Figures checked 1 October 2026. According to the ACT Government’s City and Environment Directorate’s builder guidance, there is no requirement under ACT legislation for a written contract for residential building work, although one is strongly recommended; the guidance also recommends at least 3 quotes from different builders. The contract should identify the builder’s licence and any insurance policies held, and for work over $12,000 on some residential buildings, the builder must have residential building work insurance or a fidelity fund certificate before work starts; the maximum amount claimable under that project insurance is currently $10,000 if the work is not completed.
Why should I use a written contract if it is not compulsory?
A written contract records the agreement between the homeowner and builder, including their rights, responsibilities, costs, timeframes and expectations. It can also establish how variations, extensions of time, completion and disputes will be handled, helping prevent uncertainty or disputes about the work.
The ACT has no mandatory cooling-off period for building contracts. Be ready to sign because changing your mind after signing may lead to a penalty under the contract.
A builder may use a standard contract from an industry association or have a lawyer draft one. Read the full document and make sure you understand every clause, particularly your rights and obligations. Seek independent legal advice if you are uncertain about a term or want to add or change something.
After signing, ensure you receive a copy of the contract as soon as possible.
How do I choose a builder and compare the quotes?
The ACT Government recommends approaching different builders and obtaining at least 3 quotes. Compare the scope, quality, inclusions, timing and price rather than assuming the cheapest quote offers the best value. Higher-quality work generally costs more.
Before accepting a quote:
- Check that the builder has the correct licence class whenever the work requires a licensed builder.
- Ask for details of similar work and recent clients.
- Consider company searches.
- Check the disciplinary register for compliance action involving the builder or its directors.
- Set a budget and consider keeping additional funds available for unforeseen costs.
- Compare what is included and excluded, not just the total price.
What should the building contract say before I sign it?
The guidance says a residential building contract should clearly cover the following:
| Contract area | What to check |
|---|---|
| Parties and site | Exact names of the homeowner and builder, the work address, contract date and both signatures |
| Licence and insurance | The builder’s licence details and any insurance policies held |
| Scope | A detailed description of the work, with plans and specifications attached |
| Important features | The inclusions and work features that matter most to the homeowner |
| Approvals | Who is responsible for obtaining building, development and any other required approvals |
| Price | The contract price if known, or a clear explanation of unknown or changeable costs |
| Timeframes | Start and completion dates, time allowed for approvals and the final handover date |
| Variations | How changes to plans, specifications, time and cost will be processed |
| Payments | The deposit, progress-payment stages, amounts and payment dates |
| Completion | What practical completion means and when it occurs |
| Defects period | The maintenance or defects liability period and what each party must do |
| Disputes | A clear process for attempting to resolve disputes |
| Termination | When either party may terminate and the obligations and costs that follow |
| Special conditions | Any conditions that modify the standard contract |
Attach the building plans and identify important inclusions, even small items. Without clear requirements, the contract may allow room dimensions to change or unacceptable products to be substituted.
If a standard contract includes special conditions, read them carefully and check that the document still provides the protections you need.
Who appoints the independent certifier?
Some building work requires a building approval. An independent building certifier must consider the approval application and inspect the work at certain stages, and the landowner is responsible for appointing the certifier.
A residential building contract must not give the builder the right to appoint the certifier or act as the homeowner’s agent when dealing with it. If the builder or another person will appoint the certifier, record that agreement separately in writing.
How should I check the builder’s licence and insurance?
For licensed work, confirm that the builder holds the correct licence class. Where insurance is required, check the contract and the current project documents rather than relying only on a verbal assurance.
The contract should identify any insurance policies held by the builder. You should also obtain a copy of the residential building work insurance policy or fidelity fund certificate for covered work. Check that the contract allows fair termination if the builder cannot obtain the required insurance within the prescribed time.
| Insurance arrangement | Key point |
|---|---|
| Residential building work insurance | Required before work starts for work over $12,000 on some residential buildings |
| Maximum project-insurance claim | Currently $10,000 if the work is not completed |
| Homeowners warranty insurance | Covers only up to $10,000 for deposits and is not residential building work insurance under the Building Act 2004 |
| Separate insurance | May be purchased voluntarily if desired |
Where a policy applies, read its Product Disclosure Statement and check the current regulator guidance. The policy’s terms, not simply its name in the contract, determine its scope and conditions.
How should deposits and progress payments be structured?
