Understanding legal rights when building a new home

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​Frequently projects go wrong and the contractor and the owner engage each other in lengthy and costly legal battles. 

Why home construction projects end in legal disputes

Disputes may arise because:

• There’s a poor contract in place which doesn’t adequately describe the scope of the work and the contractor’s and owner’s (your) obligations. Or, the contract is flawed with loop-holes and contradictory clauses. Read Home build and renovation contracts part 3 - What contracts should include
• You don’t understand the contract fully, including your rights and obligations in terms of the contract.
• The contractor doesn’t understand the contract.
• One, or both parties doesn’t act in good faith, or in terms of the contract.
• There’s a lack of communication between the parties.
• One of the parties is obstinate, or doesn’t want to admit they’re wrong.

Avoiding legal disputes on your home build and renovation project

​It’s essential that:

• You understand that changes, delays and instructions caused by you, or those acting on your behalf, can have a profound impact on the project giving rise to delays and variations. Even the simplest change could have a knock-on impact on other activities which you haven’t considered or aren’t aware of.
• Your expectations should be clear, consistent and achievable from the start of the project. Read What’s included in your builder's price (or excluded)
• You know that failure to understand the contract, or assumptions made incorrectly, is no excuse for non-compliance of the obligations and terms of the contract.
• You understand that the contract is the law on the project, and all actions are judged using this document. It’s not about who will be nice, who will forgive, rather it’s about complying with the terms of the contract. The fact that the contractor has a legitimate variation claim should be no reason to argue that they’re being unfair, or to assume that they’re crooks only out to steal money from you. Read Home build and renovation contracts part 1 - what you should know
• All parties continually communicate with each other, immediately notifying the other party of concerns, changes and possible impacts on the project. Read Good communication with your building contractors is vital
• You understand that even if the contractor hasn’t said that there will be an extra cost, that this doesn’t mean there won’t be a claim from them later.
• When in doubt you ask for expert advice. 

Conclusion

Construction disputes are usually costly and they sometimes can drag on for years. Inevitably both you and the contractor will be out of pocket, frustrated and upset. There are frequently no winners from construction disputes.

It's important that you engage reputable contractors for your home build or home renovation project. That the contract used protects your rights and clearly sets out the scope of work, and both your and the building contractor's obligations. It's important to read and understand the contract and ensure that both you and the contractor meets their obligations.
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If in doubt engage an expert to help you through the contract process.

In future articles we will look at some reasons your contractor can claim additional time and costs, and reasons they cannot claim for.

Other useful articles
​14 Questions to ask your building contractor's clients
Construction Management: Resolving Disputes Effectively between Owners and Contractor
Home build and renovation contracts part 4 - Different types of contract

​​This is an extract from the author's book 'An Introduction to Building and Renovating Houses: Volume 1 Hiring Contractors, Managing Construction and Finishing Your Home'.
​© 2020 This article is not to be reproduced for commercial purposes without written permission from the author.

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Want to learn more about designing, renovating and building houses?

Paul Netscher has written 2 easy to read books 'An Introduction to Building and Renovating Houses - Volumes 1 and 2'. An Introduction to Building and Renovating Houses Volume 1 deals with Hiring Contractors, Managing Construction and Finishing Your Home.  and Designing your ideal home Volume 2 deals with Finding Your Ideal Property and Designing Your Dream Home. 
​("Great for those that DIY. Very helpful in home renovations!" said a Reader on Amazon.com 5*****)
These books are available from Amazon and other online bookstores in paper and ebook.

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