5 traps to look out for before signing a building contract

signing a building contract

Luke Carroll, EC Credit Control & Tradebusters Connect

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Five key things you need in a contact. Number one; Contractor's license details. This is much like a quality assurance label you might see on a consumer product. Confirms you're dealing with a legitimate and qualified trades person to complete the job. Second; an accurate description of the works to be carried out. If it's not an accurate description, don't sign the contract. You're heading straight towards a dispute. Third; the contract price should be clearly displayed on the first page or alternatively if it's not displayed, a reasonable explanation given for why it's not. If it's not displayed accurately and clearly, don't sign the contract. You're heading straight towards a dispute. Fourth; deposits and progress payments. Guys it's pretty simple rules. For jobs under $20k, 10% deposit is the maximum allowable. For jobs above $20k, 5% deposit. In relation to progress payments, your trades person can't ask you to pay for more than the work that's already been done. And finally; home warranty and insurance is a requirement for any job above $20 000 in value. It's designed to protect you as a home owner from any loss that you may incur on a job that's incomplete or faulty where your trades person has become insolvent or disappeared.

Listen to other instalments of The Smart Property Investment Show:
Episode 78: Savings tactic: how house-sitting helps this couple save more money for property
Episode 77: How will the government's changes to tax depreciation impact investors?
Episode 76: SPI portfolio update: what's next for the team?
Episode 75: How travelling cross-country helped this investor buy 9 properties in 6 years
Episode 74: How this investor plans to double his portfolio within 10 years
Episode 73: Bad builders: how this investor bounced back
Episode 72: Policy changes to interest-only loans: what buyers need to know
Episode 71: How this 'stubborn' investor recognised a property lemon
Episode 70: How this investor complements each property and balances his portfolio
Episode 69: Are you a ‘lazy’ investor? Consider the benefits to working with a financial team
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