Signing residential building contracts

What are the requirements for signing a contract in Tasmania?

The Residential Building Work Contracts and Dispute Resolution Act 2016 (Tas) requires residential building contracts to be in writing and signed by the builder and owner. A contract can be signed electronically or in wet ink. Once signed the builder must then provide a copy to the owner as soon as practicable or in any case 5 business days. 

Can a residential building contract be signed electronically?

With the increased use of online transactions, many businesses are looking for an efficient and flexible way to sign building contracts. The Electronic Transactions Act 2000 (Tas) allows building contracts to be signed electronically provided the following requirements are met:

• The method used identifies the person and their intention to sign the contract;
• The method used is reliable; and
• The owner and builder consent to signing electronically. 

What is an electronic signature?

An electronic signature is any method which applies a “signature” to an electronic document. This can include a person’s typed name, an inserted image of a person’s scanned wet ink signature or a signature created on a device using a touchscreen.

Alternatively, you may use a secure digital signing platform to sign your building contracts. It is very important that a reliable and trustworthy platform is used when signing electronically.

While signing building contracts electronically may be convenient, businesses should take reasonable steps to ensure the digital signing platform adopted is secure. 

Rules relating to witnesses

Do I need a witness? 

Whilst there is no legal requirement that a residential building contract be signed by a witness, HIA’s building contracts include a provision for witnesses. Having signatures witnesses is considered best practice as by witnessing the signatures to the contract, the witnesses are confirming that they have observed the contracting parties sign the contract.

Do the parties need to sign together? 

Importantly, all parties do not need to sign the contract together. Each witness only needs to observe and attest to their respective party’s signature. Whilst there is no legal requirement that witnesses sign the contract, we recommend that you nonetheless endorse this practice. 

Rules relating to initialing 

There is no legal requirement that residential building contracts be initialed by a builder and owner. However, HIA’s building contracts have a provision on certain pages for both parties to initial. .

We recommend that once a party reviews the contents on a page to then print their initials. It is important to remember, printing initials on a page does not bind the contract, it only confirms that the party has reviewed each page.

Faxing, emailing and photocopying?

Parties to a contract are permitted to email, fax or photocopy a signed copy of a residential building contract provided the requirements of using electronic signatures are met. 

It is important to remember that all parties must sign the same version of the contract. For example, if you are contracting with an owner who is interstate, you would email an unsigned copy of the contract requesting that the owner sign it first and email it back to you. Then you would sign the same version of the contract however, you must make sure to review the contract after the owner has signed to ensure that the owner has made no amendments. 

Lastly, unless the contract contains a “counterpart execution clause” (which HIA contracts do not) it will usually be insufficient to have two versions of the contract in existence (one signed by each party) as such a contract risks being be declared void by the Courts.