The Building Work Contractors Act 1995 (SA) requires a building work contract to have certain elements.

Building Indemnity Insurance

Section 34 of the Building Work Contractors Act 1995 (SA) requires builders carrying out domestic building work (where the contract price is over $12,000 and development approval is required) to hold a policy of insurance in relation to that building work [see also Building Work Contractors Regulations 2011 (SA) reg 4]. A copy of the certificate of insurance must be supplied to the building owner and to the relevant authority at the time of applying for planning approval [Planning, Development and Infrastructure (General) Regulations 2017 (SA) reg 36]. Building work cannot commence without the insurance being in place [reg 36(2)].

Building indemnity insurance covers a building owner for defective building work up to $150,000 in cases where the builder dies, disappears (or is otherwise unable to complete the work) or becomes insolvent [Building Work Contractors Act 1995 (SA) s 35].

Other Requirements of a Building Work Contract

Section 28 of the Building Work Contractors Act 1995 (SA) requires every domestic building work contract valued at more than $12,000 to:

A signed copy of the contract along with the prescribed notice (which includes important information about the contract) must be given to the building owner as soon as possible following signing [Building Work Contractors Act 1995 (SA) s 28(1)(f)]. The prescribed notice is called a Form 1 – Your Building Contract: Your Rights and Obligations and can be found in Schedule 3 of the Building Work Contractors Regulations 2011 (SA)].

A building work contract will include certain terms that describe how the contract price is calculated [s 29]. These terms include:

The contract should include a start and finish date, or at least an estimate of the number of days that it will take to complete the work.

If the value of the work is less than $12,000, it is still a good idea to have a written contract so that both the building owner and the builder are aware of their rights and obligations.

If a contract contains terms that are harsh or unconscionable, a party to the contract may apply to the Magistrates Court for appropriate relief [s 38].

A building work contract cannot purport to exclude the effect of the Building Work Contractors Act 1995 (SA) and its provisions, and any term to that effect is void [s 42].

Cooling Off

A building owner has 5 clear business days after signing the contract in which to terminate the contract. The Act requires a building owner to provide a builder with written notice of their intention not to be bound by the contract. The contract is considered to be terminated at the time the notice is posted by certified mail or personally served [s 36(3)].

The building owner may also terminate the contract prior to completion if the builder has not complied with the relevant provisions of the Act [see s 36(5)(b)]. In this case, legal advice should be sought prior to cooling off, because there may be ramifications in relation to any unpaid work or legal costs incurred.

Progress Payments

Progress payments are interim payments for the building work, made over the life of the contract, and are usually expressed as a percentage of the total contract price.

A builder must not demand or request payment unless it is a genuine progress payment in respect of work already performed under the contract [s 30].

The building owner is not obliged to make the payment in the absence of a written request by the builder for the progress payment [s 30(3)].

Certain advance payments are authorised under the Building Work Contractors Regulations 2011 (SA):

Contract Variations

A building owner should read the contract carefully to find out how the contract might be varied. Building a home can take some time, and unforeseen circumstances can affect many aspects of the contract including price and completion date.

Usually the contract can only be varied if both parties agree in writing, although minor changes may occur without the owners consent. Remember that variations may result in increased costs, and a building owner should ensure that there are sufficient funds to cover changes. Attach copies of the variations to the contract for future reference.

Statutory Warranties under the Building Work Contractors Act

Section 32 of the Building Work Contractors Act 1995 (SA) implies certain statutory warranties into every domestic building work contract. These include:

Proceedings for a breach of a statutory warranty under s 32 of the Building Work Contractors Act 1995 (SA) must be commenced within 5 years after completion of the building work [s 32(5)]. This strict time limit cannot be extended [s 32(6); see also Duncan v Bert Farina Constructions Pty Ltd [2024] SASCA 67]. Court proceedings would usually be brought in the Magistrates Court or District Court depending on the amount claimed.

The statutory warranties in s 32 are passed on to subsequent owners of the property [see Building Work Contractors Act 1995 (SA) s 32(3), (4)].

It is important for the building owner to talk to the builder as soon as they notice a problem. Many issues can be resolved quickly before they escalate if the building owner is prepared to talk to the builder.

A building owner who is unable to resolve the matter by negotiation with the builder should seek legal advice. A building owner can also contact Consumer and Business Services for help, which may assist in negotiations with the builder, or if necessary convene a conciliation conference under section 8A of the Fair Trading Act 1987 (SA).

Compliance with technical details and rules under the Planning, Development and Infrastructure Act

Under the Planning, Development and Infrastructure Act 2016 (SA) building work must be performed in accordance with the approved technical details, particulars, places, drawings and specifications and must comply with the Building Rules and any other requirements imposed during the approval process [s 216]. A building owner who can demonstrate that a builder breached these provisions may apply to the Environment, Resources and Development Court for an order that the builder remedy the breach [s 202(1)]. In the first instance all applications are referred to conferencing under section 16 of the Environment, Resources and Development Court Act 1993 (SA) [Planning, Development and Infrastructure Act 2016 (SA) s 204(2)] except where the matter is referred to a building referee under s 206 of the Planning, Development and Infrastructure Act 2016 (SA).

A commissioner to whom a matter is referred under section 202 will determine the matter as a building referee. A building referee will, subject to the rules of the ERD Court, have the power of an arbitrator under the Commercial Arbitration Act 2011 (SA).

The Court has the power to order the builder to make good the breach within a specified period or to pay the building owner costs, expenses or compensation for loss or damage [Planning, Development and Infrastructure Act 2016 (SA) s 214(6)]. The Court may also order that a building (or any part of a building) be altered, reinstated or rectified in a specified manner, that a party to the dispute remove or demolish a building, make any other determination or grant any other remedy or relief as the Court thinks fit [s 205(1)]. If an application is unsuccessful and the Court is satisfied that the builder has not breached the Act, the applicant may be required to pay the builder for any loss or damage, and legal costs [s 214(16), (18)]. An application for relief should not be brought lightly or without legal advice.

Under s 159 of the Planning, Development and Infrastructure Act 2016 (SA) (and under the repealed equivalent provision in s 73 of the Development Act 1993 (SA)), no action for damages for economic loss or rectification costs resulting from defective building work (including an action for breach of statutory duty) may be commenced more than 10 years after completion of the building work. This operates as a "long stop limitation period", barring all claims of this kind after 10 years have elapsed and preventing a court from extending time to bring an action [Duncan v Bert Farina Constructions Pty Ltd [2024] SASCA 67].

For more information about this remedy under the Planning, Development and Infrastructure Act 2016 (SA), see Defective building work.

Building Work Contractors Act or Planning, Development and Infrastructure Act

It is vital for a building owner to talk to the builder as soon as they notice a problem. Many issues can be resolved quickly before they escalate if the building owner is prepared to talk to the builder.

If a building owner is unable to resolve a matter by negotiation with a builder, they should seek legal advice about their options, including whether to pursue further negotiations, conferencing or court proceedings with the builder on the basis of the statutory warranties under the Building Work Contractors Act 1995 (SA), the requirement to comply with technical details and building rules under the Planning, Development and Infrastructure Act 2016 (SA), or some other basis such as pursuant to Australian Consumer Law. Different time limits apply to these actions.

In relation to the Australian Consumer Law, see Consumer Protection.