Contracts and deposits for home jobs

A written contract sets out what you've agreed: the work, the price, the timing and what happens if things change. It protects both sides. Many disputes between customers and businesses come down to a misunderstanding that a clear contract would have prevented.

This guide covers the main things to check in a contract for work around the home, and how deposits and progress payments should work. Contract law and home building rules are set at state level, so we use NSW as a worked example, based on NSW Government guidance. Check the rules in your own state, and get legal advice for a large or complex job.

When you need a written contract

For small jobs, a written quote and an invoice may be all you get. For bigger jobs, a proper contract is essential, and in some cases the law requires one.

In NSW, the government says:

• a small job contract is required for residential building work valued between $5,000 and $20,000 including GST;
• a large job contract is required for work over $20,000 including GST.

The value includes labour and materials. Other states and territories have their own thresholds and requirements.

What a good contract covers

Whatever the size of the job, a contract should make these things clear:

1. Who the parties are. The full name of the business (matching its ABN record and licence) and your name.
2. The licence number, where the work requires a licence.
3. The scope of work. A detailed description, ideally with plans, specifications or a list of inclusions and exclusions.
4. The price. Whether it's fixed or estimated, whether GST is included, and any provisional sums or allowances.
5. The payment schedule. The deposit, progress payments and final payment, and what triggers each.
6. Timing. Start date, expected completion and how delays are handled.
7. Variations. How changes are requested, priced and agreed.
8. Warranties and insurance. Any warranty offered and, where required, insurance details.
9. Disputes. How disagreements will be dealt with.

Read the whole contract before signing, including the fine print. If something you discussed isn't in it, ask for it to be added.

Deposits

A deposit is the money you pay before work starts, usually to secure a place in the schedule and to cover early costs such as ordering materials.

In NSW, the government says the deposit for residential building work can't be more than 10% of the contract price. Other states have their own limits, and some differ for different types of work. Our quote checker flags any deposit above 10% so you can check the rule where you live.

A request for a much larger deposit, especially for a job that hasn't been clearly defined, is a reason to slow down and ask questions.

Home building compensation cover in NSW

For residential building work over $20,000, the NSW Government says the builder must have home building compensation cover. This protects you if the builder can't complete the work or fix defects because they have died, disappeared, or become insolvent. The government advises that you shouldn't pay any money, including a deposit, until you have received the certificate of cover.

Other states have similar schemes under different names and with different thresholds.

Progress payments

On longer jobs, the price is usually paid in stages. A sensible schedule links each payment to a clearly defined stage of work, such as "frame complete" or "rough-in plumbing complete", rather than to dates on the calendar.

Before you make a progress payment, check that the stage has actually been reached. It's reasonable to ask for photos or to inspect the work. Avoid paying well ahead of the work done; if something goes wrong, money already paid for unfinished work is hard to recover.

Variations

Changes during a job are common. You might decide on a different tile, or the builder might find rot behind a wall. A variation is any change to the agreed scope or price.

Good practice is simple: every variation should be agreed in writing, with the price and any effect on timing, before the extra work is done. A text or email can work for small changes, as long as it is clear. Keep a list of all agreed variations so the final invoice holds no surprises.

Cooling-off

In NSW, the government says large job contracts (over $20,000) have a 5-day cooling-off period, during which you can withdraw from the contract. Read the contract for how to exercise this right.

Separately, if you signed the contract after a trader approached you uninvited, for example by knocking on your door, the rules for unsolicited consumer agreements may apply. Those include a 10 business day cooling-off period and restrictions on taking payment. See door-to-door sales and cooling-off.

Before you sign: a checklist

• The business name, ABN and licence number match each other and the official registers.
• The scope is detailed enough that someone else could price it.
• The price and GST treatment are clear.
• The deposit is within the limit for your state.
• Progress payments are tied to stages of work.
• Variations must be agreed in writing.
• Required insurance certificates have been provided.
• You understand any cooling-off rights.
• You have a copy of the signed contract.

During and after the job

Keep everything: the contract, variations, invoices, receipts, photos and messages. If a problem appears, your rights under the Australian Consumer Law include guarantees that services are provided with due care and skill. See consumer guarantees and, if something goes wrong, resolving disputes.

Standard form contracts

Many businesses use their own standard contract, and industry bodies publish template contracts too. A standard contract can be perfectly fair, but read it carefully, because it was written with the business's interests in mind. Look in particular at clauses about variations, delays, extra charges, cancellation and dispute resolution. If a term seems one-sided or you don't understand it, ask the business to explain or change it before you sign.

The Australian Consumer Law includes protections against unfair terms in standard form consumer contracts. If you think a term is unfair, your state's consumer protection agency can explain your options.

Keep the contract handy

Once the contract is signed, keep a copy where you can find it quickly, along with the plans, specifications and any variations. Refer to it before each progress payment and whenever a question comes up about scope or timing.

Delays and extensions of time

Contracts for larger jobs often allow the builder more time for certain delays, such as bad weather or variations you've requested. Check how the contract handles delays: what counts as an acceptable reason, how the builder must notify you and whether there's any consequence for unreasonable delay. Clear rules here prevent arguments later, especially if you have moved out or have other trades booked around the job.

Handover

At the end of the job, the contract may provide for a final inspection and handover. Walk through the work with the business, list any defects or unfinished items, and agree in writing how they'll be fixed. Ask for any warranties, manuals and compliance certificates before you make the final payment.

Key points

• In NSW, home building work over $5,000 including GST needs a written contract.
• NSW caps home building deposits at 10% of the contract price.
• For NSW work over $20,000, get the home building compensation certificate before paying anything.
• Tie progress payments to completed stages and agree all variations in writing.
• Rules vary by state, so check with your state's agency.