There is no legal limit on the initial deposit for ACT building work, although industry practice is usually up to 10% of the total contract price. This may be paid in advance as security for the builder and toward initial material costs.
The contract’s progress-payment schedule should identify:
- The stage of work completed.
- The amount payable at that stage.
- When each payment becomes due.
- How the builder must demonstrate progress.
- Whether progress payments cover completed work only.
Apart from the initial deposit, good practice is for each progress payment to cover only work already completed, and the contract should say so. If the project is financed, understand the lender’s requirements for releasing funds. Parties creating their own payment schedule should seek legal advice.
How are variations and extensions of time handled?
A variation can change the plans, specifications, programme or final cost. The contract should explain how variations will be processed, including changes caused by changes in local laws, errors in plans or changes in the supply of goods.
Always obtain variations in writing. Most contracts require them to be signed by both the homeowner and builder. A builder may refuse a requested variation in circumstances prescribed by the contract.
The contract should also explain how an extension of time is requested. A builder’s margin is essentially the builder’s fee: the percentage applies in specified circumstances, such as variations or termination, and is used to calculate an amount added to other costs.
Contracts generally contain delay-compensation terms for the builder. If you want compensation for construction delays, raise it before signing and obtain legal advice. If the contract includes liquidated damages, it should state the amount payable for each day the project is late and identify allowable delays such as rain, events outside the builder’s control or delays caused by the homeowner.
When are lock-up, practical completion and handover reached?
The contract should state both the completion date for the work and the final building handover date. The completion date is intended as a guide and may change, while a properly considered estimated timeframe protects both parties.
Lock-up generally means the building can be secured effectively, but internal and external work may remain. It does not necessarily mean the project is finished.
Practical completion generally means the building is complete or almost complete under the contract, apart from minor work or defect fixing. Most contracts treat practical completion as the finish date, but some do not, so check when the contract is considered complete. The document should also explain the maintenance or defects liability period and each party’s responsibilities during it.
Review the termination clauses as well. Ending the contract may require the homeowner to pay an amount to the builder. Obtain legal advice if those clauses do not provide sufficient protection.
Which warranties apply if the contract is silent?
Residential building work valued over $12,000 carries statutory warranties under ACT law even if the contract does not state them. The Building Act 2004 requires work to be carried out in accordance with the Act, in a proper and skilful way, and according to approved plans.
The guidance notes that structural and non-structural building elements have different warranty periods, although the quoted material does not provide the exact durations.
Statutory warranties apply to the residence but not to items such as:
- Paving and fences
- Retaining walls
- Outdoor swimming pools and ponds
- Antennas
A contract may provide additional warranties and defect-resolution processes, but these do not limit the statutory warranties.
What should I do if a problem or dispute arises?
Raise concerns with the builder as soon as possible. Keep records of each complaint and the builder’s response because they may be needed if the issue remains unresolved. You can also ask the builder to explain its complaints policy and provide any written policy.
Before signing, understand the dispute-resolution process in the contract and what it requires from each party. If that process does not resolve the dispute, seek independent legal advice about your rights under the contract.
Fair Trading at Access Canberra can be contacted on 13 22 81 for advice about Australian Consumer Law rights.
This is general information, not legal or financial advice. Check the ACT Government regulator page for current requirements and read the relevant policy’s Product Disclosure Statement before relying on insurance cover.
Sources
- ACT Government — Hiring a builder — figures checked 1 October 2026.
FAQ
Is a verbal building contract acceptable in the ACT?
ACT legislation does not require a written residential building contract, but the ACT Government strongly recommends one for a new home or renovation. A written contract is binding and provides a clear record of the work, costs, timeframes, responsibilities, variations and dispute process.
Must the contract show the builder’s insurance policies?
The contract should state the builder’s licence details and any insurance policies held. For work over $12,000 on some residential buildings, the builder must also have residential building work insurance or a fidelity fund certificate before work commences. Obtain the relevant policy or certificate and check its terms.
Is a 10% deposit compulsory in the ACT?
No. There is no legal limit on the initial deposit, although industry practice is usually up to 10% of the total contract price. Make sure the deposit and progress-payment schedule are clearly stated and that you can meet the payment commitments.
Can I cancel an ACT building contract immediately after signing?
There is no mandatory cooling-off period for ACT building contracts. Signing without being ready may mean you cannot change your mind without a contractual penalty, so understand the terms and obtain advice before signing.
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