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Depending on the cost and nature of the project, the Home Building Contracts Act 1991 (WA) regulates the manner and form under which a variation should be requested.
The information below outlines the formal process for documenting a builder-requested variation, including the builder’s obligations under the contract and the legislation.
The Home Building Contracts Act regulates contracts with any person undertaking home building or associated work for a homeowner valued between $7500 and $500,000, including contracts between a builder and owner-builder. However, it excludes contracts between trades/sub-contractors and a builder.
HIA has a range of contracts available that comply with the Act.
There would usually be two scenarios by which the builder is permitted to initiate a variation:
Firstly, the builder needs to give to the owner a statement setting out the reasons and the cost to be incurred on account of the variation and a copy of any direction from the building surveyor (or other person).
This statement must be given by the builder to the owner within 10 working days after the builder received notice of the direction or alternatively within 10 working days of becoming aware (or should reasonably have become aware) of the unforeseen circumstances.
In the event the owner disagrees with a variation necessitated by ‘unforeseen circumstances’, then they may make a complaint to the Western Australian Building Commission. However, this complaint would need to be made within 10 working days after the statement was given to the owner.
HIA sell a Form 1 Variation Document (which comes in a pad of 30 in triplicate), which can be used by the builder for the purposes of variations between the builder and owner.
The HIA contracts also entitle the builder to issue a variation document in certain circumstances, such as:
Please check the exact clause in your contract or check with your Workplace Advisor if you are unsure of your rights and obligations in these circumstances.
If you do not comply with the above requirements then you expose yourself to a number of risks, including:
Furthermore, in all likelihood you may end up with an unhappy client, which would pave the way for subsequent disputes of other issues.
It is therefore best practice to ensure that you obtain your client’s written authorisation before carrying out any variation to the contract or the scope of works.
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