NSW Building Consumers Hit with Thousands in Unexpected Payments

by Andrew Heaton

Residential building customers in New South Wales are being forced to cough up with thousands of dollars in payments over and above what they believed they would be liable for, the consumer regulator in that state says.

In a recent statement, former (recently retired) NSW Fair Trading Commissioner Rod Stowe said his agency was hearing concerns from consumers who entered into building contracts and were subsequently forced to pay more than what they thought they would have to.

One problem revolved around consumers entering into ‘fixed price’ contracts with builders only to find themselves being hit for extra costs which they believed would have been included within the price.

“Some builders are applying penalty costs for delayed commencement of construction work, even if the delays were outside the consumer’s control,” Stowe said.

“They are also demanding payment for things thought to be covered by the contract, such as site clearance, structural steel beams, and council fees and charges.”

“We are hearing from consumers who thought they had entered into a ‘fixed price’ contract with a builder, only to find this wasn’t the case.”

Outside of fixed price contracts, Stowe said consumers were experiencing other problems.

In some cases, customers who expected a specific final-payment amount were finding this was much more than expected.

In some instances, builders were holding their customers to ransom by refusing to hand over the keys where unless the consumer agreed to pay the higher amount.

In further instances, builders were offering consumers a lower final payment amount in exchange for signing a deed of release which indemnified the builder from further claims and prevented the consumer from making adverse comments against the builder.

Finally, some consumers were being hit with non-refundable fees of up to $15,000 in order to enter into a pre-tender agreement with a builder.

Throughout New South Wales, home building contracts are governed by the Home Building Act 1999 and associated regulations.

Under that law, builders or tradespeople who perform residential building work valued at between $5,000 and $20,000 must provide consumers with a ‘small jobs’ contract.

For contracts worth over $20,000, a more extensive home building contract is required. This contains a more extensive list of requirements including a termination clause, a cooling off period and a checklist of fourteen items which are prescribed in the Home Building Regulations 2014.

Statutory warranties also apply to all residential building work.

Contracts written in clear, plain English are available on the NSW Fair Trading web site.

Lynelle Collins, A/Executive Director Building & Construction Service for the NSW Department of Finance, Services and Innovation, said it was important for consumers to ensure that they understood the contract and sought independent legal advice.

In particular, Collins says any special conditions which are not part of standard contracts should be afforded extra scrutiny.

For those already embroiled in disputes about defective or incomplete work, Collins says Fair Trading can assist in mediation.

“Consumers have the right to seek independent legal advice to review the documents to see if there are any hidden surprises,” Collins said.

“It is important to understand the inclusions as well as what is not included. (What’s not included in the fixed price contract is important as this can cause financial stress).”

“Ensure you understand each clause of the contract and that the contract contains all of the items listed on the Fair Trading website (too many to list) as well as the contract checklist for owners entering a building contract.”

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