Clauses to Include in your Building Contract


A tight building contract ensures your budget doesn’t blow out.

NewBuild recommends the following clauses be added to your Building Contract:

In nearly all instances your banks’ loan conditions (especially the progress payments) will conflict with your building contract.

Banks have certain rules around how much they will advance against a section, or how much money they allow as deposit, to how much they are willing to pay for a progress claim. And in some instances, they can even stop making payments if they are not satisfied.

So while your bank may win the battle between any conflict between your build contract and the loan contract – the client almost always loses.

Key clauses to avoid conflict

At this point you have two legally binding agreements – with potential for serious conflict. To help avoid this conflict NewBuild encourages you to ensure three clauses are added to your build contract – even if you choose another bank.

  1. All deposit and progress payments are to be made in accordance with the lender's guidelines
  2. Practical Completion shall include the Code Compliance Certificate and the valuer's Completion Certificate, in accordance with the lender's guidelines
  3. The contract is conditional upon the lender's acceptance of the build contract, and a formal bank loan has been approved to build