According to the ACT Government’s City and Environment Directorate – Planning, anyone hiring a builder for a new home or renovation should always have a written contract, even though ACT legislation does not require one. The guidance also confirms there is no mandatory cooling-off period: the contract is binding, and signing before you are ready may mean you cannot change your mind without a contractual penalty. All figures below come from that page; figures checked 1 October 2026.
| Point | ACT position in the linked guidance |
|---|---|
| Written contract | Not required by ACT legislation, but strongly recommended |
| Cooling-off period | No mandatory cooling-off period for building contracts |
| Quotes | Obtain at least 3 quotes from different builders |
| Initial deposit | No legal limit; industry practice is usually up to 10% of the total contract price |
| Project insurance | The maximum claim is currently $10,000 if the work is not completed |
| Statutory warranties | Residential building work over $12,000 carries statutory warranties even if the contract does not state them |
| Insurance before work | For work over $12,000 on some residential buildings, the builder must have residential building work insurance or a fidelity fund certificate before work starts |
| Homeowners warranty insurance | Covers up to $10,000 for deposits but is not residential building work insurance under the Building Act 2004 |
Why is there no mandatory cooling-off period?
The cited ACT guidance does not provide a broader policy explanation. It sets out the legal position directly: ACT legislation does not require a written residential building contract, and there is no mandatory cooling-off period.
That does not make signing less important. A building contract records the parties’ rights and responsibilities and helps them agree on costs, timeframes and expectations. It can also set procedures for variations, extensions of time and dispute resolution, potentially preventing later disagreement about the work or the process used to complete it.
The practical message is to complete the contract negotiations before signing, not to treat signing as an opportunity to change your mind later.
What happens if I change my mind after signing?
Without a mandatory cooling-off period, you cannot assume there is an automatic cancellation right after the contract is signed. The ACT guidance warns that changing your mind may attract a penalty under the contract.
The termination clause is particularly important. It should explain:
- when either party may terminate the contract;
- what obligations continue after termination;
- whether the homeowner must pay an amount to the builder; and
- what happens if the builder cannot obtain required project insurance within the prescribed time.
Termination provisions are not a substitute for deciding whether the price, scope, inclusions and payment schedule are workable before signature. Seek independent legal advice if the termination terms do not provide sufficient protection.
What should I settle before signing?
Start by checking the builder as well as the contract. The ACT guidance recommends obtaining at least 3 quotes from different builders and remembering that the cheapest quote is not always the best value.
Before accepting a quote:
- ask about similar work and recent clients;
- confirm the builder has the correct licence class where the work requires a licensed builder;
- check whether the builder is licensed and insured where required;
- consider company searches; and
- check the disciplinary register for compliance action involving the builder or its directors.
The written contract should deal clearly with the following:
| Contract area | What to check |
|---|---|
| Parties and site | Exact names of the homeowner and builder, the work address, contract date and both signatures |
| Licence and insurance | Builder’s licence details and any insurance policies held by the builder |
| Scope of work | Detailed description, plans and specifications, including the features most important to the homeowner |
| Inclusions | Specific products, finishes and design details that cannot be changed without the homeowner’s agreement |
| Approvals | Who is responsible for obtaining each relevant approval |
| Price | The contract price if known, or clear explanations of costs that are unknown or subject to change |
| Timeframes | Start and completion dates, allowance for approvals, extension-of-time process and final handover date |
| Variations | How changes to plans, specifications, time and cost will be authorised and priced |
| Payments | Deposit, progress-payment stages and the amount payable at each stage |
| Completion and defects | Practical completion, maintenance or defects liability period, and each party’s responsibilities |
| Problems | Dispute-resolution process and termination rights |
A builder may use a standard residential contract from an industry association or have a lawyer draft one. If the standard contract includes special conditions, read them carefully and make sure it provides the protections you need.
Read every clause and make sure you understand your rights and obligations before proceeding. Obtain independent legal advice if you are uncertain about a term or want to add or change something. The guidance also recommends independent legal and financial advice for any building contract being considered, and a copy of the signed contract as soon as possible after signing.
How should the contract handle costs and variations?
The contract should distinguish between the agreed price and costs that are unknown or may change. It should also explain what happens if building work must be varied because of changes in local law, errors in plans or changes in goods supply.
Before signing, set a budget and try to stick to it. The ACT guidance notes that higher quality generally costs more and recommends setting aside extra funds for unforeseen circumstances that create additional costs.
The variation clause should explain:
- who can request a variation;
- how the proposed work and cost will be documented;
- whether changes to time are allowed;
- how builder’s margin will be calculated and applied; and
- how both parties will approve the change.
Most contracts require variations to be in writing and signed by both parties. Always obtain variations in writing. A builder may also refuse a requested variation in circumstances prescribed by the contract, so the refusal process matters as much as the approval process.
A builder’s margin is essentially the builder’s fee. The percentage stated in the contract applies in specified circumstances, such as variations or termination, and is used to calculate the dollar amount added to other costs.
Who handles approvals and the independent certifier?
Some building work requires building approval. An independent building certifier must consider the approval application and inspect the work at certain stages. As the landowner, it is your responsibility to appoint the certifier.
