During the contract stage of your renovation project, you should be made aware of the ‘cooling-off period’. This is the initial period of time after you've entered into a building contract.
Upon receipt of your signed contract from your builder, you as the home owner have five days within which you may withdraw from your building contract.
Furthermore, should you not receive the signed contract documents within this specified time frame, you may also affect your right to withdraw from your building contract.
Did you know?
For domestic building works over $3,300, your building contract must contain notice advising you of your right to withdraw during the cooling-off period. Consequently, if you become aware that your contract does not contain such notice, you have seven days to implement your right to a contract withdrawal.
What should the withdrawal notice contain?
Should you choose to withdraw from your building contract, you must give your builder a signed written notice stating:
- Your intention to withdraw from the contract; and
- The section of the Act under which the withdrawal is made (i.e. Section 72 of the Domestic Building Contracts Act 2000)
Are there limitations affecting a contract withdrawal?
There are some restrictions surrounding a withdrawal throughout the cooling-off period. You may not withdraw from your building contract if –
- You and your builder have previously entered into a building contract; and
- The terms and contracted services of the previous contract and current contract are substantially the same, as well as relate to the same home.
Additionally, if you receive independent legal advice before entering the contract or, after you enter the contract you advise your builder you received the prior advice, you will not be permitted to withdraw under the cooling-off period.
Will I incur any costs?
You will incur some costs should you withdraw from your contract during the cooling-off period.
You must be refunded any prepayments you made under the contract. However, your builder is entitled to retain $100 plus any reasonable ‘out-of-pocket’ expenses incurred up to the time of your withdrawal from the building contract.
