Questions to Ask Before Signing a Building Contract in NSW

The moment you sign a building contract, most of your leverage transfers to the builder. Before that moment, every question is easy to ask and cheap to fix. After it, the same questions cost money. I have sat with too many people who discovered this order of operations the hard way, so here are the questions I would ask before signing anything in NSW, and what the law actually says behind each one.

A note on the law: the protections below come mostly from the Home Building Act 1989, and they are real, current and enforced by Building Commission NSW. The dollar thresholds all include GST.

Licence and insurance questions

"Can I see your licence, and does the name on it match the name on this contract?" Residential building work over $5,000 requires a licence. Check the number yourself on the free NSW register at verify.licence.nsw.gov.au, which also shows licence conditions, suspensions, public warnings and prosecution results. Make sure the entity on the licence is exactly the entity on the contract. A company quoting under one name and contracting under another is a question in itself.

"Where is my certificate of Home Building Compensation insurance?" For work over $20,000, HBCF cover (the old home warranty insurance) is compulsory, and under section 92 the builder must give you the certificate for your job before taking any money at all, including the deposit, and before starting work. Not "it's being processed". Before. You can verify the certificate is genuine on the public HBC Check register via SIRA. Understand what it is, too: last resort cover that pays out if the builder dies, disappears or becomes insolvent, with cover of at least $340,000 per dwelling.

Money questions

"Why is the deposit more than 10%?" It legally cannot be. Section 8 caps the deposit at 10% of the contract price for every residential building contract, and demanding more is an offence. There is no innocent version of this mistake from a professional builder.

"What exactly triggers each progress payment?" Under section 8A, progress payments on contracts over $20,000 must be either a set amount tied to completion of a stage "described in clear and plain language", or costs actually incurred and invoiced. Payments tied to dates rather than completed work are the classic sign of a front loaded contract, and official NSW guidance is blunt: progress payments should be for work actually done, not time on the job. My builder selection guide shows what a healthy schedule looks like.

"Are these allowances realistic?" Every prime cost item and provisional sum in the contract is a guess you will pay to correct if it is low, plus the builder's margin on the overrun. This is the single most common budget blowout mechanism I see, and it has its own explainer: provisional sums and prime cost items explained. The short version of the fix: choose your actual fittings, brands and models before you sign, so the guesses become prices.

Document questions

"Where is the price, and can it change?" On contracts over $20,000 the price must appear prominently on the first page. If it can vary, the contract must say so in a warning next to the price and explain how. Read that explanation like it is the whole contract, because in the bad scenarios, it is.

"Where is the checklist, the Consumer Building Guide and my copy?" Contracts over $20,000 must include the official 17 item owner checklist. Builders must give you the Consumer Building Guide before any contract over $5,000, and a signed copy of the contract within 5 business days of signing. These are legal obligations, not courtesies, and a builder casual about them is telling you how they treat obligations generally.

"Who chooses the certifier?" You do. It is your legal right to select the registered certifier, and it is one of the items on the official checklist. A builder who insists on "their" certifier is removing one of your independent sets of eyes.

"How are variations handled?" In writing, priced and signed by both parties before the varied work is done. Anything looser converts every site conversation into a disputed invoice later.

Time and exit questions

"What are the liquidated damages if you finish late?" This is what the builder pays you per day or week past the contracted completion date. It should approximate your real holding costs, like rent. Token amounts effectively remove the deadline. I treat them as a red flag.

"How many rain days are allowed, and what counts as one?" On the Central Coast the honest number is not small. An unrealistic allowance just moves the completion date quietly.

"What happens if I need to walk away this week?" Contracts over $20,000 carry a cooling off period of 5 clear business days after you get your signed copy, under section 7BA. You can rescind in writing within that window and lose only the builder's reasonable out of pocket costs. It can only be waived with a certificate from your own independent solicitor, so treat any pressure to waive it as a signal. Pressure to sign before you have had the contract reviewed is the oldest trick in the book, and it works. Do not let it.

The warranty questions people forget

Every residential building contract in NSW automatically includes the statutory warranties in section 18B: work done with due care and skill, in accordance with the plans, with suitable new materials, compliant with law, finished in a reasonable time, and resulting in a dwelling reasonably fit to live in. You cannot sign these away.

The periods that matter, from section 18E: 6 years from completion for a major defect (major elements include the structure, fire safety systems and waterproofing) and 2 years for everything else, plus an extra 6 months if the defect surfaces near the end. Two duties sit on you in return: give the builder written notice within 6 months of a defect becoming apparent, and allow reasonable access to fix it. Diarise that 6 month notice rule now, because it is the one owners lose on.

Where I fit

Reading a building contract against a set of drawings is literally my job, and an hour of it before signing is the cheapest insurance in this industry. I review contracts and tenders as part of a free site assessment, the wider journey is mapped in before you build on the Central Coast, and if your builder is a project home company, read what to change before you sign first, while changes are still free.