A building contractor’s role is usually more than personally carrying out the building work. It can include:
- quoting and submitting tenders
- contracting for building work
- arranging and paying labour and subcontractors
- scheduling work
- conducting on-site meetings and inspections
- subcontracting to another builder.
You must have a building work contractor’s licence but you can limit your licence to specific work – eg limited to aluminium window and door installation. You must also register as a building work supervisor or hire an approved supervisor.
Building indemnity insurance
Builders must take out insurance when doing domestic building work that needs council approval and costs $12,000 or more. This includes when you are:
- building a house
- building an extension.
Before you start work, give the owner – or their agent – and the council, a copy of the certificate of insurance .
Building indemnity insurance can only be taken out by a person or company that holds a builder's licence.
Domestic building contracts
You must have a written contract if the domestic building work is worth $12,000 and more.
Building contracts must:
- be clearly written
- show the business name and licence number of the contractor and any partners
- be signed by the contractor and owner – or their agents
- state a fixed price and payment terms – can include a ‘rise and fall’ clause.
You must give the owner a signed copy of the contract with a Form 1 – your building contract – your rights and obligations (34KB PDF).
Some clauses in the contract can include:
- rise and fall clauses – allows you to change some of the costs after the contract has been signed – eg increased cost of materials
- prime cost items – allows you to charge for items that are a higher standard than you normally provide – eg ovens and cooktops
- provisional sums – gives an estimate for specific costs of the building work – eg earthwork to level the site.
Deposits and payments
You can ask for a deposit before you start work. Jobs that cost less than $12,000 don’t have a limit but more than $1,000 could be considered unreasonable. The legal limits for jobs costing more than $12,000 are:
- $12,000 - $20,000 – no more than $1,000 deposit
- more than $20,000 – no more than five percent of the total.
You can also ask to be paid for things like council approval and soil testing.
After building work has started, you can only ask to be paid for completed work if the customer has received an invoice.
You must provide certain warranties when doing domestic building work. All work must:
- meet plan, specifications and legal requirements
- be finished within a reasonable time
- be made of good and suitable materials
- be fit for humans to live in if building a house
- constructed with care.
Claims can be made up to five years after the work was finished. Defective building work is covered for ten years.
Advertising and signage
All signage and advertising for the public must include:
- your name as it appears on the licence – or registered business name
- your licence number – if in a partnership, include all licence numbers.
You must put signs in a prominent position on a building site when you are the principal contractor.
This isn’t needed when advertising for staff or other contractors.