Variations to a Residential Building Contract
September 01, 2019
The residential building legislation in Tasmania since 2017 make it an offence for variations to not be in written form before additional work is carried out and also make it an offence for a variation document to not comply with formal requirements. This legislation applies to any building contract for residential building work where the cost exceeds $20,000; including when the variation increases the cost from below $20,000 to above $20,000.
The legislation also provides that all variation documents must be signed by the builder. A variation document must be signed by the owner if additional work is required or the variation is sought by the owner. In practice the signature of the owner is the evidence that they agreed to the variation so the signature should always be obtained on the variation document before any additional work is carried out or any changes made to the building work. It is for this reason that the HIA contracts require signatures from both the builder and owner for all variations.
One possible trap with variation documents is that the legislation effectively requires the builder to sign the variation document first and then provide it to the owner to sign. It is not unknown for an owner to modify a variation document, sign it, and then return it to the builder. There have been cases where owners have added or changed the work or changed the price by this method. It is therefore important that the builder keeps a copy of the original variation document they sign and check the returned signed document has not been modified.
Finally, if the owner does not sign and return a variation document within a reasonable time, such as 10 working days, then the builder should notify the owner in writing that the variation has not been agreed and cannot be carried out. The builder may then elect to charge an administrative fee if the owner requested the variation and the contract allows a fee to be charged.
If you have any further questions, please contact a HIA Workplace Adviser on 1300 650 620