The Contract Clauses That Could Cost You Thousands
Let's talk about the document most people spend fifteen minutes reading before signing away hundreds of thousands of dollars.
Your building contract.
Not the floor plan. Not the facade. Not the selections catalogue. The actual legal document that controls everything that happens from the moment you sign to the moment you get your keys.
Because here is what I see happening constantly. People spend weeks choosing a splashback and fifteen minutes reading the contract.
And then something goes wrong - a cost increase, a delay, a payment dispute - and suddenly they are trying to understand a document they barely read, desperately turning to social media groups chats in search of answers - while simultaneously managing a build that has gone sideways.
I don't want that to be you.
So here are a few contract clauses that catch people out most consistently. Know them before you sign. Not after.
1. Fixed Price Doesn't Always Mean Fixed
This one gets almost everyone.
"It's fixed price so we're protected."
If I had a dollar for every time I've heard this I could probably build another house.
A fixed price contract often contains several exceptions that allow your builder to legitimately charge you more. And they are not small exceptions.
👉 Site conditions. Unexpected rock, poor soil, fill, groundwater or engineering requirements discovered after signing. Your block looked straightforward. Underneath it was not.
👉 Owner variations. Any change you make to plans, selections or inclusions after signing. Even small ones. Every single one has a price tag attached.
👉 Authority requirements. Additional works required by councils, certifiers or utility providers that weren't anticipated at contract stage.
👉 Delays caused by you. Delays in your finance, your selections, your approvals or your land settlement can result in additional costs being passed back to you.
👉 Legislative changes. New building regulations or compliance requirements introduced after you signed. You cannot control these. You can still be charged for them.
👉 Provisional sums. Allowances for unknown works - rock removal, retaining walls, service connections - that end up costing more than the estimate in your contract.
The price is fixed. Until one of those things happens.
2. The Special Conditions
Everyone reads the standard contract. Or at least skims it.
The Special Conditions are a different story entirely.
These clauses are not generic. They are specific to your builder - written over time to protect them from situations they have already found themselves in.
- Disputes they lost.
- Claims that cost them.
- Scenarios that exposed gaps in the standard contract that didn't go in their favour.
They fixed those gaps. With clauses. In your contract.
So before you skim past the Special Conditions understand what you are actually reading. You are reading a history of every situation this builder decided they never wanted to be caught in again.
Here is what to look for:
Extension of time clauses. Can the builder claim extra time for weather, material shortages, labour shortages, supplier delays or access issues? Ask how much extra time they can claim and what evidence they are required to provide.
Site cost clauses. Look for any wording relating to rock removal, soil conditions, retaining walls, piering or service connections. Ask specifically what site costs are excluded from the contract price - because the answer may surprise you.
Suspension of works clauses. Some contracts allow the builder to legally stop construction for late payments, approval delays or other owner related issues. Know when they can do this before you find out the hard way.
Always read the Special Conditions. Then read them again. Then consider having a building lawyer read them too.
3. Extensions of Time - The Clause Builders Understand Better Than You Do
You are focused on your build duration. The builder is focused on the Extension of Time clause.
They are not the same thing.
For example - a 180-day build can become significantly longer if Extensions of Time are granted - for weather delays, material shortages, labour shortages, supplier delays, council delays, authority approvals or access issues.
And in most standard contracts the builder has the right to claim them.
Before you sign ask yourself the following:
- Does the builder need to actually prove the delay occurred?
- How many days can be claimed in total?
- Is there a specific process they must follow to claim an EOT or can they simply add time whenever they choose?
- What specifically caused the delay?
- How were those days calculated?
- And importantly, what is the revised completion date?
An Extension of Time isn't necessarily a problem.
A poorly explained Extension of Time is.
4. Progress Payments - You May Not Be Able to Withhold Them
This is the one that genuinely shocks people when they find out.
Many owners assume that if they are unhappy with the quality of work at a particular stage they can simply withhold the progress payment until the issue is fixed.
In most standard building contracts - that is not how it works.
Many HIA and MBA contracts require stage payments to be made once a stage has been substantially completed - even if you have concerns about workmanship or defects.
✨Minor defects or quality disputes do not automatically entitle you to withhold payment.
The contract typically requires you to pay the stage claim and have defects addressed through the builder's defect rectification process separately.
Which means if you withhold payment because something doesn't look right - you may be the one in breach of contract. With interest charges, suspension of works or further contractual consequences to follow.
Standard building contracts are generally designed to protect the builder's cash flow. Not yours.
Check your contract carefully. When is each payment due? Is it linked to construction stages or calendar dates? How long do you have to pay? What are the consequences of late payment? Can interest be charged on overdue amounts?
What Can You Do to Avoid Disputes?
If your contract requires you to make progress payments once a stage is substantially complete, your best opportunity to identify issues is often before that stage is signed off.
Consider arranging your own inspections throughout the build, rather than waiting until Practical Completion.
Common inspection points include:
🔎 Pre-Slab Inspection
🔎 Frame Inspection
🔎 Lock-Up Inspection
🔎 Fixing Stage Inspection
🔎 Practical Completion Inspection (PCI)
By inspecting each stage as work progresses, you may be able to identify concerns earlier and raise them with the builder before the next stage of construction begins.
And you should also visit your site regularly. Take photographs, keep records and ask questions when something doesn't look right.
While not every concern will be a defect, documenting the build as it progresses can help you better understand what is happening and provide a record if issues arise later.
Can You Change a Building Contract Before Signing?
Yes, you can ask for changes.
No, that doesn't mean the builder will agree to them.
The reality is that volume builders operate differently to custom builders.
A custom builder might negotiate heavily because they're building a handful of homes at a time.
A volume builder may have hundreds or thousands of contracts using the same template. Their contracts are designed to be standardised, repeatable and low risk for the builder.
That doesn't mean you shouldn't ask.
It means you should be realistic about what is likely to be negotiated.
If there is a clause you don't understand, don't agree with, or feel is unfair, raise it before signing. This is your opportunity to ask questions, seek clarification and negotiate changes.
Common areas homeowners may wish to discuss include:
· 🚩 Extensions of Time (EOT) clauses
· 🚩 Special Conditions
· 🚩 Progress payment timeframes
· 🚩 Access rights
· 🚩 Site cost provisions
· 🚩 Price increase clauses
· 🚩 Liquidated damages
Some builders may agree to amendments. Others may refuse. Some may offer alternative wording or additional clarification.
The important thing is that you ask.
Once the contract is signed, your ability to negotiate is significantly reduced.
The Bottom Line
Your building contract is not a formality. It is the rulebook for everything that happens when something goes wrong.
And sometimes - things go wrong.
Read it. All of it. The standard contract and the Special Conditions attached to it. If something is unclear - ask.
If something doesn't sit right - get a building lawyer to look at it before you sign. The cost of an hour with a lawyer is nothing compared to the cost of discovering a clause you didn't understand twelve months into your build.
Disclaimer:
Abeaud exists to educate, empower and support homeowners through the building journey. The information in this article is general in nature and should not be considered legal, financial or professional advice. Every build, contract and circumstance is different, so we recommend seeking independent professional advice before acting on any information contained in this article. 🍏
