3 Things You Probably Didn’t Know About Home Renovation Building Contracts
(And Unfortunately Many Builders Don’t Either)
When embarking on a home renovation or building project in Perth, understanding your rights under the Home Building Contracts Act 1991 (HBCA) is essential. However, many homeowners are unaware of the rules that govern building contracts, leaving them vulnerable to potential pitfalls. Here are three crucial aspects you may not know about home building contracts, and unfortunately, many builders don’t either:
What Does the Home Building Contracts Act 1991 Cover?
The Home Building Contracts Act 1991 (HBCA) regulates residential building work in Western Australia. The Act applies to home building contracts valued between $7,500 and $500,000 and involves construction, alteration, improvement, or repair of a dwelling.
Some key work types covered include:
- Construction of a new home.
- Home extensions and renovations.
- Construction of structures like garages, sheds, patios, and swimming pools.
- Home improvements such as kitchen or bathroom remodels.
- Deposit Limits: Builders Cannot Charge More Than 6.5% Before Work Begins
Under the HBCA, builders cannot charge a deposit exceeding 6.5% of the total contract value before commencing work. This rule safeguards homeowners by limiting their exposure in case of non-performance by the builder.
Tip: If a builder asks for more than 6.5% upfront, it’s a red flag. Stick to the legal limit and seek clarification if needed.
(Sources: Home Building Contracts Act 1991, Department of Commerce WA)
- Housing Indemnity Certificate: No Deposit Without It
Before issuing an invoice or collecting any deposit, a builder must secure a Housing Indemnity Certificate in your name for the proposed work. This certificate safeguards you if the builder cannot complete the work due to insolvency, death, or disappearance.
Tip: Always request proof of a Housing Indemnity Certificate before paying any deposit. If the builder can’t provide it, hold off on making any payments.
(Source: Home Building Contracts Act 1991, Schedule 1)
- Home Indemnity Insurance: Mandatory for Contracts Over $20,000
For any residential building contracts valued over $20,000, the builder must provide Home Indemnity Insurance. This insurance is a safety net, protecting you if the builder cannot complete the work. It covers you in case the builder dies, becomes insolvent, or disappears, and also ensures that you’re compensated for any structural defects that may arise within six years of the completion date.
Tip: Confirm that your contract explicitly includes the Home Indemnity Insurance. Make sure the insurance is in your name, and covers your property address.
(Source: Department of Energy, Mines, Industry Regulation and Safety)
Choosing the Right Builder
At Addstyle Master Builders, we pride ourselves on adhering to the Home Building Contracts Act 1991 to the letter, ensuring our clients are always fully informed and protected. We believe in fostering trust through clear communication and quality work.
Complimentary Consultation:
If you’re considering a renovation or extension, we offer a complimentary consultation to discuss your project and explain your rights and obligations under the Home Building Contracts Act 1991. Let’s work together to bring your dream home to life.
Contact us today to get started.
