Back to Back Issues Page
KHB-Zine, Issue #009: Contracts
September 02, 2017


Welcome to the September edition of KHB Ezine.

This month....
Contracts and warranties for the kit home owner builder

Early PS: if you are reading this on a phone, turn it sideways to enable landscape view, it's easier to read.

For potential owner builders, contracts and warranties can look daunting. Here is an outline of what to expect as an OB buying a kit home to build themselves. No legal advice is offered here.

Kit home supply contract
Start with a Finalised Quote: It is virtually impossible to get a real quote from a provider unless you go through the motions of handing all information to them. Yes you can get a basic kit price from the net, but the final price can be much more.

Once you look closely at the layout, move or add a wall, add or enlarge a window, raise the ceiling, add a sliding door, add bushfire provisions etc, the price will alter significantly. This is not the providers fault as they have to start somewhere. So for the kit alone I would add 20% to the advertised prce for your alterations. This will eventually be 'the finalised quote' which should also list the agreed inclusions: insulation, cladding, roofing, linings ect, and is then yours to accept or not.

My big alterations were thicker glass in the windows (for bushfire provision), more windows and an extra slider, a higher ceiling, steel screens and transport. This changed the price from $62000 to $78000.

A contract to provide a kit is a lot more basic compared to a contract to build a home. There are still three pages of 'legalese' which needs to be read and understood. Most of it outlines dispute management rising from quality of the product, late or non payment, timeliness of deliveries, substitutions, ammendments, what the supplier is not responsible for eg site prep or site construction, what the purchaser is responsible for eg immediate inspection and approval of the delivered product. If it is not readable, get a solitictor to assist.

The contract will also spell out the terms of payment, usually broken into 4 payments:
1. Deposit: around 20%.
This allows the provider to begin drawing plans, engineering and building the frames. 5 business day (120 hour) cooling off periods apply here.

2. Frame delivery
3. Roofing, guttering, soffit and cladding delivery
4. Windows, linings and door delivery

The contract should also spell out owner builder assistance over and above any manuals supplied.

Trade contracts
Before entering an agreement to hire a trade worker, I enquire about their Workplace Health and Safety setups. Their initial response will tell you their safety attitude, so listen in. I want to hear them speak of gantries, fall arrest systems, guard railing, safe work methods, personal protective equipment, and any specific trade risk management they may need. They are responsible for their own safety, but according to our WHS regulations, owner builders are responsible for site WHS. So if there is an accident, and safety systems were not in place, you will both be liable for big fines.

A trade quote often doubles as a contract in this day and age as properly written quotes contain the following:
Detail of the task, specifications, dimentions, plans etc
All materials to be purchased including quality, seller, and delivery.
How long the task will take to complete, outlining all contingencies required beforehand.
The total cost of the task including what will cost extra if required + GST
The warranty offered on the task
The personel to be used
Job site requirements
Signed and dated
Some add dispute resolution fine print on the back.

Certifications Many building jobs require a certification to be furnished on completion or supply and need to be handed to the building insector. Some of these need to be part of a trade work contract. My last build required certification for:
Frame engineering
Slab engineering
Gas fitting
Electical work
Window glazing
Shower glazing
Garage engineering

Warranties on trade work must be inserted into the signed contract and be explicit. Most reputable trade workers will return to fix a fault these days due to the advent of social media! A twelve month warranty is pretty good for faulty workmanship or failures. Of course all PC items such as Dishwashers, exhaust hoods, stoves etc must be redeemed from the item seller.

Waiver: This is a summary from my experience. I am not a contracts solicitor so this is not advice. Do your own research and seek legal advice.

If you are buying a kit from a builder and getting them to build it, you will need a much more substantial contract. HERE is a site that outlines some important contract provisions.

Need a short ebook on owner building? Your big bonus, just for being a subscriber, is personal access to my Free Ebook
Kit home groundwork: 5 Crucial Steps.

Download your free PDF version HERE and use your personal password khb7913 (lower case letters-expires in 7 days). If you miss out just contact me.
I'm happy for you to share this file with a friend, but please don't upload it.

For a full experience kit build ebook check out Steel Yourself here.

Follow me on Facebook here and if you like the page...please "like and follow" it!

warm regards

Back to Back Issues Page