New law shifts risk from the builder to the homeowner
With any law change there is usually a re-allocation of risk between the interested parties. The 1 July 2015 changes to domestic building contracts and the law relating to domestic building are no different. The new changes now make it easier for builders and contractors dealing with homeowners. It does this by simplifying the building contracts and processes that builders and contractors are expected to comply with as part of their licensing. Some of these changes make it easier to understand the building contracts and the process for both the builder and the homeowner, which is great. But some of the changes merely shift the risk from the builder to the homeowner, including:
Cost plus contracts are now available to domestic building;
Larger deposits are allowed for prefabricated work; and
No financial consequence for failing to provide variations or defects documents.
Our concern is not that the changes were made, but the lack of measures the Government has taken to counteract the risks introduced for homeowners. The Government has implemented the following measures:
A new 2 page Consumer Building Guide (which replaces the previous 10 page Information Statement); and
A series of YouTube videos on the QBCC website.
In my experience in dealing with homeowners and domestic home building contract reviews and home building disputes:
The QBCC Information Statement was hardly ever read by homeowners. Although the new guide is shorter and more likely to be read, it does not contain all of the information that homeowners need to know about their risks. This guide merely gives homeowners sound bites about the potential risks. For example it does not mention provisional sums or prime cost items as potential and serious risk areas.
The catalyst of most domestic building contract disputes is apparent at the pre-contract stage.
Most consumers are unaware of the risks or simply believe the risks won't happen to them.
Legal advice is the only way to counteract the risks particular to each homeowner and each home building contract.
And we are not the only ones who consider that legal advice is fundamental to counteracting the risks to homeowners.
In 2013 the Inquiry into the Building Services Authority (pre-QBCC), not only recommended legal advice should be obtained by all homeowners, but recommended to the then Government that if homeowners chose not obtain legal advice, they should have to a sign a disclaimer stating that they have chosen not to seek legal advice. Despite the Newman Government not adopting the recommendation, it stated that it would "recommend legal advice". Unfortunately, even this "recommendation" has been watered down in the QBCC Consumer Guide to:
Recommending legal advice for cost plus and construction management contracts; and
Talk to your builder first and then "seek legal advice if you still have concerns" on all other contracts.
At Aitchison Reid we deal with homeowners every day who have building disputes with builders. On most occasions those building disputes could have been prevented if the homeowners had received good legal advice before they signed the building contract, however most of them were unaware that legal advice on building contracts was even available. It is disappointing that this opportunity to help and educate homeowners before they sign the dotted line has been overlooked by the Government.
If you're a homeowner wanting to find out more about how risks are shifted from the builder to homeowners like you, get legal advice from a building lawyer before signing your home building contract. Feel free to call our office on 07 3128 0120 or email us at email@example.com.