The construction jargon you need to know

It’s important to be able to decipher all the construction jargon if you're undertaking a new build. We’re explaining the lingo for you.

Fixed Price Contract: 

This is a legal document between the builder and the owner of the land. It sets out the role, rights and responsibilities of the customer and the builder, the agreed cost of construction and includes the plans and specifications to build your home. The contract will also include the progress payment schedule. This is based upon the schedule that these payments will be made, or any changes to the schedule.

Variations: 

If you make an alteration to what was previously agreed to in the building contract, this is known as a variation. Any variations will usually result in a contract price change. Generally, a variation will also result in a price increase, although there can be alterations where there is a decrease in price. Variations will be subject to credit approval and may reduce your home loan limit.

Building Specifications, also called inclusions: 

This is a list of inclusions in your home including the type and grade of timber to use in the frame, the type of bricks, kitchen cupboards and carpet etc. It should also list the brand and model of all appliances to be installed. 

Plans: 

Building plans are usually prepared by a draftsperson or an architect and provides an overview of the layout and size of your new home. They can show the design of the slab, the side, front and rear elevations and details of the cupboards, doors, power points and light switch positions. The plans will need to be approved by the council before RAMS will issue an Authority to Commence (ATC) construction.

Home Owner Warranty Insurance, also known as Queensland Building and Construction Commission Home Warranty Insurance in Queensland: 

This covers the home owner for a certain period (usually 6 -7 years, depending on the state) against structural defects in the home. It’s normally organised by the builder on behalf of the owner and paid by the owner. It also protects against non- completion of your home due to the death, disappearance or insolvency of the builder or their failure to correct faults, deemed by law to be the builder’s responsibility, including poor workmanship, faulty design, and use of inadequate or unsuitable materials.

Builder’s Public Liability Insurance: 

Protects the customer and builder during construction from damage or loss caused by theft, burglary, malicious damage and also covers against any injury on the site. It is paid by the builder and may be known as contract works or Public Liability Insurance.

Certificate of Occupancy: 

This is not required in every State or Territory, and if required, it is only necessary if the valuer requests it. If this is the case, then it is the customer’s responsibility to obtain it, although the builder is often best placed to organise this certificate. While it will not be awarded until after the final inspection, there are various steps and inspections already required throughout the construction process. Once all inspections are completed and the council has received all the necessary documents, including smoke detector certification, termite protection certification and Fire Safety Schedule, you’ll be able to receive a Certificate of Occupancy. This allows the building to be used for what it was designed for and to be sold to another party.