An Overview on Builder’s Variations or Changes to Major Domestic Building Contracts

Variations or changes to domestic building contracts may be performed if the statutory requirements prescribed in the Domestic Building Contracts Act 1995 (Vic) are met. If changes are made to working drawings, schedules, scope of works, plans and specifications, annexed to a major domestic building contract, then those changes are commonly known as variations.

In this article, we address frequently asked questions that builders may have regarding variations or changes made to domestic building contracts:

In Victoria, the Domestic Building Contracts Act 1995 (Vic) (“the Act”) regulates domestic building contracts, and major domestic building contracts. The Act also regulates how variations should be made, and the procedures followed by owners and builders in any variations to plans or specifications that form part of a major domestic building contract. 

What is a major domestic building contract?

The Domestic Building Contracts Act 1995 (Vic) defines a major domestic building contract as a contract for the carrying out of domestic building work that is more than $10,000.

Without limiting the kind of building works regulated by the Domestic Building Contracts Act 1995, domestic building works may include the following works:

• the erection or construction of a home.
• the renovation, alteration, extension, improvement or repair of a home;
• any work such as landscaping, paving or the erection or construction of retaining structures, driveways, fencing, garages, workshops, swimming pools, or spas that has to be carried out in conjunction with the renovation, alteration, extension, improvement or repair of a home.
• the demolition or removal of a home.

For an introduction regarding domestic building work, our topics include:

How can a builder make variations to a major domestic building contract?

If a builder intends to make variations or changes to the scope of works in a major domestic building contract, then the builder should deliver to the building owner, a variation notice.

It is important that a builder’s variation notice should include the following information:

Does a builder require signed consent from a building owner to make a variation?

Generally, a builder cannot effect a variation or change to plans and specifications, unless a building owner has given signed consent to the builder’s variation notice.

However, a builder may not require a building owner’s signed consent to a variation notice, in circumstances when:

• a building surveyor (or other authorised person under the Building Act 1993 (Vic)) requires a building notice or building order that the variation be made; and
• the requirements arose in circumstances outside the builder’s control; and
• the builder has included that building notice or order in the variation notice; and
• the building owner does not advise the builder in writing within five (5) business days when in receipt of the variation notice that the building owner wishes to dispute the building notice or order.

When can a builder claim payment from an owner for variations?

Generally, a builder cannot claim money from a building owner for variations, unless the builder:

• shows that they have complied with the requirements with a variation notice and the builder owner has given signed consent; and
• can establish the variation was made necessary by circumstances that could not have been reasonably foreseeable by the builder at the time the contract was entered into.

Otherwise, generally, if proceedings are commenced at the Victorian Civil and Administrative Tribunal (“VCAT“), then for a builder to claim payment from an owner for variations that does not comply with procedural requirements for making variations, VCAT must be satisfied that:

• there are exceptional circumstances that entitles the builder to claim payment; or
• builder would suffer significant or exceptional hardship if they did comply with the requirements to a variation notice; and
• it will not be unfair to the builder owner for the builder to claim the payment.

Notes and Further Information

On topics relating to the built form environment and construction, our related topics include:

Related Entries

Domestic Building Work | Domestic Building Contracts Act 1995 | Domestic Building Contract | Major Domestic Building Contract | Variation (Owner) | Domestic Building Contracts Regulations 2017 | Domestic Building Insurance | Progress Payments | Variations (General) | Termination | Repudiation | Causation | Liquidated Damages and Penalties |

Authored by:
Ben Franklin, Managing Partner (LIV Accredited Specialist – Property Law), & Matthew Tran, Lawyer.