What is in your HIA Building Contract?

Knowing what is in your standard HIA Building Contract is important. To assist with this process, we have put together this helpful summary. Also check out our other article on the things to look out for. 

Welcome to Building Contract 101. Let’s begin.


"The building contract is the legal agreement which binds you and the builder for the construction of your new home"


The Building Contract will have attached to it, your building plans, tender (inclusions) and the Consumer Building Guide” prepared by NSW Fair Trading. It is a great little guide that is generally attached to your Building Contract. If it is not included for any reason, you can download a copy of the guide here.


The Building Contract will also set out, amongst other things:


The Contract Price - Item 2 (a)

This is the price that you will have to pay for the works as set out in the Contract. Make sure you know what is included in the price. In particular, what inclusions are included.


Deposit - Item 2 (b)

Due to recent changes in the law, NSW Builders are now entitled to take up to 10% of the contract price as a deposit. Most still charge 5%. However, if your Builder asks for anything more than 10%, then this is illegal.


Builder’s Margin - Item 8

The “Builder’s Margin” is essentially the “premium” payable to the Builder for any item of work which cannot be accurately costed at the time the Contract is entered into. Common item of works includes landscaping, tiling and concreting. Where possible, avoid the “Builder’s Margin”. At a default rate of 20%, it is definitely not worth it.


Interest - Item 10

This is the interest rate you must pay on top of your progress payments if any payments are late. Remember you only have 5 days to sort out your progress payment. Some builders are more understanding than others so don’t get caught out. Also, don’t be fooled if nothing is stated. Interest will still be payable at the going rate applicable to judgements in the NSW Supreme Court (this is 6% above the cash rate).


Contract Period - Item 12

The Contract period is the time period in which the Builder must complete your house and have it reach “practical completion”. Make sure this is in line with what the Builder has promised you in person. Unfortunately, this time period is subject to delays that may be beyond the control of the Builder (such as bad weather or even, delays caused by you in sorting out your variations).


Liquidated Damages - Item 13

This is the amount that the Builder will pay you if they are unable to complete the house within the Contract Period. If they have promised you a certain time frame, get them to put their money where their mouth is. Some money is better than no money for delays caused by the Builder.


Initial Period - Item 15

The “Initial Period” is the time period in which you must have everything sorted before the Builder can start building. When we say “everything”, we mean the items set out in Clause 4 of your Building Contract. Make sure you understand your obligations.




Please note that this is not an exhaustive summary and you should always read your Building Contract in full so you are familiar with all its terms.


But what if your Building Contract is not the standard HIA Building Contract? Maybe it is a Master Builder Association Contract or even a Home Building Contract for work over $20,000.00 from NSW Fair Trading? Keep an eye out on our site for upcoming guides on these different contracts. 


If you have any questions about your building contract, say “hello” and drop us an email with your questions. We’re here to help!



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