A residential building contract must not give the builder the right to appoint the certifier or act as your agent when dealing with the certifier. You may agree for the builder or another person to appoint the certifier, but that arrangement must be covered by a separate written agreement.
The contract should also identify who is responsible for obtaining other approvals, such as a development approval. Start and completion dates should allow time for obtaining the relevant approvals.
Make sure the contract clearly allocates these responsibilities rather than assuming that the builder will handle every approval.
How should deposits and progress payments work?
A deposit is the initial payment made to start the work. Progress payments are ongoing payments as the build progresses. The contract should describe each stage of work and the amount payable after that stage is completed.
The key payment points are:
- Initial deposit: There is no legal limit in the ACT, although industry practice is usually up to 10% of the total contract price. The deposit may provide security for the builder and contribute to initial material costs.
- Progress-payment schedule: The stages and amounts must be clearly described rather than relying on a general promise to invoice as work proceeds.
- Work completed: Apart from the initial deposit, good practice is for each progress payment to cover only work already completed. Check that the contract says so.
- Cash flow: Make sure you can pay when each amount falls due. If a lender is financing the project, understand its requirements for releasing funds.
- Custom schedules: Parties preparing their own payment schedule should seek legal advice.
When negotiating the deposit, consider the project-insurance limit in the table above. That limit is the amount recoverable for incomplete work, not a limit on the builder’s deposit or total contract price.
For relevant work, the builder must obtain residential building work insurance or a fidelity fund certificate before commencement. Obtain a copy and check that the contract allows fair termination if the builder cannot obtain the required insurance within the prescribed time.
Homeowners warranty insurance is different: it covers only up to $10,000 for deposits and is not residential building work insurance under the Building Act 2004. Separate insurance may be purchased voluntarily. Read the relevant policy’s Product Disclosure Statement before relying on its terms.
When is the building actually complete?
The contract should state the start date, completion date and final building handover date. It should also outline the process for requesting an extension of time.
The contractual date is intended as a guide and may be subject to change. An estimated timeframe can protect both builder and homeowner by giving them a shared expectation.
Two completion terms require particular attention:
- Lock-up generally occurs when the building can be secured effectively, while internal and external work may still remain.
- Practical completion occurs when the building is complete or almost complete under the contract, apart from minor work or defect fixing.
Neither lock-up nor practical completion necessarily means every physical task is finished. Most contracts treat practical completion as the finish date, but some do not, so check which event legally and financially concludes the build.
Delay provisions also need review. Contracts generally contain terms compensating the builder for delay. If you want compensation for construction delays, discuss this before signing and obtain legal advice. A liquidated damages clause may require the builder to pay an amount for each day the project is late, subject to allowable delays such as rain, events outside the builder’s control or homeowner-caused delays.
What defect protections should the contract include?
The contract should clearly describe practical completion, the maintenance or defects liability period, and what each party must do during that period.
Residential building work over $12,000 carries statutory warranties under ACT law even if the contract does not state them. The Building Act 2004 requires residential building work to be carried out in accordance with the Act, in a proper and skilful way and according to approved plans.
The statutory position has important boundaries:
- structural and non-structural elements have different warranty periods;
- statutory warranties apply to the residence but not to items such as paving, fences, retaining walls, outdoor swimming pools, ponds and antennas; and
- a contract can provide additional warranties or defect-resolution processes without limiting the statutory warranties.
Check the current regulator guidance for the applicable requirements rather than assuming that every part of the property or every defect falls within the same protection.
What should I do if a problem or dispute arises?
Raise concerns with the builder as soon as possible. Keep records of complaints and the builder’s responses because they may be needed if the issue remains unresolved. You can also ask the builder to explain its complaints policy and provide a copy of any written policy.
Before signing, understand the contract’s dispute-resolution process and what it requires from each party. If that process does not resolve the matter, seek independent legal advice about your contractual rights. The ACT guidance also identifies Fair Trading at Access Canberra as a source of information and advice on Australian Consumer Law rights; the listed contact number is 13 22 81.
This article provides general information, not financial or legal advice. Check the current ACT Government regulator page before signing or relying on a figure, and review the relevant policy’s PDS for insurance terms.
Sources
FAQ
Is a written building contract compulsory in the ACT?
No. ACT legislation does not require a written contract for residential building work, but the ACT Government strongly recommends having one because it records costs, expectations, rights, responsibilities and dispute procedures.
Is there a cooling-off period after signing an ACT building contract?
No mandatory cooling-off period applies. Because the contract is binding, signing before you are ready may mean changing your mind attracts a contractual penalty. Check the termination clause before signing.
How much deposit can I pay under an ACT building contract?
There is no legal limit on the initial deposit, although industry practice is usually up to 10% of the total contract price. The separate $10,000 project-insurance figure concerns recovery for incomplete work, not the maximum deposit or contract price.
Can the builder appoint the independent certifier?
No. A residential building contract must not let the builder appoint the certifier or act as your agent when dealing with it. The builder or another person may appoint the certifier only under a separate written agreement.
What should I do if a building dispute cannot be resolved?
Follow the contract’s dispute-resolution process, keep records of complaints and responses, and seek independent legal advice about your contractual rights if the process does not settle the issue.
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