An Overview on Owner Changes to Major Domestic Building Contracts

Domestic building contracts may be varied or changed if the statutory requirements set by the Domestic Building Contracts Act 1995 (Vic) are complied. If changes are made to working drawings, schedules, scope of works, or 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 building owners 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 building 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 further information on domestic building work, our related topics include:

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

If a building owner intends to make variations or change to the scope of works, plans or specifications to a major domestic building contract, then the building owner must give to a builder, a notice requesting variation.

The builder may carry out the variation if the builder reasonably believes that:

• the variation will not require a variation to any permit; and
• the variation will not cause any delay and will not add more than 2% of the original contract price stated in the contract.

However, in any other situation and if the variation may be carried out, the builder must give to the building owner, a variation notice that states the following information:

What happens if there is a refusal to carry out a variation?

If the builder refuses or is unable to carry out the building owner’s requested variation, then the builder should deliver a notice to the building owner stating the reasons for refusing with that variation.

When should a notice of variation or notice of refusal be provided?

The builder should provide a notice of variation or notice of refusal within a reasonable time after receiving the building owner’s request for a variation.

Does a builder require signed consent from a building owner for variations requested by a building owner?

A builder should not give effect to a builder owner’s request for a variation to the plans and specifications, unless:

• a building owner has given signed notice requesting for a variation
• a building owner has attached the builder’s notice of variation alongside the building owner’s signed notice requesting for a variation
• an exception applies as listed above, that, the variation will not cause any changes, not cause any delay, and not add more than 2% of the original contract price.

When can a builder claim from owners 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 set out above; 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, if a builder has not followed procedural requirements for making variations, then generally, when proceedings are commenced by a builder against an owner at the Victorian Civil and Administrative Tribunal (“VCAT”), 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 and discussions about construction and the built form environment, our related topics include:

Related Entries

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

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