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What is a major domestic building contract in Victoria?

An Overview on Major Domestic Building Contracts

The Domestic Building Contracts Act 1995 (Vic) is Victoria’s domestic building legislation that regulates major domestic building contracts and the conduct of parties when entering into that type of contract. Major domestic building contracts are regularly entered between owners and builders for the construction of homes and residential buildings.

In this article, we address the frequently asked questions associated with major domestic building contracts, including:

What general content is required in a major domestic building contract?

A major domestic building contract is a domestic building contract to carry out, arrange or manage the carrying out of domestic building work that is more than $10,000. The Domestic Building Contracts Act 1995 (Vic) sets out statutory requirements relating to major domestic building contracts.

The statutory requirements prescribes that a major domestic building contract should contain minimum standard of content. A builder should enter into a major domestic contract unless the contract meets the minimum requirements as follows:

Minimum RequirementsSummary
Writing and Full TermsThe contract should be in writing, in the English language, readily legible and sets out all the terms of the contract.  
Detailed DescriptionThe contract has a detailed description of the work to be carried out.  
Plans and SpecificationsThe contract should include the plans and specifications, and those plans and specification have enough information for the obtaining of a building permit.  
Name and AddressThe contract should state the names and addresses of the parties to the contract.  
Registration NumberThe contract should state the registration number under the Building Act 1993 (Vic) of the registered building practitioner entering into the contract.
Commencement DateThe contract should state the date when the work is to start, or how that date is to be determined.

However, if the starting date is not yet known, the contract should state that the builder will do everything that is reasonably possible to ensure that the work will start as soon as possible.  
Work CompletionThe contract should state the date when the work will be finished, or if the starting date is not yet known, the number of days that will be required to finish the work once it has started.  
Contract DateThe contract should state the date the contract is made.  
InsuranceThe contract should set out the details of the required insurance under the Building Act 1993 (Vic).  
Notice as to cooling-off periodThe contract should have have a conspicuous notice in a form approved advising the building owner of the right the building owner may have to withdraw from the contract under the cooling-off provision.  
Defined WordsThe contract should a separate section that defines the key words and phrases used in the contract.

Furthermore, the contract should indicate whenever a defined word or phrase is used, the word or phrase is defined in the definition section.  
Statutory WarrantiesThe contract should set out the statutory warrantied implied into a domestic building contract.
Other RegulationsThe contract should comply with the other requirements in the Domestic Building Regulations 2017 (Vic).  

Read More: For more information about domestic building regulations, “What is the Domestic Building Contracts Regulations 2017?” explores the Domestic Building Contracts Regulations 2017 as an overview.

What are the other general requirements if a builder is in a partnership or company?

There are number of other requirements if the builder is in a partnership or foreign company, as set out below:

Entity TypesSummary
PartnershipIf a registered builder enters into a contract on behalf of a partnership, the contract should state the names and addresses of each member of the partner, and the registration number of each member of the partnership who is a registered building practitioner.
Corporation or Foreign CompanyThe contract should state the ACN or ABRN of the corporation or foreign company. 

For further information about domestic building contracts, other legal topics explored include:

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When must a builder give the building owner a copy of the domestic building contract?

After the parties enter into a domestic building contract, the builder must give a building owner, a readily legible signed copy of the major domestic building contract as soon as practicable, but no later than five clear business days. However, if it is any other type of contract, then a readily legible copy of any document that forms part of the contract must be provided to the building owner with the same time frame.  

Can a person enter into a major domestic contract without being registered building practitioner?

A person must not enter into a major domestic building contract to carry out domestic building work for another person unless the statutory requirements are met:

  • the person is a registered building practitioner; and
  • the person’s registration authorises the person to carry out the work that is engaged.

Furthermore, if a person enters into a major domestic building contract on behalf of a partnership, that person should be a member of that partnership, be a registered building practitioner, and their registration authorises the carrying out of the relevant building work.

Does a domestic contract provide a caveatable interest in land?

A builder cannot place a caveat on a building owner’s land in reliance of a domestic building contract because a domestic building contract does not provide a builder a caveatable interest to lodge a caveat.

Read More: For further information about caveatable interests, “What is the purpose of a caveat in Victoria?” explores the topic of caveats, and the general process involved before and after caveat has been lodged in Victoria.

When can a building owner end a major domestic building without penalty?

Generally, a building owner may end a major domestic building contract without penalty based on whether or not a warning notice has been given, and within time limits prescribed by the Domestic Building Contracts Act 1995 (Vic). Depending on the situation, different legal consequences may arise.

Can a building owner end a major domestic building contract without penalty if a warning notice is given?

If a building owner receives a copy of the signed major domestic contract, then the building owner may withdraw from the contract at any time before the lapsing of five (5) clear business days. To withdraw, a building owner must comply with the delivery requirements within five clear business days.

If a withdrawal of the major domestic contract arises within five clear business days, then certain events may arise:

  • a builder may retain out of any money already paid to the builder ,$100 plus cost of out-of-pocket expenses the builder incurred before the withdrawal with the building owner’s approval;
  • the builder must refund all other money paid from when the contract was made; and
  • the building owner is not liable to the builder for withdrawing from the contract.

However, building owner may not withdraw from a contract, if the building owner and builder previously entered into a major domestic building contract with substantially the same terms for the carrying out of work in the same home or land, or the building owner received independent legal advice.

Can a building owner end a major domestic building contract without penalty if a warning notice has not been given?

If a major domestic contract does not contain a notice advising the building owner their cooling off rights, then the building owner may withdraw from the contract within seven (7) days of becoming aware that the contract should have contained that notice. To withdraw, a building owner must comply with the delivery and notice requirements.

However, if a major domestic building contract is ended by this approach, then it is different if the major domestic building contract was ended within the cooling off period. In this situation, a builder may recover a reasonable price for work carried out under the major domestic building contract up to the date when the contract was ended, however, limited by the amount under the contract.

Notes and Further Information

On topics relating to construction, built form, and the application of the National Construction Code, our related topics include:

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

If you are looking for legal expertise and have any questions, connect with an author or a member of our building and construction team.

Do you need legal advice? Call us on (03) 5331 1244 to get in touch and arrange an appointment with one of our lawyers.

You can also connect with us by filling out your details and telling us about your information for legal advice below:

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

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