Building Contract Checklist: What to Check Before You Sign

A residential build runs for months, and the money flows in stages against work as it is done. The contract is the only thing that governs when those payments are due, how much each one is, and what you get to check before you release funds.

The current system does not give owners much visibility into any of this. You sign a document, money leaves your account on a schedule, and you trust that the stages line up with the work. Builders are not the villains here. They finance jobs out of their own pocket and are squeezed by the same structure, but the contract terms still decide who carries the risk when timing slips.

The good news is that almost everything that matters can be read and questioned before you sign. The clauses below are where owners most often get caught out. Bring this list to your lawyer and to the builder, and ask the questions plainly.

The payment schedule is the staged ladder of payments across the build: a deposit, then progress payments tied to milestones, then a final payment at completion. This is where your money is most exposed, so read it line by line.

Two things matter most. First, does each stage payment roughly match the value of work completed at that point, or are the early stages front-loaded so you pay well ahead of progress? Front-loading is a known risk, because it means your money is in the builder's account before the corresponding work exists. Second, is the deposit within the legal cap for your state? Deposit limits and progress-payment rules vary by state and territory, and you can check the basics for your situation at business.gov.au.

Ask how each progress claim gets verified before you pay. Under the current system, a claim arrives and you are expected to release funds, often with little independent check that the stage is genuinely complete. You are entitled to inspect, query, and withhold payment for work that is not done. Make sure the contract says so in plain terms. For a deeper walk-through, see our guide on the payment schedule explained and what a progress claim is.

A variation is any change to the agreed scope: a different benchtop, an extra power point, a wall moved by 300mm. Variations are normal on almost every build, but they are also the most common source of cost blowouts and arguments, because the price often gets agreed verbally and confirmed later.

Your contract should require every variation to be priced and approved in writing before the work happens, not after. Read the clause that covers this and ask one blunt question: can the builder do extra work and bill me for it without my written sign-off first? If the answer is yes, that is a clause to negotiate. See variations and cost overruns for how these stack up over a job.

Pay equal attention to provisional sums and prime cost items. A PC sum is a placeholder amount for an item you have not chosen yet, like tapware or tiles, and the final cost adjusts when you select. These are legitimate, but a contract loaded with optimistic allowances can look cheap on paper and climb steeply once you make real selections. Our guide on PC sums, provisional sums, and allowances explains how to read them.

Retention is money held back from payments and released only after the build is finished and any defects are fixed. It is your leverage to get the last items done properly. Check whether the contract holds a retention amount or a final payment until practical completion, and on what conditions it releases.

The risk under the current system is paying out in full before the job is genuinely finished, then chasing the builder for the last 5 percent of work with no money left to hold. A sensible final stage keeps a meaningful amount tied to completion and to defects being resolved. Our guide on retention and how much to hold covers typical ranges and the trade-offs.

No build is perfect at handover. The defects liability period is the window after practical completion during which the builder must come back and fix faults that emerge, at no cost to you. Read how long it runs, how you report a defect, and how long the builder has to rectify it.

Look for two things in the clause. First, a clear process for recording defects with evidence, so there is no argument later about what was raised and when. Second, a link between unresolved defects and any money still held, so the builder has a reason to come back. We cover the post-handover side in defects liability after handover.

Three clauses you hope never to use, but must read before you sign. These are also where you most need a lawyer, so flag anything unclear for legal review.

None of these clauses is unusual, and a fair contract will have all three. The point is to read them while you can still negotiate, not after a problem has already started.

BuildFair does not replace your lawyer, and it does not give legal advice. What it does is make the payment and variation terms you negotiated easier to run and harder to fudge once the build starts.

On BuildFair, the quote, contract, and spec sheet are bundled into a single tender package that both parties sign in-app, with an audit trail of who signed what and when. Owner deposits and progress payments are held in regulated custody with BuildFair banking partner Kobble (Kobble operates under AFSL 545391, Yondr Money Pty Ltd), separate from the builder operating account, and released only on verified release conditions. Builders raise progress claims against verified stages, and you approve before funds move.

Variations follow the rule a good contract should already set: both builder and owner must approve a variation before it changes the contract sum. Retention-style amounts stay held until practical completion and until any recorded defects are resolved. Every action is written to a double-entry, hash-chained ledger, so the record of what was agreed and paid is tamper-evident. You can read more on the platform and how it protects owner funds.

This is general information, not legal or financial advice. Before signing any building contract, have it reviewed by a qualified lawyer, and take disputes to your state tribunal or Legal Aid.