The Environmental Planning and Assessment Act 1979 is the primary law which oversees the assessment and determination of development proposals in New South Wales (NSW).
Before you start building your home, you first need to know whether you need any planning approval or not. It is prudent to decide about the type of approval required, which will ease your planning process.
In NSW, there are 57 types of projects which include garden sheds, barbecues, fences and pergolas which do not require any planning or construction approval. However, you may still need to check your zoning with your council.
You are only entitled to get a 10 day or less planning approval if:
- Your land is 200 square meters or larger with a width of 6 meters; and
- You are building a new one or two storey house; or
- You are renovating an existing house on a block 200 square meters or larger with a width of 6 meters.
There are certain other requirements that your development should also meet, in order to get a 10 day approval. In a situation where your building does not comply with the rules for a 10 day or less approval, you can make an application for a development application through your local council and that will be considered in accordance with the development standards established by local council.
Your local council, architect, designer, an accredited certifier or a planning consultant can help you to deal with the entire process.
Land Subdivisions & Negotiation in the Pre-Contract Stage
Land subdivisions allow a builder or a land owner to divide the land into two or more parcels so that it can be disposed off separately.
Negotiations in the pre-contract stage play a very important role. Both the parties to a contract must ensure before signing the construction contract that:
- The contract is in writing and sets out all the terms and conditions clearly and precisely as agreed;
- The work to be done is described in detail;
- The contract includes the plan and specification for the work to be done;
- The names of the parties and their respective addresses are included;
- The builder’s domestic registration details are enclosed;
- The time period within which the work needs to be completed;
- Days on which no work will be performed are mentioned;
- Provisions that the work can get delayed due to inclement weather; and
- The date on which the contract is to be signed by the parties that is the contract date, should also be mentioned in the contract.
In absence of an approved development application and a construction certificate, you or your developer cannot start with a building work.
While initiating a construction work, you should enter into a construction contract as a matter of precaution and an essential requirement. Like any other contract, a construction contract contains details of the work to be covered, the price to be paid for the work, the mode of payment and also the risks involved. You need to have a clear understanding of the construction contract so as to protect your interest and avoid endless disputes.
Following is a list containing various construction contracts available in order to assist in your decision-making process:
- Guaranteed Maximum Price: This type of contract allows the client to know the highest cost of the project. Any expense beyond the estimated cost is paid by the contractor.
- Documented Design (DD): In this type of contract, most of the designs are prepared by consultants engaged by or on behalf of the construction agency. Till the entire work is designed, tenders for construction contract are not invited.
- Design Development & Construct (DD & C): Here the contractor is required to engage consultants to develop a preliminary design with regard to the construction specifications provided by the construction agency, the construction documents and asset construction.
- Design Novate & Construct (DN & C): The construction agency engages a designer to carry out a preliminary design work under a design agreement and enters into a contract with a construction contractor. The agency then grants the design agreement and the contractor assumes full responsibility for the whole design and construction and also pays for the designer’s fees.
- Design and Construct (D & C): The construction agency briefs the project explaining few concepts with regard to the design and also specifies the performance and quality requirements. The contractor engages consultants to prepare and develop the design and the construction documents.
- Design Construct & Maintain (DC & M): The contractor is briefed about the project with a description of some concepts of design and the quality of the assets required. The contractor is responsible for preparing and developing the concept design, construction documents, asset construction and maintenance for a specified period.
- Managing Contractor: This contract is prepared during the design phase after a project brief is developed. The document sets a target price based on the estimated cost of the construction work and a target date for completion.
- Alliance: These types of contracts require the involvement of owners, designers, builders, and key stakeholders on a project at the conceptual stage. Both risk and reward are shared by the parties to the contract.
Due Diligence Advice
Before signing a contract, look carefully whether your contract has the following elements:
- Time Frame: A construction contract should mention a time frame for any transaction that will take place in future.
- Price: The contract should clearly state the consideration amount and any additional charge involved. You should ask for an estimate of all the additional charges and incorporate the same in the contract.
- Payment Method: Do not forget to determine the terms and mode of payment which is appropriate to your financial condition.
- Payment of Penalties: A contract should have provisions for penalties. In cases of late payment penalties, keeping a note should be reasonable.
- Material Terms: Clauses detailing project completion date, consultant costs, risk allocation, construction of electrical cables, provision for contract revision in situations of price hike, right to appoint sub-contractors, maintenance requirements, compliance of regulatory requirements and grounds of termination must be included.
- Inability to Agree: In case you cannot come to a concurrence regarding the final terms of an agreement, ensure that you sign a contract that cannot be enforced as a permanent agreement. In such circumstances, you may enter into an interim agreement.
- Dispute Resolution: Disputes may arise despite taking all necessary precautions. Your contract should include an arbitration clause as an effective instrument for dispute resolution before resorting to Court proceedings.
- Attorneys’ Fees: Your contract should also specify the fee to be paid to the attorney by the contracting parties.
Drafting of Lease Terms and Conditions
An agreement between the lessee and the lessor, to occupy a residential premise for an agreed rental payment is called a lease or residential tenancy agreement. Whereas, a commercial lease is an agreement between a lessor and a lessee to use an office, warehouse, industrial property or a similar facility to run a business.
Before signing a lease, the rights and responsibilities of each party should be ascertained. The main issues to consider when drawing up a Lease Contract include:
- Details of lessor, lessee and premises;
- Term of the lease;
- Lease amount;
- Common areas;
- Maintenance and repairs;
- Renewal; and
- Dispute resolution.
Advising in Relation to Payment & Strata Title and Community Title Matters
Builders may claim for payments during and/or after completion of the construction work. There are various methods one can use to make payments to builders such as a default method or payments on at different stages once the work pertaining to that stage is completed.
Work on a new home is divided into the following stages:
- Base stage;
- Framing stage;
- Lock-up stage;
- Fixing stage; and
We at Owen Hodge Lawyers are recognised in the strata industry for our sensible and practical advice. Our knowledge and experience in dealing with strata and community title issues allows us to provide holistic advice to owners, corporations and community associations.
Alternative Dispute Resolution Forums or in Litigation
The two fold avenues available with the parties in resolving their disputes are:
- Alternative Dispute Resolution (ADR) including negotiation, mediation or arbitration; and
- Court proceedings.
Prior to Court proceedings being launched, it is important for the parties to engage in pre-litigation steps in an attempt to resolve their dispute(s) so as to avoid the excessive costs, stress, delay and uncertainty involved in a litigation process. ADR enables the parties to resolve disputes by way of negotiation, mediation and arbitration. It is also less time consuming and more cost-effective if compared to Court proceedings. The Australian Commercial Dispute Center (ACDC) is the organisation committed to the implementation of non-court dispute resolution procedures. These procedures assist parties to arrive at negotiated agreements to resolve their disputes, as an alternative or in addition to Court action.
Court proceedings may be resorted to if the parties are unable to resolve their dispute(s) through mediation. Depending on monetary value of the claim, the action will be brought either in the Magistrates, County or Supreme Courts. Disputes under federal legislation are determined by the Federal Court. The Court makes rulings based on the admissible evidence of the parties to the dispute. A party aggrieved by a decision may prefer an appeal to the higher Court.
For further advice and assistance, contact our team of experts at Owen Hodge Lawyers.