Land buyers beware! The secret charges lurking in your building contract

It’s a situation most land buyers know well; You purchase the perfect plot of land and throw yourself into planning your dream home, only to wait months for permits and building approval.

While managing delays is a common hassle for many land buyers, these delays could do more than just frustrate you – they could cost you thousands.

In building contracts, it is common for builders to add a clause explaining that they will charge owners an additional fee if construction is delayed. It might look something like this:

“If the time allowed in Tender for building works to commence expires…the builder shall be entitled to increase the contract price by way of contract price adjustment of 4.5%.”

While the contractual clause may seem ordinary, it has forced countless Australians to cash out because of circumstances beyond their control.

Although it takes an average of 68 days to process a Development Application in NSW, many landowners have reported that such processes have taken far longer. As the time ticks closer to the building commencement date, owners waiting for Approvals are powerless to hasten the process.

This week, Freedman & Gopalan saw the consequences of this clause first-hand. The client in question was ecstatic about the purchase of her plot of land, in a buy and build deal with one of the country’s leading developers. After months of unexpected delays in obtaining relevant permits, her builder hit her with a fee of over $15,000 to be paid up front.

It is vital to have your contract professionally reviewed before you put your signature on the dotted line.

To discuss having your building contract reviewed by our experts at Freedman & Gopalan Solicitors, call us on 02 8999 9837.

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