Guide 2 of 6Over $5,000, and over $20,000
Small job or large job: which contract do I sign?
Over $5,000, a builder must give you a written contract. Between $5,000 and $20,000 it is a small job contract; above $20,000 it is a large job contract with more in it, says the NSW Government. The table below sets the two side by side for a job in Sydney or anywhere else in NSW.
General information about NSW home building law, not legal advice. Not a government website. For your own job, Building Commission NSW is on 13 27 00.
When a written contract is needed
Your chosen builder or tradesperson must give you a written contract if the contract price is:
- over $5,000 (including GST), or
- unknown but the reasonable market cost of the labor and materials is more than $5,000 (including GST).
In the Home Building Act, the small job form is section 7AAA and the large job form is section 7. The Regulation sets the amounts each applies above: $5,000 for section 7AAA and $20,000 for section 7, for contracts entered into on or after 1 March 2015.
Either way, the builder must give you something before you sign. “By law, builders and tradespeople must give you a copy of the Consumer Building Guide before entering into a contract for residential building work that costs more than $5,000.” For work that needs a certifier, the contractor must also give you the information Building Commission NSW publishes about certifiers, and the contract must include terms about your freedom to choose your own.
From NSW Government, Contracts for residential building work and the Consumer Building Guide.
Small and large, side by side
| Item | Small job contract | Large job contract |
|---|---|---|
| Price of the job | Between $5,000 and $20,000 | More than $20,000 |
| Form | In writing, dated and signed by or for each party | In writing, dated and signed by or for each party |
| Some things it must hold | The contractor licence number, a description of the work, and the contract price if known | The price on the first page, with a warning if it may change; the cooling-off period; a checklist of 17 items; a termination clause; a note about the certificate of cover; and a clause that variations must be in writing |
| Cooling-off period | None: the Act’s cooling-off section applies only above $20,000 | 5 clear business days after you are given a copy |
| Your copy | A signed copy within 5 clear business days after the contract is entered into (section 7B) | |
| Progress payments | The Act’s limits on the kinds of progress payment apply above $20,000 | Only authorised kinds, tied to stages or to work already done |
| Arbitration clauses | Void: a term requiring disputes to go to arbitration has no effect (section 7C) | |
| Compensation cover | Not required at $20,000 or less | Required before any work or payment |
From NSW Government, Contracts for residential building work and the Home Building Act 1989 and Home Building Regulation 2014.
Under the Home Building Act 1989 and its Regulation, the differences that matter most all switch on above $20,000: a cooling-off period, the checklist for you, the certificate of cover, and limits on how progress payments are worked out. A job of exactly $20,000 sits on the small side of each line, because each rule applies only where the price exceeds $20,000.
The large job checklist is printed on the NSW Government’s checklist page and on the home page of this guide. The contracts page adds a caution about signing the contract if you cannot answer yes to all items in it.
The cooling-off period
Under section 7BA of the Act, for a contract over $20,000 you may cancel by written notice until 5 clear business days after you are given a copy of the signed contract. If you were not given a copy within 5 days of signing, the 5 clear business days run instead from when you become aware you were entitled to one.
If you cancel, the contract is treated as cancelled from the time it was signed. The builder may keep any reasonable out-of-pocket expenses already incurred from the money paid and must refund the rest, and you owe the builder nothing for cancelling. You can cancel even if some work has been done; the builder is then entitled to a reasonable price for the work done up to that date.
A contract can shorten or remove the cooling-off period only once you give the builder, or the builder’s lawyer, a certificate of the kind section 7BA describes. If the contract leaves out the cooling-off statement altogether, you may cancel it by written notice within 7 days of finding that out.
The period does not apply to every contract. Among the contracts the Act leaves out are contracts between two licensed contractors for work their licences cover, contracts between a builder and a developer, and any class of contract the Regulation names. It also does not apply to urgent work as section 6(2) defines it: work that, if not done promptly, is likely to put someone’s health or safety at risk or damage property, and that could not be done promptly if the contract rules had to be met first.
From Home Building Act 1989, sections 6, 7BA and 7BB and Home Building Regulation 2014, clause 7.
Before you sign
Before you sign any contract with the builder or tradesperson you should:
- make sure there’s nothing in your contract which makes you responsible for termite control instead of the builder or tradesperson
- ensure that progress payments listed on the contract are for work actually done and not time on the job
- not sign if you’re unhappy as you have the right to request changes to the contract
- get legal advice before you make a change to a standard contract or if the builder or tradesperson has amended a standard contract, or included any special conditions
The quotes come first. The NSW Government suggests giving at least 3 contractors the same information so the quotes can be compared, and choosing fittings and appliances before you sign so the prices in the contract are accurate.
From NSW Government, Contracts for residential building work and NSW Government, Getting quotes for contractors.
In Sydney
In the Sydney, Illawarra and Blue Mountains areas, Sydney Water holds the sewer service diagrams for a property, and they are available from the Tap in portal on its website, the NSW Government’s plumbing documents page says.
Sydney Water also asks to see the plans. Its first-time builders page says a new home, retaining wall, garage or similar structure needs its approval before you build, to protect its pipes, structures and easements, and that the plans are lodged online through Tap in. Where a development application goes to council, the council will not consent until Sydney Water has approved the building plans. Sydney Water says it approves around 70% of building plans automatically.
From Sydney Water, Steps for first-time builders and Sydney Water, Building plan approvals.
The money side of the contract has its own guide: the deposit guide works one renovation through, stage by stage. If a contract over $20,000 is in front of you, the compensation cover guide explains the certificate that must come with it.