Importance of building contracts
You can keep your property investment safe with a formal written contract.
Few investments are more worthwhile or more profitable than building. Even minor alterations or additions to your home, granny flat, workshop or holiday home will usually increase in value by far more than you originally paid the builder for the work.
According to the Master Builders Association of the Western Cape (MBAWC), to get the maximum benefit from your investment, you should choose your contractor wisely and enter into a formal contract before any work begins.
Payment problems
Most payment problems experienced by contractors and owners are due to no contracts being signed.
In the excitement of starting the building work – often after protracted negotiations – the administrative documentation is ignored by all parties. In addition, you may not think it’s necessary to sign a contract when the builder is a friend, relative, or acquaintance. This is because you are quite sure the person will not let you down. Many people also think a contract is unnecessary for smaller jobs.
Unfortunately, disputes usually arise when the last payments are due to contractors. In most cases, says the MBAWC, owners consider that the contractors hadn’t complied with discussions held before the work started.
In other instances, contractors become aggrieved after non-payment for extras and variations requested by the owner over and above the initially priced scope of work.
Dispute resolution
These problems can be avoided if a suitable contract is established from the beginning. In addition to the scope of work, the contract should include details of procedures to be followed in case of disputes.
To avoid problems, you need to be proactive. Insist on a building contract that has been approved by the Master Builders Association in your region or by other recognised professional bodies. These could include the Association of South Africa Quantity Surveyors, the Engineering Council of South Africa or the National Home Builders’ Registration Council.
Contract documents and advice on the correct documentation for specific contracts are available from the MBAWC.
A professional contract will go a long way towards keeping your investment safe and your relationship with the contractor pleasant.
Writer :Â Sarah-Jane Meyer
