of the home owner or
  ii) a design or specification required by the home owner if the contractor has advised the home owner in writing that they go against the 'work compliance clause'.

Fair Trading home building contracts

We recommend our plain English Home Building Contracts which covers all types of residential building work. These clearly lists the responsibilities and rights of the builder or tradesperson and those of the home owner.

From 1 September 2008, you can download these contracts in PDF format for free:

• FT240 Home building contract for work under $25,000 (size: 346k)  
  Suitable for trade work, maintenance and repair work as well as smaller alterations or improvements likely to cost less than $25,000
• FT241 Home building contract for work over $25,000 and all residential swimming pools (size: 720k)
  Suitable for new homes, major alterations and additions and any new swimming pool installation.

Alternatively, as a builder or tradesperson, you may wish to use your own contract or one purchased from an industry association. This is fine as long as you understand each clause and the contract contains:

• the Contract checklist for owners entering a building contract
• all of the items listed on the home building contract page.