If you’re looking to undertake a development, you need to ensure your proposed Building Contract is appropriate for the project. This will depend on whether the project is design and construct, novated design and construct or simply construct only. Talk to us about these and the issues noted below.
BUILDING CONTRACTS
If you’re borrowing from one of the big four banks, it is likely that the bank will want your proposed building contract reviewed by its lawyers in terms of the risk allocation and compliance with relevant legislation. In many cases you will also be asked to sign a Tripartite Agreement.
You need to ensure that the building contract adequately deals with such matters as Contractor’s Security, latent conditions, liquidated damages and the appointment of the Contractor as ‘Principal Contractor’ for the purposes of relevant OH & S legislation.
CONSULTANCY AGREEMENTS
If you intend to novate your preliminary design to the Contractor, your consultancy agreement will need to be drafted accordingly. In this regard, the consultancy agreement should contain a suitable deed of novation and appropriate levels of Professional Indemnity insurance.
PROTECTION WORKS
If you are the owner of the property on which the development is to be undertaken, you are responsible to ensure that protection works notices are prepared and served in accordance with the requirements of the Building Act 1993. Getting this wrong has the potential to cause you significant delay in your project which may ultimately result in lost time, money and possibly sales.
SECURITY OF PAYMENT LEGISLATION
The Building and Construction Industry Security of Payment Act 2002 (the Act) imposes strict and unforgiving timelines. If you’re a Developer and you’ve been issued with a payment claim under the Act, you need to respond within the stipulated timelines, otherwise the claimed amount may become due and payable. In addition, the contractor may be able to apply for an adjudication or summary judgment in respect of that payment claim.
SALES AND MARKETING AGREEMENTS
Make sure you understand the agreement presented to you by your sales and/or marketing agent. Most importantly, ensure you understand whether the agreement is an ‘exclusive’ agreement, the term of exclusivity and how the sales commissions or marketing fees are calculated and in what circumstances they are payable.